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2017+(winter)+final+solutions.pdf - Econ 301 - Final...

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Econ 301 - Final Solutions - Winter Term 1, 2017PART A:Answer only 4 of the questions in this part. Each question is worth 5 marks.1. Consider the production functiony=f(L; K) = 2L12K13:The output good is sold for pricep;the inputs are priced atwfor Labour andrfor Capital. IfK=°K= 8is °xed in the short run,derive the short-run demand for Labour.
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2. What are the characteristics of a Pure Public Good? Use a °gure to show how the derivation ofthe total demand for a pure public good di/ers from the derivation of total demand for a pureprivate good.
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3. Use a graph showing a downward-sloping market demand an upward-sloping private marginalcost and an upward-sloping positive consumption externality to show the di/erences in:
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4. Suppose the cost function of a single °rm in an industry isC(q) = 2q2+ 10. Write an expressionfor the industry average costs when there are2°rms present in the industry, each °rm producingequal output (each producing12the total industry output).Find the range of output levelsa±q±bwhere productive e¢ ciency will be achieved by having only a single °rm producerather than two or more °rms.

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Term
Fall
Professor
CHAPPLE

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