# Question 1 Consider a production function of the form: y = (x1 +23)=. Draw the isoquants and explain whether the technology is convex in the following cases: (a) When \$

Question 1
Consider a production function of the form: y = (x1 +23)=. Draw the isoquants and explain whether
the technology is convex in the following cases:
(a) When \$ = = [3.5 marks]
(b) When s = 2. [3.5 marks]
Question 2
Suppose a firm’s profit function is given by:
n (p, W1, (2) =
1 p3
9 w1 w/2
Compute the supply and input demand functions. Show the supply function slopes upwards and the
input demands slope downwards. Verify symmetry in cross-price effects. [8 marks]
Question 3
Suppose a firm has the following production function:
Y = (A+C)i Li
where A represents macbooks, C represents chromebooks and L denotes labor. The prices of the three
inputs are PA, pc and w. Solve for the conditional factor demands of each input and for the cost
function. [12 marks]
Question 4
Consider the following production function that uses labor (() and capital (k),
f ( e, k) = 202ki
Denote the price of labor by w and the price of capital by r. Suppose in the short-run the level of
capital the firm operates is fixed at k. In the long-run the firm can adjust both labor and capital.

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