N12

1.The Lagrangian function L = f (x, y) - [g(x,y) -c] has 2 first order conditions

True

False

2. If the firm's output is already determined at Qo, then the firm's optimal solution (K*, L*, Q*) is where w/p=MPL and r/p=MPK

True

False

3. If a consumer consumes goods X1 and X2 and enjoys utility U = F(X1,X2) at prices p1 and p2. Then we need to find the optimal combination of goods X1 and X2 that maximise the utility function.

True

False

4.Find the optimum level of capital that generates the lowest cost of producing 151 units of output if output is produced according to the Cobb-Douglas Q = 11K^0.4L^(1-0.4), and r = 8 and w = 6. Give your answer to one decimal place (if you find 0.132: your answer should be 0.1).

5.If the firm's output is already determined at Qo, then the firm's optimal solution is where the slope of the isocost equals to the slope of the isoquant

True

False

6. In the general form of a constrained optimization problem, where the optimum value of z = f (x, y) is subject to g(x, y) = c, z is the functional constraint

True

False

7.If the firm's output is already determined at Qo, then the firm's optimal combination of K*, L* satisfies: w/r = MRTS

True

False

8.If the firm's output is already determined at Qo, then the firm's objective is only to maximise it's profits

True

False

9.In the general form of a constrained optimization problem, where the optimum value of z = f (x, y) is subject to g(x, y) = c, the optimum value of z is called the constrained optimum

True

False