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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 prot-maximizing quantities of the inputs at the given prices. Calculate maximum prots. c. What are the LR and SR cost-minimizing 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