Question 1

A firm has the long-run cost function C(q)= 7q2 + 175.In the long run, it will supply a positive amount of output, so long as the price is greater than

Accepted Answer

A) $70. 
B) $148. 
C) $35. 
D) $140. 
E) $75.

Question 2

Mr.O.Carr has the cost function c(y)= y2 + 100 if his output, y, is positive and c(0)= 0.If the price of output is 25, Mr.Carr's profit-maximizing output is zero.

Accepted Answer

A) True 
 B)False

Question 3

A firm produces one output, using one input, with the production function f(x)= 2x1/3, where x is the amount of input.The cost function for this firm is proportional to the price of the input times the cube of the amount of output.

Accepted Answer

A) True 
 B)False

Question 4

Irma's production function is f(x1, x2)= (min{x1, 5x2})1/2.If the price of factor 1 is w1 = $5 and the price of factor 2 is w2 = $20, then her supply function is given by the equation

Accepted Answer

A) S(p)= p/18. 
B) S(p)=p(max{w1, 5w2})2. 
C) S(p)=p(min{w1, 5w2})2. 
D) S(p)= 9p. 
E) S(p)=min{5p, 100p}.

Question 5

A competitive firm produces its output according to the production function y = min{x1/2, 10}.Let w be the price of the factor x, and let the price of output be $1.The demand for factor x, when the factor price is w, is

Accepted Answer

A) x =min{w1/2, 10} 
B) x = max{w1/2/2, 100}. 
C) x =min{1/4w2, 100}. 
D) x = 10 + x1/2/2. 
E) None of the above.

Question 6

A competitive firm uses two inputs and has a production function f(x1, x2)=8x.25 1x.25 2.The firm can buy as much of either factor as it likes at factor prices w1 = w2 = $1.The cost of producing y units of output for this firm is

Accepted Answer

A) 8(x1 + x2)y. 
B) 2(y/8)2. 
C) (x1 + x2)/8. 
D) y/16. 
E) y2/16.

Question 7

Mr.O.Carr has the cost function c(y)= y2 + 64 if his output, y, is positive and c(0)= 0.If the price of output is 12, Mr.Carr's profit-maximizing output is zero.

Accepted Answer

A) True 
 B)False

Question 8

Suppose that Dent Carr's long-run total cost of repairing s cars per week is c(s)= 3s2 +12.If the price he receives for repairing a car is $24, then in the long run, how many cars will he fix per week if he maximizes profits?

Accepted Answer

A) 6 
B) 4 
C) 0 
D) 8 
E) 12

Question 9

A firm's production function is f(x1, x2)= (min{x1, 5x2})1/2.If the price of factor 1 is w1 = $5 per unit and the price of factor 2 is w2 = $25 per unit, then its supply function is given by the equation S(p)=

Accepted Answer

A) p/20. 
B) max{w1, 5w2}p. 
C) min{w1, 5w2}p. 
D) 10p. 
E) min{5p, 125p}p.

Question 10

A competitive firm uses two variable factors to produce its output, with a production function q = min{x1, x2}.The price of factor 1 is $4 and the price of factor 2 is $1.Due to a lack of warehouse space, the company cannot use more than 15 units of x1.The firm must pay a fixed cost of $90 if it produces any positive amount but doesn't have to pay this cost if it produces no output.What is the smallest integer price that would make a firm willing to produce a positive amount?

Accepted Answer

A) $15 
B) $21 
C) $5 
D) $24 
E) $11

Question 11

A competitive firm uses two variable factors to produce its output, with a production function q = min{x1, x2}.The price of factor 1 is $4 and the price of factor 2 is $5.Due to a lack of warehouse space, the company cannot use more than 17 units of x1.The firm must pay a fixed cost of $136 if it produces any positive amount but doesn't have to pay this cost if it produces no output.What is the smallest integer price that would make a firm willing to produce a positive amount?

Accepted Answer

A) $36 
B) $33 
C) $21 
D) $9 
E) $17

Question 12

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

Accepted Answer

A) $36. 
B) $44. 
C) $9. 
D) $18. 
E) $23.

Question 13

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

Accepted Answer

A) y = p/5 if p > 148, y = 0 if p  150, y = 0 if p  153, y = 0 if p  153, y =0 if p  155, y = 0 if p < 145.

Question 14

In a perfectly competitive industry, the demand curve for the total output of the industry may be downward sloping.

Accepted Answer

A) True 
 B)False

Question 15

Marge Costa produces plastic dog dishes using a process that requires only labor and plastic as inputs and has constant returns to scale.With the process she is currently using, a laborer can turn out 30 dog dishes an hour.The wage rate is $9 per hour.The plastic in a dog dish costs Marge $.10.She has no other costs besides labor and plastic.Marge faces a perfectly competitive market for plastic dog dishes, and she decides that she is maximizing profits when she makes 300 dog dishes an hour.What is the market price of dog dishes?

Accepted Answer

A) $.21 
B) $.32 
C) $.40 
D) $.27 
E) $.28

Question 16

A competitive firm uses two inputs and has a production function f(x1, x2)= 39x.25 1x.25 2.The firm can buy as much of either factor as it likes at factor prices w1 = w2 = $1.The cost of producing y units of output for this firm is

Accepted Answer

A) 2(y/39)2. 
B) 39(x1 + x2)y. 
C) (x1 +x2)/39. 
D) y/78. 
E) y2/78.

Question 17

A competitive firm has a single factory with the cost function c(y)= 4y2 + 89 and produces 28 units in order to maximize profits.Although the price of output does not change, the firm decides to build a second factory with the cost function c(y)= 8y2 + 39.To maximize its profits, how many units should it produce in the second factory?

Accepted Answer

A) 14 
B) 21 
C) 9 
D) 13 
E) None of the above.

Question 18

A firm's production function is f(x1, x2)= (min{x1, 3x2})1/2.If the price of factor 1 is w1 = $6 per unit and the price of factor 2 is w2 = $6 per unit, then its supply function is given by the equation S(p)=

Accepted Answer

A) max{w1, 3w2}p. 
B) min{w1, 3w2}p 
C) 8p. 
D) p/16. 
E) min{6p, 18p}p.

Question 19

A competitive firm produces its output according to the production function y = min{x2, 100}.Let w be the price of the factor x, and let the price of output be $1.The demand for x, when the price of x is w, is

Accepted Answer

A) 10 when w  10 and 10 otherwise. 
E) None of the above.

Question 20

The area under the marginal cost curve measures total variable costs.

Accepted Answer

A) True 
 B)False

Exam 21: Firm Supply-Part A

A firm has the long-run cost function C(q) = 7q2 + 175.In the long run, it will supply a positive amount of output, so long as the price is greater than

Mr.O.Carr has the cost function c(y)= y2 + 100 if his output, y, is positive and c(0)= 0.If the price of output is 25, Mr.Carr's profit-maximizing output is zero.

A firm produces one output, using one input, with the production function f(x)= 2x_1/3, where x is the amount of input.The cost function for this firm is proportional to the price of the input times the cube of the amount of output.

Irma's production function is f(x1, x2) = (min{x₁, 5x₂}) ^1/2.If the price of factor 1 is w1 = $5 and the price of factor 2 is w2 = $20, then her supply function is given by the equation

A competitive firm produces its output according to the production function y = min{x^1/2, 10}.Let w be the price of the factor x, and let the price of output be $1.The demand for factor x, when the factor price is w, is

A competitive firm uses two inputs and has a production function f(x1, x2) =8x.25 1x.25 2.The firm can buy as much of either factor as it likes at factor prices w1 = w2 = $1.The cost of producing y units of output for this firm is

Mr.O.Carr has the cost function c(y)= y2 + 64 if his output, y, is positive and c(0)= 0.If the price of output is 12, Mr.Carr's profit-maximizing output is zero.

Suppose that Dent Carr's long-run total cost of repairing s cars per week is c(s) = 3s2 +12.If the price he receives for repairing a car is $24, then in the long run, how many cars will he fix per week if he maximizes profits?

A firm's production function is f(x1, x2) = (min{x₁, 5x₂}) ^1/2.If the price of factor 1 is w1 = $5 per unit and the price of factor 2 is w2 = $25 per unit, then its supply function is given by the equation S(p) =

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 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

In a perfectly competitive industry, the demand curve for the total output of the industry may be downward sloping.

A competitive firm uses two inputs and has a production function f(x1, x2) = 39x.25 1x.25 2.The firm can buy as much of either factor as it likes at factor prices w1 = w2 = $1.The cost of producing y units of output for this firm is

A firm's production function is f(x1, x2) = (min{x₁, 3x₂}) ^1/2.If the price of factor 1 is w1 = $6 per unit and the price of factor 2 is w2 = $6 per unit, then its supply function is given by the equation S(p) =

A competitive firm produces its output according to the production function y = min{x2, 100}.Let w be the price of the factor x, and let the price of output be $1.The demand for x, when the price of x is w, is

The area under the marginal cost curve measures total variable costs.

Exam 21: Firm Supply-Part A

A firm has the long-run cost function C(q) = 7q2 + 175.In the long run, it will supply a positive amount of output, so long as the price is greater than

Mr.O.Carr has the cost function c(y)= y2 + 100 if his output, y, is positive and c(0)= 0.If the price of output is 25, Mr.Carr's profit-maximizing output is zero.

A firm produces one output, using one input, with the production function f(x)= 2x1/3, where x is the amount of input.The cost function for this firm is proportional to the price of the input times the cube of the amount of output.

Irma's production function is f(x1, x2) = (min{x1, 5x2}) 1/2.If the price of factor 1 is w1 = $5 and the price of factor 2 is w2 = $20, then her supply function is given by the equation

A competitive firm produces its output according to the production function y = min{x1/2, 10}.Let w be the price of the factor x, and let the price of output be $1.The demand for factor x, when the factor price is w, is

A competitive firm uses two inputs and has a production function f(x1, x2) =8x.25 1x.25 2.The firm can buy as much of either factor as it likes at factor prices w1 = w2 = $1.The cost of producing y units of output for this firm is

Mr.O.Carr has the cost function c(y)= y2 + 64 if his output, y, is positive and c(0)= 0.If the price of output is 12, Mr.Carr's profit-maximizing output is zero.

Suppose that Dent Carr's long-run total cost of repairing s cars per week is c(s) = 3s2 +12.If the price he receives for repairing a car is $24, then in the long run, how many cars will he fix per week if he maximizes profits?

A firm's production function is f(x1, x2) = (min{x1, 5x2}) 1/2.If the price of factor 1 is w1 = $5 per unit and the price of factor 2 is w2 = $25 per unit, then its supply function is given by the equation S(p) =

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 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

In a perfectly competitive industry, the demand curve for the total output of the industry may be downward sloping.

A competitive firm uses two inputs and has a production function f(x1, x2) = 39x.25 1x.25 2.The firm can buy as much of either factor as it likes at factor prices w1 = w2 = $1.The cost of producing y units of output for this firm is

A firm's production function is f(x1, x2) = (min{x1, 3x2}) 1/2.If the price of factor 1 is w1 = $6 per unit and the price of factor 2 is w2 = $6 per unit, then its supply function is given by the equation S(p) =

A competitive firm produces its output according to the production function y = min{x2, 100}.Let w be the price of the factor x, and let the price of output be $1.The demand for x, when the price of x is w, is

The area under the marginal cost curve measures total variable costs.

A firm produces one output, using one input, with the production function f(x)= 2x_1/3, where x is the amount of input.The cost function for this firm is proportional to the price of the input times the cube of the amount of output.

Irma's production function is f(x1, x2) = (min{x₁, 5x₂}) ^1/2.If the price of factor 1 is w1 = $5 and the price of factor 2 is w2 = $20, then her supply function is given by the equation

A competitive firm produces its output according to the production function y = min{x^1/2, 10}.Let w be the price of the factor x, and let the price of output be $1.The demand for factor x, when the factor price is w, is

A firm's production function is f(x1, x2) = (min{x₁, 5x₂}) ^1/2.If the price of factor 1 is w1 = $5 per unit and the price of factor 2 is w2 = $25 per unit, then its supply function is given by the equation S(p) =

A firm's production function is f(x1, x2) = (min{x₁, 3x₂}) ^1/2.If the price of factor 1 is w1 = $6 per unit and the price of factor 2 is w2 = $6 per unit, then its supply function is given by the equation S(p) =