Spring '08 - Final Exam

# Spring '08 - Final Exam - Econ 100B, Final Version A yellow...

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Econ 100B, Final LAST NAME: _________________________ Version A – yellow Tuesday, June 10, 2008 FIRST NAME: _________________________ © 2008, Yuan Emily Tang All rights reserved. STUDENT ID: _________________________ SIGNATURE: __________________________ STUDENT CONSENT FOR RELEASE OF STUDENT INFORMATION (Buckley Waiver) I hereby authorize the UCSD Economics Department to return my graded final examination by placing it in a location accessible to all students in the course. I understand that the return of my examination/research paper as described above may result in disclosure of personally identifiable information, that is not public information as defined in UCSD PPM 160-2, and I hereby consent to the disclosure of such information. Signature ______________________________________________________ You have three hours for the exam. Show all work. We reserve the right to deduct points from answers that are hard to read. There are a total of 160 points possible. No notes, calculators, electronic devices, etc. are allowed. There are two versions of the exam-- if you have the right answer to the wrong version of the exam, we may suspect you of cheating. 1) (6 pts) Draw a graph showing the average total cost, average variable cost, and marginal cost curves for a typical firm. (3 pts) Draw in three prices that result in the firm making positive profits, breaking even, and making negative profits that are less than fixed costs. Label these carefully. (3 pts) 1

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2) Suppose labor and capital are perfect one for one substitutes. (6 pts) a) How would you write the equation for the production function? (1 pts) b) Draw a graph showing a set of isoquants for q=5, q=10, and q=15 for the production function described above. Carefully label all important intercepts. (2 pts) c) Draw isocost lines for C=\$10, C=\$20, and C=\$30 when w=2, and r=1. Carefully label all important intercepts. (2 pts) d) Identify the cost-minimizing input bundle with the input prices given above, for q=10. (1 pt) 2
3) Explain as precisely as you can the relationship between producer surplus and profits. (4 pts) 4) For the following production functions (i) show whether the diminishing marginal product of labor is satisfied, and (ii) demonstrate whether the function has increasing, decreasing, or constant returns to scale (4 pts total) a) 2 1 4 KL q = b) q=min(K, L) 5) Suppose the cost of producing acai smoothies is 50 15 3 3 1 2 3 + + - = Q Q Q C . (6 pts) a) Find marginal cost. (2 pts) b) Find average cost. (2 pts) c) Find the average cost at its minimum value. (2 pts) 3

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6) Say a competitive firm has the short-run cost function C =50” +5 q + q 2 . (8 pts) a) Write down the firms’ profit maximization problem. (2 pts) b) Find the first order condition for the firm’s profit maximization problem. (2 pts) c) Find the profit maximizing output level when P=\$35. (2 pts) d) Does the second order condition for profit maximization hold? (2 pts) 7) Suppose the demand curve for a good is Q =10-P and the supply curve is
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## This note was uploaded on 09/07/2009 for the course ECON Econ 100C taught by Professor Tang during the Spring '09 term at UCSD.

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Spring '08 - Final Exam - Econ 100B, Final Version A yellow...

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