ECON410MidtermPractice

ECON410MidtermPractice - Multiple Choice(4 points each 1...

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Unformatted text preview: Multiple Choice (4 points each) 1. Assume an individual has preferences of the form 1/4 1 2 1 2 , ) ln( ) ( U x x x x = + . Which of the following are his demand functions? A. 4/3 1/3 2 2 1 2 4 1 2 1 ; 4 4 ( ) ( ) p p I x x p p p = =- B. 4/3 1/3 1 1 2 4 1 1 2 2 ; 4 4 ( ) ( ) p p I x x p p p = =- C. 1/3 4/3 2 2 4 2 1 1 1 2 ; 4 4 ( ) ( ) p p I x x p p p =- = D. 1/3 4/3 1 4 1 2 1 1 2 2 4 4 ; ( ) ( ) p p I x x p p p =- = 2. Assume a firm’s production technology is represented by the following isoquants. Which of the following statements is true? A. The production technology displays increasing returns to scale. B. The production technology displays decreasing returns to scale. C. The production technology displays constant returns to scale. 3. Some athletes insure their bodies to protect against the possibility of getting injured and not being able to make a living. Consider an athlete who, if healthy, will earn $100 million. If the athlete becomes injured, she will earn $0. This athlete has a vNM utility function of 1/2 ( ) u x x = , where x is money in millions of dollars (for instance, the individual’s vNM utility for $9 million is 3). dollars (for instance, the individual’s vNM utility for $9 million is 3)....
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This note was uploaded on 01/05/2012 for the course ECON 410 taught by Professor Codrin during the Fall '07 term at UNC.

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ECON410MidtermPractice - Multiple Choice(4 points each 1...

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