400exam1-10-soln - ECON 400 Winter 2010 ANSWERS FOR FIRST...

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ECON 400 Hartman Winter 2010 ANSWERS FOR FIRST EXAM 1.a. 3/4 1/4 20 pL K w  and 1/4 3/4 pLK r . 1.b. 7/4 3 0 2 pL K , 1/4 3 0 2 pL K , and 2 2 3/2 33 1 22 2 pL K pL K pL K p L K     , so the (sufficient) second order conditions for a maximum are satisfied. 1.c *2 3 / 2 1 / 2 4 Lp w r and 1 / 2 3 / 2 4 Kp w r 1.d *1 / 2 1 / 2 16 Qp w r 1.e. 3 / 2 1 / 2 4 w r , 1 / 2 3 / 2 4 w r , and / 2 1 / 2 16 w r are homogeneous of degree zero in w , r , and p . This does not imply that the production function is homogeneous of degree one. 1.f. 1/ 2 Lr  2.a. 112 1 (, ) 0 pf x x w and 212 2 () 0 pf x x C x 2.b 11 0 pf , 22 0 pf C   , and 11 12 11 22 12 21 22 () 0 pf pf pf pf C p f pf pf C . The (sufficient) second order conditions imply that 11 0 f , but they do not imply that 22 f has a particular sign. 2.c. The exogenous variables are p and 1 w . The price per unit for the second input is not exogenous.
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This note was uploaded on 04/04/2011 for the course ECON 400 taught by Professor Ellis,g during the Spring '08 term at University of Washington.

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400exam1-10-soln - ECON 400 Winter 2010 ANSWERS FOR FIRST...

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