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Unformatted text preview: diagram and label your diagram completely. b. Find conditions that determine Pareto optimal allocations for this economy. c. Find a competitive equilibrium for this economy. 3. Let f ( x 1 ,x 2 ) = x 1 + x 2 be the production function of a rm. Let input prices be w 1 = $2, w 2 = $8, and output price p = $16. Assume input 2 is xed in the short run at x 2 = 100. a. Are the inputs perfect substitutes or perfect complements? b. Find the LR and SR protmaximizing quantities of the inputs at the given prices. Calculate maximum prots. c. What are the LR and SR costminimizing quantities of the inputs that the rm should use to produce y = 90? d. Find the rms LR and SR cost functions. 1...
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This note was uploaded on 12/26/2011 for the course ECON 104B taught by Professor Qin during the Fall '09 term at UCSB.
 Fall '09
 QIN
 Economics

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