RIFT VALLEY UNIVERSITY COLLEGE

DEPARTMENT OF DISTANCE AND CONTINUING EDUCATION

0221 -11 68 79

1715

WORK SHEET FOR MICRO ECONOMICS THEORY II (Econ-212)

Name_________________________
Id. No________________________
Department __________________
P.O. Box______________________
Region (Zone)_________________
Centre _______________________
This work sheet is prepared for you to do by your own. It carries 30%. The worksheet
should be completed and mailed to the Office of Distance and Continuing Education,
Adama Head Office.
Do not try to complete the worksheet until you have covered all the lessons and exercises
in the course material.
If you have any questions in the module that you have not been able to understand,
please state on a separate sheet of paper and attach it to this worksheet, otherwise, your
tutor will clarify them for you.
After completing this worksheet, be sure that you write your Name, ID. No, Address on
the first page and Your Name and ID. No only on the other pages.

Part I: Define the Following Terms Using Graphs and Mathmatical Expressions
(1 mark each)
1. Utility
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2. Util
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3. Iso cost
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4. Indiffernce curve
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5. Budeget line
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6. Monopolist
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7. Kiked demand cure
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8. Social Exploitation
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9. Profit
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10. Perfect competation market
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Part II: Explain the Following Questions Brefly and the point. ( 3 pts each)
1. Prove the profit maximization of the consumer i.e mu=p, according to cardinalist
using mathmatical derivation.
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2. Expain the profit maximation condition of multi plant monoplist?
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3. Prove that the slope of indiffernce curve is equalt to budget line
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4. Show the short run profit condition of perfect competetion market.
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Part III: Calculate the Following Questions by Using hte Necessary Steps
(4 pts each)
1) A monopolist is deciding how to allocate output between two markets that are
separated geographically. Demands for the two markets are P1 = 15 Q1 and
P2 =
25 2Q2. The monopolists TC is C = 5 + 3(Q 1+Q2). What are price, output, profits,
and MR if:
a) The monopolist can price discriminate?
b) The law forbids (prohibits) charging different prices in the two regions?
2. Suppose you are the manager of a watch-making firm operating in a competitive
market. Your cost of production is given by C = 100 + Q 2, where Q is the level of
output and C is total cost.
a) If the price of watches is birr 60, how many watches should you produce to
maximize profit?
b) What will your profit level be?
c) At what minimum price will you produce a positive output?