Explain why it is a weakly dominant strategy under uniform price auctions to truthfully reveal opportunity costs, while this is not the case for discriminatory price auctions. describe the type of unemployment

In light of the above, set up the decision problem facing firm i assuming each firm seeks to maximize its expected profit taking the other firm's output as given. (Do not solve the problem.)

b. For the special case in which p(y, a) = -y+a, solve for the Cournot equilibrium as a function of the expected value of a, denoted .

c. Argue that if > 3k, then firm l's revenue will be greater and it's costs less than firm 2's in Cournot equilibrium, and hence 1's profits will be greater.

d. In light of part c, suppose that the government decides to subsidize firm 2 in the event of a loss in order to ensure that there remain at least two competitors in the industry. This works as follows. As before, the firms first engage in Cournot competition, choosing their output levels to maximize their expected profits. Market demand is then realized. If the market price is below firm 2's break-even price, denoted p(2), the government would raise the price for firm 2 (only) so that it would be able to break even. Assuming firm 2 knows it will be subsidized in the event of a loss, explain how the government intervention would affect its decision problem.

e. Discuss the effects of a and k on the likelihood of the need for government subsidiza tion.

Consider a firm that produces a single output q 0 using inputs z1 0 and z2 0, where the input-requirement set is nonempty, strictly convex, closed, and satisfies weak free disposal. Assume the firm operates in competitive markets. The firm's profit function is (r1, r2, p) = p 4(r1 + r1r2 + r2) , where p > 0 is the price of output, r1 > 0 and r2 > 0 are the input prices, and is a constant parameter. (a) What condition on (if any) is required for (r1, r2, p) to satisfy the price homogeneity property of a valid profit function? Justify your answer. (b) Use (r1, r2, p) to derive the firm's unconditional supply and factor demands. (c) Derive the firm's conditional factor demands and cost function. (d) It is easy to verify that the conditional input demands in (c) are non-increasing in their own price. Show that this result holds in general for a cost function derived from a production possibility set with N inputs and M outputs.

The engineering director of one of the divisions of ICI wanted to see whether the job of design engineer might lend itself to motivational change. His design department faced an increasing work load as more design work for the division's plants was being done internally. The situation was exacerbated by difficulties in recruiting qualified design engineers. People at all levels in the department were being overloaded and development work was suffering. Changes & experimental design Here is the specific program of action devised and implemented for the design engineers. Technical: Experienced engineers were given a completely independent role in running their projects; the less experienced technical men were given as much independence as possible. Occasions on which reference to supervision remained obligatory were reduced to an absolute minimum. The aim was that each engineer should judge for himself when and to what extent he should seek advice. Group managers sponsored occasional investigatory jobs, and engineers were encouraged to become departmental experts in particular fields. They were expected to follow up completed projects as they thought appropriate. When authority to allocate work to outside consultants was given, the engineers were to have the responsibility for making the choice of consultants. Financial: Within a sanctioned project with a budget already agreed on, all arbitrary limits on engineers' authority to spend money were removed. They themselves had to ensure that each "physical intent" was adequately defined and that an appropriate sum was allocated for it in the project budget. That done, no financial ceiling limited their authority to place orders. Managerial: Engineers were involved in the selection and placing of designers (drawing office staff). They manned selection panels, and a recruit would only be allocated to a particular engineer if the latter agreed to accept him. Experienced engineers were asked to make the initial salary recommendations for all their junior staff members. Engineers were allowed to authorize overtime, cash advances, and traveling expenses for staff: Motivational results In summary fashion, these are the deductions that can be drawn from this study: Senior managers saw a change in both the amount and the kind of consultation between experimental group design engineers and their immediate supervisors. The supervisors' routine involvement in projects was much reduced, and they were able to give more emphasis in their work to technical development. Some engineers still needed frequent guidance, others operated independently with confidence. The point is that not all were restricted for the benefit of some; those who could were allowed to find their own feet. The encouragement of specialist expertise among design engineers was a long-term proposition, but progress was made during the trial period. The removal of any financial ceiling on engineers' authority to place orders within an approved project with an agreed budget proved entirely effective. Whereas before the design engineers had to seek approval from as many as three higher levels of management for any expenditure over $5,000a time-consuming process for all concernednow they could, and did, place orders for as much as $500,000 worth of equipment on their own authority. There is no evidence of any poor decision having been taken as a result of the new arrangements. In fact, at the end of the trial period, none of the senior managers concerned wanted to revert to the old system. The changes involving the engineers in supervisory roles were thought by the senior managers to be at least as important as the other changes, possibly more so in the long term. There was no doubt about the design engineers' greater involvement in the selection process, which they fully accepted and appreciated. Significantly, they began to show a greater feel for the constraints involved in selection. The responsibility for overtime and travel claims was fully effective and taken in people's stride. There was no adverse effect from a budgetary control point of view. The involvement of design engineers in making salary recommendations for their staff was considered by the senior managers to have been a major improvement. If anything, engineers tended to be "tighter" in their salary recommendations than more senior management. There was general agreement that the effectiveness of this change would increase over time. Senior managers felt that none of the changes of its own accord had had an overriding effect, nor had all problems been solved. But there was no doubt that the cumulative effect of the changes had been significant and that the direction of solutions to some important problems had been indicated. The changes may have been effective, but in this particular study the important question was whether they had a significant impact on job satisfaction. Some of the motivators introduced into the experimental groups had been in operation in the control group for some time; othersbecause of the specialist nature of the control group's workwere not as important to it as to the experimental groups. The control group had scored high in the initial job reaction survey, while the experimental groups had both achieved very low scores. If the experimental groups' scores did not improve, doubt would inevitably be cast on the relationship between job content and job satisfaction. As it turned out, comparison results of the before and after job reaction surveys revealed that the mean scores of the two experimental groups had increased by 21% and 16%, while those of the control group and all other design engineers in the department had remained static. How this company used job enrichment and how effect employee performance.. critically explain the case above

Consider a simple utility function for two goods, x1 and x2: u = (x1 1) 1 (x2 2) 2 , with 1 > 0, 2 > 0. The parameters 1 and 2 are constants, but they could be positive or negative. (a) Someone suggests that "it would be okay" to assume that 1 + 2 = 1. Yet someone else claims that this restriction may be unrealistic. Which person is correct? Briefly explain your answer. (b) Suppose that the person with the above utility function is struck by lightning. He survives, except now his utility function is u = 1 log(x1 1) + 2 log(x2 2). Will his consumption decisions change as a result of being struck by lightning? Briefly explain your answer. (c) Returning to the original utility function, assume that the consumer faces the budget constraint p1x1 + p2x2 = w, where p1 > 0, p2 > 0 are prices and w > 0 is wealth. Set up the Lagrangean and solve for the two first-order conditions. Then use the budget constraint to solve for the Walrasian demands of both goods. These should be functions of p1, p2, w, 1, 2, 1, and 2. Finally, use your answer to part (a) to simplify your answer. (d) Finally, turn to a more general utility function with L goods: u = Y L k=1 (xk k) k , where k > 0 for all k, which is maximized subject to the budget constraint PL k=1 pkxk = w. Using the same approach as in part (c), derive the Walrasian demands for the L goods. (Hint: first substitute out the Lagrangean multiplier using the first-order conditions for two goods, i and j, then find an expression for pixi and sum that expression over all i, using a normalization similar to the one used in part (c)).

answer all