Solution to Midterm -- Microeconomics F2007

★★★ Solution to Midterm Examination (International Business, WUCL) ★★★
Fall 2007 Instructor: 衛忠欣 (Jong-Shin Wei)
個體經濟學(Microeconomics) (07)342-6031 ext.6222
93001@mail.wtuc.edu.tw http://www.wtuc.edu.tw/ib

November 13, 2007
Open books/notes exam. 105 points in 60 minutes; absolutely no talking nor borrowing items during exams. 可使用自己的資料、字典或翻譯機。行動電話若響起，該生扣十分、以強調基本禮貌。3:10 pm ~ 4:10 pm, Wednesday, November 14, 2007. Watch your time and good luck! 務必工整扼要、依序作答。Watch your time and have fun!
Part One: Multiple choice questions. [By multiple choice in an English-speaking academic environment, we mean that you must choose the most appropriate one from 4 alternatives. I did encounter some less intelligent folks who confused it with “複選題”. 依慣例，答錯不倒扣！平均每題不該超過2分鐘。] 75 points
1. An economy consists of three people: Andy, Bill, and Cindy. There are two consumption goods. Andy cares about good one only. Bill cares about both goods but prefers consuming the same amount of both goods to consuming at the unequal amount. Cindy has no preferences over those goods but only wishes Andy to be happy.
(A) The utility function of Andy can be U(x, y) := x2;
(B) The utility function of Andy can be U(x, y) := x + y;
(C) The utility function of Bill can be U(x, y) := Max{x, y};
(D) The utility function of Cindy can be U(x, y) := x - y.
Ans: A. [Recall lectures]
2. [continued from question 1] If each consumer has 10 dollars in budget. Prices are given as P1 = 1 and P2 = 2.
(A) The optimal consumption decision for Andy is (0, 10);
(B) The optimal consumption decision for Bill is (5, 5);
(C) The optimal consumption decision for Bill is (10/3, 10/3);
(D) None of the above is correct.
Ans: C. [Solving x + 2y = 10 and x = y yields (10/3, 10/3).]
3. [continued from question 1] Suppose that Andy and Bill do not know whether Cindy cares about Andy or cares about Bill. Of course, Cindy knows her own preferences. How will Cindy signal?
(A) Yelling “I love you” to Andy;
(B) Purchasing 10 units of good one;
(C) Purchasing nothing at all;
(D) Sitting next to Andy.
*Ans: B. [Recall lectures. 教師的題庫 (test bank) 是不會有這種靈活題目的。]
4. [continued from question 2] What do we know about budget lines?
(A) All three consumers have the same budget line;
(B) Andy’s budget line is given by 2x + y = 10;
(C) Bill’s budget line is given by 2C1 + C2 = 10;
(D) Cindy’s budget line is given by x + 2y ≦ 10.
Ans: A. [Recall lectures]
5. Which of the following is not the reason for male toads (in Frank's text) to croak?
(A) Female toads can not see how big male toads are;
(B) Other male toads can not see how big male toads are;
(C) Croaking is a signal telling others the size of the toad;
(D) Toads must croak before staring a fight.
Ans: D. [Recall lectures]
6. Frank’s toad story illustrates
(A) the problem with information asymmetry on the part of all female toads only;
(B) the problem with information asymmetry on the part of all male toads only;
(C) the problem with information asymmetry on all toads;
(D) the problem with market failure.
Ans: C. [Why not (D)? Since there is no market for toad-mating, we cannot talk about market failure per se.]
7. Examples of cheap talk do not include
(A) “Untie me and let me go home, please. I won't report to the police. You already have my nude photos;”
(B) “I always practice safe sex. Let's get down to it;”
(C) “I will kill myself if I ever lie to you;”
(D) “If you study harder, you will pass the course.”
Ans: A. [Recall lectures]
8. [Credit: Inspirations came from a conversation with Claire, Linda, and Peggy.] 如果學務處要知道「那一個系學會完全沒有投入文藻週活動」，應該如何？
(A)在校園隨機抽問300位學生；
(B)在e-learning platform隨機匿名抽問300位學生；
(C)發電子郵件請教所有的系主任；
(D)召開檢討會，要求每位系學會會長必須出席。
Ans: D. [Common sense]
9. Which of the following meets the “costly-to-fake principle” but fails the “full-disclosure principle”?
(A) Having an expensive treat on the first date to show how serious you are;
(B) Marrying your boyfriend to prove that you love him dearly;
(C) Duplicating your car key and giving it to your boyfriend to show your trust;
(D)買情人裝給男朋友穿。
*Ans: B.
10. Which of the following meets the “full-disclosure principle” but fails the “costly-to-fake principle”?
(A) 在大腿以刺青刻上女友的名字;
(B) 自願幫老師天天買午餐;
(C) 借筆記給女朋友影印;
(D) 買情人裝給男朋友穿。
Ans: C.
11. 阿土伯打電話給總經理：「別的應試者，都面試至少10分鐘。我家寶貝女兒阿花，不到七分鐘就出來啦。搞什麼鬼嘛！」總經理該如何回應？
(A) 面試提前結束，是人事主管在釋放訊號；
(B) 對不起，我們程序失當，下週六重考一次；
(C) 如果問答順暢，用不到10分鐘；
(D) 是您家小姐在釋放訊號啊。
Ans: C. [啟示：不要無限上綱，大小事情都硬套上『訊號』。]
12. Which of the following does not make sense?
(A) 台灣大學的教授，較不會在授課大綱上，註明自己擁有博士學位；
(B) 排名末尾的學校的教授，如果有博士學位，多會註明自己擁有博士學位；
(C) 大學校長在報紙投書時，應該註明自己擁有博士學位；
(D) 高中生參加全國科學展，不該陳列準備階段的生活照。
Ans: C. [Slide no.16, lecture 2]
13. Often college professors are working hard to get papers published. This has little or nothing to do with the fact that
(A) they are signaling their quality;
(B) they simply cannot teach well;
(C) it is hard to evaluate teaching effectiveness;
(D) college administrators let the external peer review help them evaluate professors.
Ans: B.
14. 假設全班同學都無法完成 Assignment One，教師仍然要區分優劣作品。妳/你應該
(A) find some native speaker to polish your letters before you turn it in;
(B) provide the original communication evidence as soon as possible;
(C) open a Word document and make up the reply;
(D) write a nasty letter to those who have not responded.
Ans: B.
15. Let your budget line be 3x + 2y = 10 and your utility function is U(x, y) = (x + y)2.
(A) Your preferences cannot be of the perfect substitution nature;
(B) You may not act as a price-taker;
(C) Your marginal rate of substitution between good X and good Y is 1.5;
(D) Your will buy 5 units of good Y.
Ans: D. [Recall lectures]

Part Two: Analytical or short-essay questions. [注意字體工整、邏輯順暢與不要出現錯別字或注音(與火星文)！如果字跡難以辨認，視同未答。畫蛇添足、答非所問、不知所云、自曝其短，將不利得分。教師也有權公告具有特色之作答。] 30 points
16. [5 points]
Recall what you wrote on Assignment 2 (about your profile). Carefully point out where in that assignment you “signaled your characteristics (or merits)”. Explain briefly. Of course, you will get zero if you have not turned in your Assignment 2.

17. [5 points]
Recall the on-line auction experiment we conducted on Nov. 7, 2007. Suppose that five people (called bidders) participate in an English auction. Their privately known reservation prices (as potential buyers) are: 100 (dollars) for bidder 1, 150 for bidder 2, 200 for bidder 3, 200 for bidder 4, and 250 for bidder 5. The auctioneer announces (1) each bid incremental must be 5, 10, 15, …. (i.e., 5的倍數) and (2) the auction starts at 50. What follows is the log of bidding process.
Bidder 2: 60
Bidder 1: 65
Bidder 2: 70
Bidder 3: 75
Bidder 4: 90
Bidder 2: 100
Bidder 5: 180
Bidder 4: 190
Bidder 3: 195
Bidder 4: 200
Bidder 5: 220
The winner is bidder 5.
Based on the above information, find the most intelligent (and rational) bidder and the least intelligent one. Briefly explain why you make such choice.
Ans: Bidder 1 is not aggressive. Bidder 2 bids quite rationally. Bidders 3 and 4 are doing fine but bidder 3 does not seem to closely follow the bidding game for some time. Finally bidder 5 truly will regret because that he could have bid 205 to win the auction. The difference between 220 and 205 (i.e., 15) is referred to as the winner’s curse in the literature. To sum up, we can say that bidders 2 and 4 are the most intelligent (and rational) bidders; bidder 5 is the least intelligent bidder.

18. [20 points] 簡答題 [Hint: Think like an economist.]
(i)就經濟學的觀點，學校該如何確定學生認真填答教學評量？如何找出真正的好老師，而不是「對學生好的老師」？
Ans: Generally speaking, students have little incentive to seriously answer those questionnaires. Cannot blame them as they barely have any idea about what this task is for, let alone getting access to those evaluation results. [現在學校辦的大小活動，還有一堆炒冷飯的碩、博士生，也喜歡一窩蜂的要求滿意度問卷，既無填答誘因，也無法保證彙整過程的公信力。我自己也常逆向操作或亂填，測試主事者的智慧。] 教務主管直接了解每位教師的授課情形，成本確實太高。依賴學生來評量，確有其重要性。因為「教師音量大小」、「教師是否上課遲到」、「教師是否親自監考」，這一類的正確資訊，教務單位很容易取得。只要在教學評量問卷上，分散置入此類問題，再對照真實資訊，系統即可篩選掉「情緒性、報復性的填答者」。當然，有作為的資教或電算中心，還可以藉由系統設計，追蹤每位學生在每門課的期中考成績、給教師的評量、期末考成績。分析學生在不同年級(time series)、不同課程(cross section)、系列課程之學習情況與主觀感受。學生如果知道有此機制，應該會較認真填答。耳朵靈光的資深教師，不難有以下的經驗：一位同學每學期都會向不同老師私下表示，這是我遇到最難的課！This is the toughest course I have ever had! 如何找出真正的好老師？除非落實教學實況的透明化、學校能夠區分用功的學生的回饋與打混的學生之意見、認真的學生或是傑出校友能夠建言，現階段由教師的研究績效(假外界專家之手，即同儕評鑑)來評比，也算是次佳解之一吧。

(ii)學校為何不直接公告每位專、兼任教師的教學評量，來幫助學生辨識真正的好老師、也可提供選課參考？
Ans: 頭腦清楚的學校主事者，應該知道無法確保學生認真填答，所以不能單以教學評量，來排序教師的教學表現、甚至開鍘。但是，為了應付(或配合)家長的要求、立委的指責、輿論的關愛，不得不行禮如儀，還要依此辦理優良教師選拔等活動。更諷刺的是，主事者以尊重隱私為由，讓學生完全不知評量結果，當然缺乏認真填寫的誘因。主管教務者，與教師們正處於一種「策略性模糊」的均衡狀態。如果直接公告每位專、兼任教師的教學評量，勢必將喚醒不少獅虎，擴大教師對「評量教學績效」之檢討呼聲。當然，教師以easy grade『換取』較佳的評量分數、爭取選課人數，此類問題，勢必會擴散、加深。
[Any resolution? 如果大多數教師，直接把自己的教學評量，大剌剌地張貼於網頁，會有何衝擊效應呢？]

(iii)一門「教師認真授課、學生嚴肅學習」的課程，該如何釋放訊號，以便與「教師敷衍打混、學生迷糊過關」的課程，有所區隔？
Ans: If the former group is relatively small but not negligible as compared with the latter group, then surely I will recommend professors in the former group to try their best to make all lecture notes, exams and solutions available to the general public, which is consistent to the signaling theory. They can also design courses such that shirking students who got easy grades from courses belonging to the latter group will have a hard time to catch up. Lessons will be well taken. Tough grading is fine as long as those who do relatively well will receive good grades from those serious professors. However, if the former is overwhelmingly dominated by the latter, we have the doomsday.

(iv)假設一位高職生面臨兩所學校，很難決定究竟應申請那一所。其中一所學校在網頁標榜：本校教師的教學評量平均值為4.2 (依據5分量表；5分係最佳)；另一所學校則不提此類資料。這位高職生該選那一所？何故？
Ans: Of course, it is the latter! To the best of my knowledge, nowadays most universities and colleges alike claim that the average teaching evaluation statistics is above 4 (on the 5-point scale). [Ironically, when the Ministry of Education ranks or accredits universities, this data plays no role for obvious reason.] If University A publicizes such information, it does not really work as signaling. Instead, it might very likely lure people to think: “Is the procedure of obtaining such data transparent and unbiased?” or “Will having 4.5 in a mediocre place be as good as getting 3.5 in some better school?” This is why you will never see elite schools such as MIT, Stanford, Chicago, and Yale brag that their average teaching evaluation statistics are high. Too bad that many university administrators here never open their mind to learn.

(放棄智慧財產權；歡迎全貌下載流傳。)