What This Document Is
This is a problem set for an introductory economics course (ECON 2) at the University of California, Berkeley. Specifically, it’s designed to test your understanding of core concepts in general equilibrium theory and welfare economics, building upon foundational lecture material. It requires applying theoretical knowledge to solve analytical problems, and demonstrates the practical application of economic models.
Why This Document Matters
This problem set is crucial for students enrolled in the course who are aiming to solidify their grasp of advanced microeconomic principles. Successfully completing these problems will demonstrate your ability to model economic scenarios, derive equilibrium conditions, and analyze welfare implications. It’s best used for practice *after* reviewing relevant lecture notes and readings, and is an excellent way to prepare for exams and further study.
Topics Covered
* Competitive Equilibrium with Non-Standard Preferences
* Pareto Optimality and Welfare Theorems
* Offer Curves and Equilibrium Determination
* Equilibrium Analysis with “Bad” Goods
* Walrasian Equilibrium and its Properties
* The Role of Assumptions in Economic Modeling
* Transfers and Equilibrium Adjustments
What This Document Provides
* A series of analytical problems designed to challenge your understanding of general equilibrium.
* Scenarios involving utility functions with specific characteristics (e.g., kinks, minimum functions).
* Opportunities to practice deriving excess demand functions and identifying equilibrium allocations.
* Exercises requiring graphical analysis using Edgeworth boxes to illustrate key concepts.
* Problems exploring the impact of endowments and taxes on market outcomes.
* A framework for evaluating the conditions under which Walrasian equilibria are Pareto optimal.
