HW_05_REV - Economics 11, Winter 2010; HW Assignment #5 To...

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Unformatted text preview: Economics 11, Winter 2010; HW Assignment #5 To be Completed before Midterm Exam Feb 11 – Not to be Col- lected 1. For the quasi-linear utility function U ( x,y ) = x + y 1 / 2 find the elasticity of demand for x as a function of p y . 2. Consider the Cobb-Douglas production function q = k 1 / 4 ` 3 / 4 Input prices are p k = 10 ,p ` = 40. (a) Find the cheapest plan for producing q units of output and the cost C ( q ) of this plan. (Use whatever shortcuts you like but explain carefully.) (b) Does cost display i) increasing cost to scale, ii) constant cost to scale, iii) decreasing cost to scale, or iv) none of these? Explain. 3. Consider the Cobb-Douglas production function q = k` 3 Input prices are p k = 10 ,p ` = 40. (a) Find the cheapest plan for producing q units of output and the cost C ( q ) of this plan. (Use whatever shortcuts you like but explain carefully.) (b) Does cost display i) increasing cost to scale, ii) constant cost to scale, iii) decreasing cost to scale, or iv) none of these? Explain. (c) Compare your answers to Problem 2(a), 2(b) and explain. 1 4. Decorator glass bowls are made using capital (machines) and labor; k hours of machine time and ` hours of labor produce q = h k 1 / 3 + ` 1 / 3 i 2 glass bowls. The price of machine time is p k = 100 and the price of labor (the wage rate) is 20....
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This note was uploaded on 04/01/2010 for the course ECON 180052110 taught by Professor Mcdevitt during the Winter '09 term at UCLA.

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HW_05_REV - Economics 11, Winter 2010; HW Assignment #5 To...

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