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Past Exam for ECON 306 - INTERMED MICROECON THRY at Maryland (UMD)

Exam Information

Material Type:Exam 3
Professor:Staff
Class:ECON 306 - INTERMED MICROECON THRY
Subject:Economics
University:University of Maryland
Term:Fall 1991
Keywords:
  • Marginal Rate
  • Assumptions
  • Provided That
  • Isocost Line
  • Average Variable Cost
  • Substitution
  • Following Terms
  • Minimization
  • Exam Booklet
  • Competitive Market
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Sample Document Text

EXAM 3 INTERMEDIATE MICROECO'OMIC THEORY ~16<' Fall 1991 November 21, 1991 Mr. Meredith Please answer ~!ll questions in the exam booklet provided. PART 1 1. Define and state the importance of the following terms: a) Technical rate of substitution b) Condition.ll factor demand functions c) Producer siurplus d) Production set e) Homogem!ity PART 2 Please answer the following questions. 2. A firm uses labor and capital to produce output according to the production function f(K,L)=3K l12 L l12 , where K is the number of units of capital and L is the number cf units of labor. The cost of labor is P L and the cost of capital is P K . a) write both the profit maximization relation and the cost minimization relation. i.e., what is the equation you would optimize in each situation? b) what is thf~ slope of the isocost line? c) using cost minimization, find the optimal values of K and L that you would use to produce y units of output. d) derive the cost function an...

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