Quiz 3 Ec21 W2013.pdf - Dartmouth ID(not name Economics 21...

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Page 1 of 8 Dartmouth ID ( not name): ___________________________ Economics 21 Winter 2013 Quiz 3 Instructions: Show all your work! (no credit for correct answers unless the intermediate steps are shown) You can earn 45 points in total. All items (including the axes) in a graph need to be labeled to get full credit There are two pages at the end in case you need additional space Do not remove the staple or tear out pages Books, notes, your own calculators or cell phones are not allowed. You are only allowed to use the calculator provided by me. Good luck!
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Page 2 of 8 1. Short Answer Questions (21 points) a. Define “sunk cost” and explain its relevance for economic decisions. b. Define the “Law of Diminishing Marginal Returns”. c. What is a “price support”? d. What are the five conditions for “perfect competition”? (1) (2) (3) (4) (5)
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Page 3 of 8 e. For each of the functions below circle whether it could be correct or is definitely wrong, and for the ones marked wrong, explain why. All notation is standard, so: K: units of capital; L: units of labor: Q: output; p: price of output; w: wage rate; r: rental rate of capital; C: total cost. The function Max(a, b) is equal to a if a b, and is equal to b if b a. The ln function denotes the natural log.
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