401_501mdt - constraint u ( x 1 , x 2 ) = x 1 + ln( x 2 ) p...

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Economics 401/501 Midterm Examination February 15, 2007 11:45 to 13:00 CL 215 Answer one question from each part. Part A 1) State and prove Shephard’s lemma and show that the cost function is concave in input prices. 2) State and prove Hotelling’s lemma and show that the pro f tfunct ionisconvexinits arguments. Part B
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Unformatted text preview: constraint u ( x 1 , x 2 ) = x 1 + ln( x 2 ) p 1 x 1 + p 2 x 2 y how much income does this person need to compensate her for a doubling of the price of good 2? 4) In the equation below what value of makes e an expenditure function? e ( p 1 , p 2 , u ) = ( p 1 p 2 ) u What is this consumers utility function? 1...
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