DiagnosticTest06-1

# DiagnosticTest06-1 - John Riley 22 September 2006 Econ 200...

This preview shows pages 1–2. Sign up to view the full content.

This preview has intentionally blurred sections. Sign up to view the full version.

View Full Document
This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: John Riley 22 September 2006 Econ 200 Diagnostic Test Summer 2006 Time allowed: ninety (90) minutes. Answer three questions only. You must answer question 4 and any two of the first three questions. 1. Profit maximization A firm sells two products. The cost of producing 1 2 ( , ) q q q = is 2 1 2 ( ) ( 2 ) C q q q = + . The demand price functions are 1 1 1 2 2 2 ( ) , ( ) 180 p q a q p q q = - =- . (a) If 120 a = show that the profit-maximizing output is (20,10) q = (b) If 72 a , show that profit is maximized by producing only commodity 2. (c) For what values of the parameter a is it profitable to produce both commodities? 2. Production decision A division of a firm can, using input vector 1 2 ( , ) z z z = , produce 2 2 1 2 ( ) q z z z = . units of output. The manager is given a total budget C and told to produce as much output as possible. Units of input i can be produced at the fixed input price i r ....
View Full Document

## DiagnosticTest06-1 - John Riley 22 September 2006 Econ 200...

This preview shows document pages 1 - 2. Sign up to view the full document.

View Full Document
Ask a homework question - tutors are online