Spring 2008 - Exam 2

Spring 2008 - Exam 2 - ECONOMICS 201 SPRING 2008 EXAM 2...

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1 ECONOMICS 201 SPRING 2008 EXAM 2 Instructions: Please mark your answers clearly. No class notes or other materials are allowed. 100 points total. Each question is worth 5 points with the exception of Question 3 (15 points), Question 4 (15 points), Question 13 (10 points), and Question 14 (10 points). 1. Calculate 1 MP , 2 MP , and MRTS for the following production function: 2 1 2 1 ) , ( X X X X f y β λ α + = = . 2. Characterize the returns to scale (decreasing, constant, or increasing) associated with the following production functions. a. 3 1 2 1 3 2 1 5 . 0 ) , , ( X X X X X X f y + = = , where 1 0 < < . b. 5 . 0 2 ) ( X X f y = = 3. Grandma makes brownies using chocolate (input 1) and sugar (input 2). The input prices of chocolate and sugar are 1 w and 2 w , respectively. Grandma’s production function is 2 1 2 1 ) , ( X kX X X f y = = . (15 points ) a. What is Grandma’s CMP (cost minimization problem)? b.
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Spring 2008 - Exam 2 - ECONOMICS 201 SPRING 2008 EXAM 2...

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