Econ 451 Practice Midterm Suggested Solutions Spring 2016
1. A policy maker is deciding whether to begin a program that improves childhood health
for low-income families or mandates that all large firms are required to accept job applications through a go
Problem Set 1
Due in lecture Thursday, April 14, 2016.
Do your work on separate sheets of paper and staple them together.
No late problem sets accepted for credit!
1. Apples cost $1 and bananas cost $2 at the store. You have $20 dollars to spend.
Welcome to EC 451!
TuTh 2:00 3:20pm
Administrative Details (1a)
Take a copy of the syllabus before you leave today.
Read it. Tape it to your wall. Refer back to it frequently.
EC 451, Spring 2016
Problem Set 2 Suggested Solutions
1. A firm has production function F (L) = L L20 . Their cost function is equal to C(L) =
(w + t) L, where w is the wage and t is an additional cost of disliking the individual hired. The
firm sells their output f