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1. If market demand is given by ??(??) = 320 − 5?? and market price is equal to 22 what is the percentage decrease in quantity demanded with respect to a 1% increase in price? a) 1.2% b) 0.81% c) 0.77% d) 0.52% e) 7.8% 

2. A firm uses the production function 2??1 + ??2. If the factor prices are $8 for factor 1 and $5 for factor 2, how much will it cost to produce 80 units of output? a) $160 b) $280 c) $480 d) $320 e) $400 Page 2 of 13 

3. Bridget, a professional athlete, has the utility function ??(??) = ??1/2, where c is her income. If Bridget is not injured this season, she will receive $16 million. If she is injured, her income will be only $10,000. The probability that she gets injured is 10%. Her expected utility is a) 3,610 b) Between 5 million and 10 million c) 100,000 d) 7,220 e) None of the above 

4. Niko’s Pasta Bar makes manicotti according to an old family recipe which states ?? = min{ ??, ??}, where ??, ?? and ?? are pounds of manicotti, cheese, and pasta respectively. If cheese costs $3 per pound and pasta costs $1 per pound, how much would it cost to produce 20 pounds of manicotti in the cheapest way possible? a) $64.33 b) $48.33 c) $164.33 d) $193.33 e) $223.33 

5. Which of the following production functions exhibit constant returns to scale? In each case ?? is output and ?? and ?? are inputs. (1) ?? = ??1/4??9/12, (2)?? = 3??3/9??2/4, (3) ?? = ??1/2 + ??1/2, (4) ?? = 2?? + 3??.