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.
You must hand in the exam
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
. If p is
the market price, w is the wage, and r is the rental
rate of captital, then:
(a) Write down the
fi
rm’s pro
fi
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
fi
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
2 coupons to buy an x and 1 coupon to buy a y (for
example: to buy 3 units of x it would require $3 and
6 coupons.
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 Spring '09
 KelvinKwainger
 Economics, following utility function, FINAL EXAM SPRING, carefully labeled graph, cournot duopoly quantities

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