ARME 608First ExamFall 19961. Given the production function y = 2x±and the price of x as r, derive and graph thetotal cost, marginal cost, and average cost functions. What happens to these threefunctions if the price of x increases?2. Is the production function y xx xx=+121222,homogeneous? Is it homothetic?3. Is the following sentence true or false (show): If a firm is maximizing profit, then therate of change of output with respect to a input price change is equal to the rate of
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