fin08 - F E 500, 8:00 December 18, 2008 Name: E-mail:...

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Unformatted text preview: F E 500, 8:00 December 18, 2008 Name: E-mail: @uiuc.edu All questions must be answered on this test form! For each question you must show your work and (or) provide a clear argument. If you need scratch paper, use the last two pages or the back of the form. Question 1 Suppose there are two goods. If p 2 = 1 then the demand for good 1 is given by x ( p 1 , 1 , w ) = 20 − 4 p 1 , for p 1 ≤ 5. Then a utility function that describes these preferences is 10 points u ( x 1 , x 2 ) = 1 Question 2 A firm’s production function is f ( z 1 , z 2 ) = √ z 1 + 2 z 2 . Let w 1 , w 2 denote the factor prices and p the price of the output. Then the firm’s profit function is π ( w 1 , w 2 , p ) = 10 points 2 Question 3 Suppose that a firm can operate at two locations, using one input at each location (the input also has the same price at the two locations). The production functions at the two locations are given by f ( z ) and g ( z ). Clearly, f (0) = g (0) = 0....
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This note was uploaded on 05/23/2011 for the course ECON 500 taught by Professor Staff during the Spring '08 term at University of Illinois, Urbana Champaign.

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fin08 - F E 500, 8:00 December 18, 2008 Name: E-mail:...

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