ARE 100 final.w09

ARE 100 final.w09 - University of California, Davis...

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University of California, Davis Department of Agricultural and Resource Economics ARE 100B Winter 2009 Dr. Larson N a m e : Final Exam –March 20, 2009 The exam is worth 200 points; values of individual problems are listed in parentheses. Read each question carefully, be as complete as you can, and put down as much of your thought process as possible for each question. But answer the question asked-- don't put down things that aren't asked for. You should draw graphs where appropriate (and where asked!) to guide your analysis and help show your reasoning. Good luck!
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ARE 100B Final Exam 1 1. (15 points) An annuity pays $3,000 per year in perpetuity. (7 pts)(a) If the discount rate is 5%, what should the value of this asset be? (8 pts)(b) If the discount rate falls, what happens to the asset's price? Explain briefly. (You don't need a calculation here.)
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ARE 100B Final Exam 2 2. (25 points) You run a bottling company that has the local monopoly on Jolt Cola. You have two plants, each of which has an upward-sloping marginal cost and is operating to supply this market. Define your profit maximization problem and explain (using both algebra and graph) the (first-order) conditions that determine (a) how much is supplied by each plant; and (b) how much soda is supplied to the market overall.
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This note was uploaded on 10/04/2011 for the course ARE 100B 100B taught by Professor Larson during the Spring '10 term at UC Davis.

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ARE 100 final.w09 - University of California, Davis...

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