Comprehensive Exam Questions for Engineering Economy | ISYE 3025, Exams of Systems Engineering

Download Comprehensive Exam Questions for Engineering Economy | ISYE 3025 and more Exams Systems Engineering in PDF only on Docsity! EDA Comprehensive Exam Questions 1. (25 points) Consider the following problem: a management must decide what wages wi to pay to a set of order-pickers in a warehouse. However, the production function is given by the level of effort ei of the workers (which cannot be directly monitored by the manager): ∑ = = N i ieV 1 and suppose that the utility of order picker i is given by Ui=wi-(ei)2. Answer the following: a. If order-pickers can collude and monitor each other’s effort, calculate the optimal effort level that should be exerted by each scientist. b. Suppose that scientists cannot collude. What is the Nash equilibrium effort level exerted by each order-picker? c. Would an increase in the number of order-pickers intensify the free-rider effect? Prove your answer. 2. (25 points) Answer the following. a. What does it mean for an auction to be efficient? Give an example of an efficient auction. b. State (in your own words) the revenue equivalence theorem and discuss its usefulness. c. You are bidding in a first-price sealed bid auction. You value the item $600. There are 30 other bidders, and you know that their private valuations are uniformly distributed between $0 and $1000. What should your bid be?