Download 300summer09samplefinal

300hunter09summerSampleFinal
Multiple Choice
Identify the choice that best completes the statement or answers the question.
____
1. Which of the following production functions exhibit constant returns to scale? In each case y is output and K
and L are inputs. (1) y =
a. 1, 2, and 4
b. 2, 3, and 4
c. 1, 3, and 4
d. 2 and 3
e. 2 and 4
. (2) y = 3
. (3) y =
. (4) y = 2K + 3L.
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2. A firm has the production function f(x1, x2) = x11x0.502. The isoquant on which output is
equation
a. x2 = 30x–21.
b. x2 = 30x21.
c. x2 = 30x–0.501.
d.
= 2.
e. x1 = 0.50x–0.502.
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3. A competitive firm produces output using three fixed factors and one variable factor. The firm’s short-run
production function is q = 154x – 5x2, where x is the amount of variable factor used. The price of the output is
$2 per unit and the price of the variable factor is $8 per unit. In the short run, how many units of x should the
firm use?
a. 15
b. 30
c. 17
d. 7
e. None of the above.
____
4. When Farmer Hoglund applies N pounds of fertilizer per acre, the marginal product of fertilizer is 1 –
bushels of corn. If the price of corn is $2 per bushel and the price of fertilizer is $.40 per pound, then how
many pounds of fertilizer per acre should Farmer Hoglund use in order to maximize his profits?
a. 320
b. 328
c. 160
d. 84
e. 200
____
5. The production function for drangles is f (x1, x2) =
, where x1 is the amount of sugar and x2
is the amount of dough used. At the factor prices, w1= w2 = $1, the minimum cost of producing y drangles is
a.
.
b.
.
c.
.
d.
.
e. None of the above.
has the
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6. A new metal alloy is discovered that uses copper and zinc in fixed proportions where each unit of the alloy
requires 2 units of zinc and 2 units of copper. If no other inputs are required, if the price of zinc is $3 per unit,
and the price of copper is $3 per unit and if total output is 5,000 units, what is the average cost per unit of
output?
a. $6
b. $1.50
c. $12
d. $15
e. $18
7. Nadine has a production function 4x1 + x2. If the factor prices are $12 for factor 1 and $2 for factor 2, how
much will it cost her to produce 30 units of output?
a. $795
b. $60
c. $90
d. $1,500
e. $75
8. The following relationship must hold between the average total cost (ATC) curve and the marginal cost curve
(MC):
a. If MC is rising, ATC must be rising.
b. If MC is rising, ATC must be greater than MC.
c. If MC is rising, ATC must be less than MC.
d. If ATC is rising, MC must be greater than ATC.
e. If ATC is rising, MC must be less than ATC.
9. A goatherd has the cost function c(y) = 2y2, where y is the number of tubs of goat cheese she makes per
month. She faces a competitive market for goat cheese,with a price of $40 a tub. How many tubs should she
produce per month?
a. 10
b. The square root of 40
c. 4
d. The square root of 20
e. 5
____ 10. Mary Magnolia from your workbook has variable costs equal to
, where y is the number of bouquets
she sells per month and where F is the number of square feet of space in her shop. If Mary has signed a lease
for a shop with 200 square feet, if she is not able to get out of the lease or to expand her store in the short run,
and if the price of a bouquet is $6 per unit, how many bouquets per month should she sell in the short run?
a. 200
b. 100
c. 600
d. 900
e. 660
____ 11. A competitive firm has a long-run total cost function c(y) = 5y2 + 1,125 for y > 0 and c(0) = 0. Its long-run
supply function is described as
a. y =
if p > 148, y = 0 if p < 148.
b. y =
if p > 150, y = 0 if p < 150.
c. y =
if p > 153, y = 0 if p < 153.
d. y =
if p > 153, y = 0 if p < 165.
e. y =
if p > 155, y = 0 if p < 145.
____ 12. Suppose that Dent Carr’s long-run total cost of repairing s cars per week is c(s) = 3s2 + 75. If the price he
receives for repairing a car is $18, then in the long run, how many cars will he fix per week if he maximizes
profits?
a. 3
b. 0
c. 6
d. 4.50
e. 9
____ 13. A firm has the long-run cost function C(q) = 3q2 + 27.In the long run, it will supply a positive amount of
output, so long as the price is greater than
a. $36.
b. $44.
c. $9.
d. $18.
e. $23.
____ 14. A monopolist has the total cost function c(q) = 800 + 8q. The inverse demand function is 80 – 6q, where
prices and costs are measured in dollars. If the firm is required by law to meet demand at a price equal to its
marginal costs,
a. the firm’s profits will be zero.
b. the firm will lose $400.
c. the firm will make positive profit but not as much profit as it would make if it were
allowed to choose its own price.
d. the firm will lose $800.
e. the firm will lose $480.
____ 15. The Cleveland Visitors Bureau is the exclusive national marketer of weekend getaway vacations in Cleveland,
Ohio. At current market prices, the price elasticity of demand is –1. To maximize profits, the bureau should
a. raise prices.
b. lower prices.
c. not change prices.
d. run new TV commercials.
e. More information is needed to make an accurate judgment.