1、 市場失靈 (market failure)

1. Consider a market in which there are two firms. Marginal costs for both firms are constant and equal to $4. While both firms are free to choose their respective advertising levels, A1, and A2, government regulation forces both firms to sell the product for $5 per nit. The demand curves for the two firms are given by: For both firms, the total cost of producing A units of advertising is A2 (that is, A squared). Find the Nash equilibrium levels of advertising, A1, and A2.(20%)

(a) How much is a risk neutral owner willing to pay for this system?(10%)

(b) If the owner's utility function is, he will adopt an aggressive inventory metho(D)If the price of weather insurance that guarantees revenues of 3600 is 1000, is the owner willing to pay for the weather insurance?(10%)

(c) According to (b), what is the highest insurance price the owner is willing to pay?(10%)

2、 邊際轉換率 (marginal rate of transformation)

3、 外部性 (externality)

4、 摩擦性失業 (frictional unemployment)

5、 公開市場操作 (open market operation)

6、 絕對利益法則 (principle of absolute advantage)

7、 尋租 (rent seeking)