Quiz 3 Ec21 S2016.pdf

Quiz 3 Ec21 S2016.pdf - Dartmouth ID(not name Economics 21...

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Page 1 of 8 Dartmouth ID ( not name): ___________________________ Economics 21 Spring 2016 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 one extra page 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 (13 points) a. Define “decreasing returns to scale” b. What are the arguments of a Social Welfare Function, and what is a Social Welfare function used for? c. Give the First Fundamental Theorem of Welfare Economics. d. Explain why, in a perfectly competitive market, the long-run supply curve of a product is upward sloping if the supply of the factor inputs is not perfectly elastic.
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Page 3 of 8 2. Labor Rules (10 points) A government dominated by Democratic Socialists passes a law that requires all companies to employ at least 100 hours of labor per week. After this law is passed, the following four companies (of which each has a different
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