PS8 - Intermediate Microeconomics, 2008 Problem Set No 8...

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Intermediate Microeconomics, 2008 Problem Set No 8 due: Wednesday, Feb 13; Thursday, Feb 14 Problems Please, read Chapter 6 and 7. These chapters do not contain math, except the derivation of the minimal cost function, c ( q ) . You do not have to read the following subsections: 6.5 Part: "Elasticity of Substitution 6.6 Productivity and Technical Change Please, answer the following questions in the book. For some of them, you are meant to guide you through the chapters: Chapter 6: Questions 1, 4, 5, 10 Chapter 7: Questions 1, 6 Q1) If the production possibilities are given by f ( K;L ) = p KL , and if w = r = 2 , what is the least cost of producing a quantity q = 4 ? Please, derive the general cost function C ( q ) . Try to use both, the substitution method and the MRTS=Price Ratio. Multiple Choice A) produce e¢ ciently. B) maximize sales revenues. D) All of the above. A) cannot produce its current level of output with fewer inputs. B) given the quantity of inputs, cannot produce more output. D) All of the above. M3) Which of the following statements best describes a production function? B) the maximum level of output generated from given levels of inputs C) all levels of output that can be generated from given levels of inputs D) all levels of inputs that could produce a given level of output 1
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period A) lasting about six months. B) lasting about two years. M5) In the long run, all factors of production are A) variable. C) materials. D) rented. M6) The Average Product of Labor is A) the change in total product resulting from an extra unit of labor, holding other factors constant. B) the ratio of output to the number of workers used to produce that output.
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PS8 - Intermediate Microeconomics, 2008 Problem Set No 8...

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