Microeconomics II - Problem Set, Evaluación final

Profesores Rosina Rodrı́guez Olivera y Martin Leites

2025

1 Equilibrio General
(Adaptado de MCWG).
Suponga que existen dos productos y dos factores productivos (z1 , z2 ). Las funciones
de producción de la empresas 1 y 2 son respectivamente F1 (z11 .z21 ) = (z11 )2/3 + (z21 )1/3 y
F2 (z12 .z22 ) = (z12 )1/3 + (z22 )3/2 .
El precio internacional de los bienes P=(1,1) es exógeno (viene dado). Las firmas son
tomadoras de precios y maximizan beneficios. El total de factores disponibles es z = (z1 , z2 ).
Los consumidores no tienen gustos por consumir los factores de producción.

i. Demuestre que las funciones de producción tiene rendimientos constantes a escala e iden-
tifique que firma es más intensiva en el uso de cada factor.

ii. Derive las funciones de isocostos y de costos unitarios de cada firma.

ii. Identifique el equilibrio en el mercado de factores (y sus precios) para posibles valores de
z = (z1 , z2 ).

iv. ¿Existe alguna dotación de factores que puede conducir a que esta economı́a se especialice
en la producción de un único bien?

v. Realice un ejercicio de estática comparativa describiendo cómo responde la situacion de

equilibrio ante un encarecimiento del bien 1.

2 Principal-Agent
Consider an agency relationship in which the principal contracts with the agent. The monetary
result of the relationship depends on both agent’s effort and state of nature as follows:

1
 θ1 θ2 θ3
e=2 x = 60 x = 60 x = 30
e=1 x = 30 x = 60 x = 30
Both parties believe that the probability of each state is one third. The payoff functions
√
of the principal and the agent are given by B(x, w) = x − w and U (x, w) = w − e2 , where
x is the monetary result of the relationship and w is the wage received by the agent. Suppose
that the agent will only accept the contract if he obtains an expected utility level of at least 1
and that the principal maximizes expected payoffs.

i. (15 points) What would be the effort and the wage contract offered by the principal if
effort is contractible?

ii. (25 points) What is the contract (wπ , eL ) that implements low effort when effort is not
contractible? What is the contract (wπ , eH ) that implements high effort when effort is
not contractible?

iii. (10 points) Which effort level does the principal prefer when effort is not observable?
Discuss.

3 Oligopoly
Agent 1 lives in town A, and agent 2 lives in town B. Tomorrow, a storm will hit either
town A or town B, but not both towns. The probability that the storm hits town A is
2
3
. The state where town A is hit is denoted by A, and the state where town B is hit is
denoted by B.
Each agent has a grain crop yield of 1 if their town is not hit by the storm, and 0 if it is
hit. They can trade today in contingent goods—promises of grain tomorrow. There are
two goods: a promise of grain in state A and a promise of grain in state B. The utility
√
of consuming x units of grain for each agent is x.

(a) Find the equilibrium prices and the final demands of both agents. Explain your
answer carefully.

(b) Suppose, just for this subquestion, that there was a third agent, who was risk-neutral
and who had a very large endowment of grain in both states. Would the presence
of this agent affect the final demands of the first two agents? Would they be better
off? Explain your answer carefully.

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 (c) Now, after the two agents have traded, but before the storm hits, agent 1 receives
a perfectly informative signal about the storm. After this new information, markets
reopen and agents can trade again. Find the prices and the final demands of both
agents in the Rational Expectations Equilibrium. Explain your answer carefully.

(d) How does this equilibrium compare to the one in question 3? Is agent 1 better off,
worse off, or indifferent? What about agent 2? Explain.

(e) Suppose instead agent 1 received the signal before any trade occurred. After the
signal, agents can trade as before. Find the prices and final demands in the Rational
Expectations Equilibrium. Explain.

(f) Does agent 1 prefer the signal to arrive before or after trade? What about agent 2?

4 Job Market Signalling

Consider a job market signaling game like the one studied in class, but with the addition of a
middle type of worker between the high and low types. While the high-type’s cost of education
is 4 and the low-type’s cost is 7, the middle-type’s cost is 5. Similarly, while the high-type’s
productivity in a managerial position is 10 and the low-type’s managerial productivity is 0,
the middle-type’s managerial productivity is 5; all types have clerical productivity of 4. The
low-type has probability 12 , while the middle and high-types each have probability 41 . Now the
extensive form of the game is as follows (the worker’s payoffs are listed first):

The labels on this extensive form have the following meanings:

• WH, WM, WL: Worker High, Worker Middle, Worker Low

• NH, NM, NL: No education High, No education Middle, No education Low

• EH, EM, EL: Education High, Education Middle, Education Low

• MN, CN: Managerial None, Clerical None

• ME, CE: Managerial Educated, Clerical Educated

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 Find all pure-strategy equilibria. Be sure to specify the entire range of beliefs that can
support each equilibrium strategy profile. Also be sure that you prove that you have found all
such equilibria. (Hint: Since the firm has only four pure strategies, consider each one in turn.)