tps://moodle.kent.a.. Ke https://moodle.kent.a... Feedback Studio Ke Untitled A https://w 4. True or False? "The income effect implies that, if a person's wage goes down, they will want to work more in order to keep their income constant (i.e. so they can continue to achieve their 'target income')." [10%] 5. True or False? "If a firm's production function exhibits diminishing marginal returns to capital, that means that when you use more capital, output actually goes down instead of up." [10%] 6. Consider a firm with the following production function: Y = F(K, L) = 2K + L. With K on the y-axis, draw 2 or 3 isoquants corresponding to such a production function. Make sure the graph is fully labelled. [15%] 7. Which of the following is NOT a condition of The Second Fundamental Theorem of Welfare? [10%] a) Producers and consumers are price takers b) There are no externalities c) Preferences and production sets are convex d) There is a market for every commodity e) Preferences must be Cobb-Douglas 8. Consider an exchange economy with two individuals (Friday and Robinson) and two goods (bananas, B and coconuts, C). In the whole economy there are 10 bananas and 20 coconuts. Friday and Robinson's preferences are represented by the following utility functions, respectively: UF(B, C) = VB + VC and UR(B, C) = VB + VC. Which of the following allocations is NOT a pareto efficient allocation? (note: / am only writing out Friday's allocation. Robinson's allocation is implied.) [15%] a) CF = 20, BF = 10 b) CF = 0, BF = 0 C) CF = 10, BF = 5 d) CF = 0, BF = 10 e) CF = 15, BF = 7.5