Roll No. Quiz 1 (Beon 511) Allowed time 50 minutes October 24, 2016 1. a. Consider a profit-maximizing competitive firm with the following production function: y=1% +k? where | > a,b>0. The firm can purchase labor (f) and capital (K) it ‘wants in competitive input markets at unit prices of w and r, respectively. The market price of the firm’s output is p. Find the firm’s factor demands I(w, 7, p). A(w, 75 PJs output supply v(m rp), and profit function x(w, 1, p). (20 marks) ePrys 2 \ Nee see Steere aes 5 vy, \ fan! Hie \ ae CPR Le =O aK im 6-I vbb. Find the firm’s factor demands I(w, r, p), K(w, rs Pl and output supply», rp) using Hotelling’s lemma, (10 marks) Liew sor)