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First Midterm

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D. S. Question 2. If you double all inputs, you will double all outputs. ... D. Wine. France. Michigan. 8. 20. 4. 2. Question 5 ... – PowerPoint PPT presentation

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Title: First Midterm


1
First Midterm
  • ECO 5800

2
Grade Distribution
3
Question 1
D
  • Key
  • Shifts in Demand


S
Square Feet
4
Question 2
  1. If you double all inputs, you will double all
    outputs.
  2. If all processes are CRTS, you can do everything
    yourself.
  3. Yes. Some big fixed costs ? increasing returns
    at least up to 50-100 beds.
  4. Hospitals are only in the largest cities.

5
Question 3
  • See figure on right.
  • Weights
  • Corn - 10/ton-mile
  • Chips - 12/ton-mile
  • Locates at market shipping is cheaper.
  • Weight I to 12.50. Location at field.
  • If cheaper to move a mile, cheaper to keep going.


144
120
Field
Mkt
12 miles
6
Question 4
D
  1. See right.
  2. Michigan is better off.
  3. France will trade wine for tire. Michigan will
    trade tires for wine.
  4. See right


France
Michigan
4
Wine
2
8
20
Tires
7
Question 5
  1. Activities must be close to each other to get
    economies of scale.
  2. Shopping You can go to more stores on the same
    trip. Production Inputs are close by.
  3. Demand rises rents rise.
  4. Detroits situation was not really common. You
    had 3 or 4 very special entrepreneurs and a lot
    of spin-offs

8
The 4 Corners
Troy
Sterling Heights
14 Mile
Warren
Madison Heights
Dequinder
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