### Sample mid-term exam paper

**University of Bologna**

**School of Economics, Management and Statistics**

**Academic Year 2017-2018**

**Economic Analysis Paper - 1 ^{st} Mid-term Exam 3.11.2017**

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**Part One**

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Students must comment **one** of the two following passages:

- ‘The fact […] that many complex systems have a nearly decomposable hierarchic structure is a major facilitating factor enabling us to understand, to describe, and even to «see» such systems and their parts’ (Simon)
- ‘Probably the most appealing of the possible postulates leading to uniqueness [of the market-clearing, “equilibrium”, price vector
**p**] is Diagonal Dominance. This condition, if fulfilled in fact, would give a general equilibrium system a kind of Marshallian flavor, inasmuch as the properties of the demand and supply curves in the plane of the price of the good in question and the quantity supplied or demanded are in some sense the “dominating” properties. It means that partial analysis may not make serious mistakes’ (Arrow and Hahn).

**Part Two**

Students must answer **two** of the three following questions:

- Illustrate and discuss the distinction between the ‘pure preference’ paradigm and the ‘pure production’ paradigm in the process of complexity reduction that leads to the construction of economic theory.
- ‘Consider the two following choices:
*{x}*=*C {x, y},**{y} = C {x, y, z*} .This

- Given the subset
*S’*of the possible outcomes in*S*(*S’*⊆*S*) that are associated with a “satisfactory” pay-off*V(s) = 1,*discuss in which way a boundedly rational agent may be able to make a “satisficing choice” (that is, a choice leading to an outcome*s*∈*S*’) .

Published on: March 19 2019