This preview shows page 1. Sign up to view the full content.
ECON 331 Final Exam Spring 1998 (a)
Name:
Instructions:
The exam is worth 60 marks. All ques
tions are equally weighted. You are to do all questions.
Answer all questions in the exam booklets provided.
Time allowed is 3 hours.
Youmusthandintheexam
with your booklets.
1. A competitive frim has the following production
function,
q
=60
K
+34
L
−
4
KL
−
6
K
2
−
3
L
2
.I
fpi
s
the market price, w is the wage, and r is the rental
rate of captital, then:
(a) Write down the
f
rm’s pro
f
t function.
(b) solve for the optimal K and L
(c) Use the Hessian to check the second order con
ditions
2. A consumer with the following utility function
u
=
xy
2
faces two constraints. The
f
rst is the normal
budget constraint where he has $100 and the price
of x and y are both $1. Also, the consumer has been
issued 120 ration coupons by the government which
he must use whenever he buys either x or y. It takes
This is the end of the preview. Sign up
to
access the rest of the document.
 Spring '09
 KelvinKwainger

Click to edit the document details