Practice Test - McMaster University Department of Economics...

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McMaster University Department of Economics Spring 2006 Term 1 ECON 2G03/2X03 Page 1 of 7 Midterm Test #2 Monday June 5, 2006 Time: 1:30 – 3:30 (2 hours) Instructor: H Holmes INSTRUCTIONS: Answer all questions in the space provided. Show all work; part marks are available. NAME: _____________________________________________ STUDENT ID#: ______________________________________ MUGSI ID: _________________________________________ TOTAL MARKS AVAILABLE: 55
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2 1. Mathematically prove that a perfectly competitive firm will maximize profit by producing a level of output y such that price equals marginal cost. (5 marks) 2. Demand for a good y is given as y = 250 - .8p. What is the elasticity of demand when p = $100 ? (5 marks)
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3. A perfectly competitive steel producing firm’s short run cost function for tonnes of steel, y, is SRTC = 40y + 2y 2 + 5 Market demand is y = 1000 – 15p. There are 100 identical firms in the industry. a) Derive the market supply curve. (6 marks)
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This note was uploaded on 06/18/2011 for the course ECON 2X03 taught by Professor Jamesbruce during the Fall '10 term at McMaster University.

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Practice Test - McMaster University Department of Economics...

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