Intermediate Microeconomics: A Modern Approach, Seventh Edition

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ECONOMICS 300 QUIZ 5 Spring 2005 PLEDGE:____________________________ NAME:______________________________ 1. (12) Suppose the market for cell phones on campus can be described with the following supply and demand curves. Q D = 2000 – 10P D Q S = 10P S a. What is the equilibrium price and quantity? Suppose the college wants to discourage cell phones on campus and makes all students with a cell phone pay a fee of $10 per phone. b. What is the new equilibrium quantity?
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Unformatted text preview: c. What price will consumers pay? d. What price will suppliers receive? 2. (8) Suppose a production function has the form Q = L .25 K .25 , where Q is the quantity produced, L is the labor input, and K is the capital input. a. What is the technical rate of substitution when L = K = 30? b. Does this production function have increasing, decreasing, or constant returns to scale? Prove your answer using the “t” method....
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