midterm1

Intermediate Microeconomics: A Modern Approach, Seventh Edition

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Unformatted text preview: 14.04 Midterm Exam 1 Prof. Sergei Izmalkov Wed, Oct 1 , y t ) for t = 1 , . . . , N be a set of observed choices that satisfy WAPM, let Y I and Y O be the inner and outer bounds to the true production set Y . Let π + ( p ) , π ( p ) , and π − ( p ) be pro f t functions associated with Y O , Y , and Y I correspondingly. (a) Show that for all p , π + ( p ) ≥ π ( p ) ≥ π − ( p ) . (b) If for all p , π + ( p ) = π ( p ) = π − ( p ) , what you can say about Y O , Y , and Y I ? Provide formal arguments. (c) For ( p 1 , y 1 ) = ([1 , 1] , [ − 3 , 4]) , and ( p 2 , y 2 ) = ([2 , 1] , [ − 1 , 2]) construct Y I and Y O (graphically). What can you say about returns to scale in the technology these observations are coming from? Hint: think y = ( − x, y ) . t 1. Let ( p 2. Given the production function f ( x 1 , x 2 , x 3 ) = x 1 min { x 2 , x 3 } a striction you have to impose on a ?...
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This homework help was uploaded on 02/01/2008 for the course ECON 14.04 taught by Professor Izmalkov during the Fall '06 term at MIT.

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