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1. Answer four of the following. In each case answer True, False or Uncertain and explain your answer. Limit each answer to one page (a) A firm has a technology that relies on only one input (call it x). The output of the firm (call it y) increases as you increase x but at a diminishing rate. Based only on the information provided then y-x would be a valid representation of this firms production function (b) Consider the system of linear equations in x, y and z. x-y+3z-3 2x +2y +2z 12 This system of equations has a unique solution (c) The present value of€500 received in 4 years time with an interest rate of 5% com pounded annually is approximately 608. d) Suppose the amount of drugs an individual consumes today (D) is given by the relationship D-fP,S) where P is the price of the drug and S is the stock of drugs consumed in the past Suppose price of the drug or the stock of drugs consumed in the past has any affect on todays consumption. are uncertain - 0. This means that neither the δS (e) A risk averse individual hates risk so much that they never will agree to participate in any lottery where the outcomes

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