(A) What is the tragedy of the commons? (5%)

1.(15%) Two persons are involved in a situation where the public good, G, is privately provided. The utility function of each individual is denoted as ui(G,x) = ai InG + xi, for all i = 1,2 where x is a private good. Denote gi as the amount of the public good contributed by the individual i such that G = g1 +g2. Each individual's budget constraint is shown as xi + gi = my. Assume a1 ＜ a2. How much will the individual 1 contribute, i.e. g1, in equilibrium?

2.(10%) Consider the game facing Player A and B below where X and Y both are integers. Nash equilibrium is (Up, Left). Find out the values of X and Y.

(A) What is Pareto efficiency? (5%)

(B) Does oligopoly imply inefficiency necessarily? Why? (5%)

(B) And how to fix it? (5%)

(A) What is transaction cost? Also with examples. (5%)

(B) What is the Coase theorem? Also with brief discussion. (5%)

(A)y=x1+x2,(5%)

(B) y = min (xy x간.(5%)

(A) What is the price which maximizes π? (5%)