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ECONOMICS 300 FINAL EXAM SPRING 2004 PLEDGE: ____________________________ NAME: ______________________________ 1. (3) In a model of oligopoly: a. There are many firms that are price takers. b. There are many firms that offer heterogeneous product. c. One firm that is a price setter. d. Several firms that interact strategically. 2. (6) Suppose that a firm produces output (Q) using one input (L) using the production function Q = L2and faces a labor wage of wL= 2. Write down the total cost function as a function of output Q.
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23. (3) Provide a definition for the technical rate of substitution. 4. (3) The following production function has _______ returns to scale and a _______ marginal product for x2. Q(x1, x2) = x1.5x2.6. 5. (12) A firm in a competitive market with a production function of Q = L.5, can sell output at the market price of 100, and can hire inputs for a market price of $10. a. Write down the firm’s profit function as a function of the input. b. What is the profit maximizing amount of input to hire?