401-feqr - E 401 1 Final Examination questions 1 What does...

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E frqrplfv 401 1 Final Examination questions 1. What does it mean to say that preferences f t the Gorman polar form? Do quasi-linear preferences f t the Gorman form? Do aggregate demands based on the Gorman form have the property that demands are independent of the distribution of wealth? Justify your answers. 2. Derive the pro f t function for the following one output, two input technology: y = z 1 + z 2 . Do the associated output supply and factor demand functions have the expected properties? Explain. 3. Suppose output q can be produced with inputs z 1 and z 2 . When the output price is p and input prices are w 1 and w 2 , the pro f t-maximizing levels of output and inputs are q , z 1 and z 2 . Suppose in the “short run” z 2 cannot be varied but z 1 can be, but in the “long run” both inputs are variable. Let the price of output rise to p ± >p , and let input prices be constant. Prove that the increase in output in the long run is at least as large as the increase in output in the short run. 4. Answer both parts (a) and (b); they are of equal weight. (a)Whatisapro
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401-feqr - E 401 1 Final Examination questions 1 What does...

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