Microeconomic Theory Homework #1

Due September 7
1. Let y = f (z1 , z2 ) be a constant returns to scale production function. Show that if the average product of z1 is rising then the marginal product of z2 is negative. 2. Let y=(
i=1 n

i x ) i

where

i = 1
i=1

and 0=1 verify that the elasticity of substition

xi xj T RS 1 ij = = i = j xi T RS xj 1

where TRS is the technical rate of substitution. 3. Derive the prot function, (p, w), and supply function, y(p, w), for the single output technologies whose production functions f (x) are given by (a) f (x) = x x . What restrictions need to be placed on and to ensure that the 1 2 prot function is well-dened? (b) f (x) = x1 + x2 (c) f (x) = M in{x1 , x2 }