Question 1

A firm has the long-run cost function C(q)=6q2 + 486.In the long run,it will supply a positive amount of output,so long as the price is greater than

Accepted Answer

A)   $216.
B)   $54.
C)   $224.
D)   $108.
E)   $113. D

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  False

Question 3

A firm with the cost function c(y)=20y2+ 500 has a U-shaped cost curve.

Accepted Answer

A) True 
 B)False  False

Question 4

A profit-maximizing dairy farm is currently producing 10,000 gallons of milk per day.The government is considering two alternative policies.One is to give the farm a lump sum subsidy of $500 per month.The other policy is to give the farm a subsidy of $.05 per gallon of output.

Accepted Answer

A)   Both kinds of subsidy will increase production at this farm.
B)   Neither subsidy will affect production at this farm,since output is determined by profit maximization.
C)   Production at this farm will be increased if the per-unit subsidy is adopted but not if the lump sum subsidy is adopted.
D)   Which subsidy has the greater effect on production at this farm depends on whether fixed costs are greater than variable costs.
E)   Production will be increased by either kind of subsidy if and only if there are not decreasing returns to scale.

Question 5

A firm's production function is f(x1,x2)=(min{x1,5x2})1/2.If the price of factor 1 is w1 =0 $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 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

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 8

A competitive firm produces its output according to the production function y =min{x3,1000}.Let p be the price of output,and let the price of input x be $1.The profit maximizing output for this firm is

Accepted Answer

A) 1,000 if p >\gt> 1 and 0 otherwise. B) 10 for all p. C) 1,000 for all p. D) 0 if p <\lt< 1/100 and 1,000 otherwise. E) None of the above.

Question 9

A competitive firm uses two inputs and has a production function f(x1,x2)= 23x.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)   23(x1+ x2) y.
B)   y/46.
C)   (x1 + x2) /23.
D)   2(y/23) 2.
E)   y2/46.

Question 10

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 11

Irma's production function is f(x1,x2)=(min{x1,5x2})1/2.If the price of factor 1 is w1 =0 $5 and the price of factor 2 is w2 =0 $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 12

A competitive firm has a continuous marginal cost curve.It finds that as output increases,its marginal cost curve first rises,then falls,then rises again.If it wants to maximize profits,the firm should never produce at a positive output where price equals marginal cost and marginal cost decreases as output increases.

Accepted Answer

A) True 
 B)False

Question 13

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 14

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 15

Irma's production function is f(x1,x2)=(min{x1,3x2})1/2.If the price of factor 1 is w1= $3 and the price of factor 2 is w2= $9,then her supply function is given by the equation

Accepted Answer

A)   S(p) =p/12.
B)   S(p) =p(max{w1,3w2}) 2.
C)   S(p) =p(min{w1,3w2}) 2.
D)   S(p) =6p.
E)   S(p) =min{3p,27p}.

Question 16

Average fixed costs never increase with output.

Accepted Answer

A) True 
 B)False

Question 17

A firm's production function is f(x1,x2)=(min{x1,4x2})1/2.If the price of factor 1 is w1 = $5 per unit and the price of factor 2 is w2 = $8 per unit,then its supply function is given by the equation S(p)=

Accepted Answer

A)   7p.
B)   p/14
C)   min{w1,4w2}p.
D)   max{w1,4w2}p.
E)   min{5p,32p}p.

Question 18

Suppose that Dent Carr's long-run total cost of repairing s cars per week is c(s)= 3s2 + 108.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?

Accepted Answer

A)   4.50
B)   0
C)   6
D)   3
E)   9

Question 19

Mr.O.Carr has the cost function c(y)=y2 + 144 if his output,y,is positive and c(0)= 0.If the price of output is 18,Mr.Carr's profit-maximizing output is zero.

Accepted Answer

A) True 
 B)False

Question 20

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   <\lt<  1 and 100 otherwise.
B)   100 for all w.
C)   10 for all w.
D)   0 if w   <\lt<  10 and 10 otherwise.
E)   None of the above.

Exam 23:Firm Supply-Part A

A firm has the long-run cost function C(q) =6q2 + 486.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 with the cost function c(y)=20y2+ 500 has a U-shaped cost curve.

A profit-maximizing dairy farm is currently producing 10,000 gallons of milk per day.The government is considering two alternative policies.One is to give the farm a lump sum subsidy of $500 per month.The other policy is to give the farm a subsidy of $.05 per gallon of output.

A firm's production function is f(x1,x2) =(min{x₁,5x₂}) ^1/2.If the price of factor 1 is w1 =0 $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 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

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{x3,1000}.Let p be the price of output,and let the price of input x be $1.The profit maximizing output for this firm is

A competitive firm uses two inputs and has a production function f(x1,x2) = 23x.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 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

Irma's production function is f(x1,x2) =(min{x₁,5x₂}) ^1/2.If the price of factor 1 is w1 =0 $5 and the price of factor 2 is w2 =0 $20,then her supply function is given by the equation

Irma's production function is f(x1,x2) =(min{x₁,3x₂}) ^1/2.If the price of factor 1 is w1= $3 and the price of factor 2 is w2= $9,then her supply function is given by the equation

Average fixed costs never increase with output.

A firm's production function is f(x1,x2) =(min{x₁,4x₂}) ^1/2.If the price of factor 1 is w1 = $5 per unit and the price of factor 2 is w2 = $8 per unit,then its supply function is given by the equation S(p) =

Suppose that Dent Carr's long-run total cost of repairing s cars per week is c(s) = 3s2 + 108.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?

Mr.O.Carr has the cost function c(y)=y2 + 144 if his output,y,is positive and c(0)= 0.If the price of output is 18,Mr.Carr's profit-maximizing output is zero.

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

Exam 23:Firm Supply-Part A

A firm has the long-run cost function C(q) =6q2 + 486.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 with the cost function c(y)=20y2+ 500 has a U-shaped cost curve.

A profit-maximizing dairy farm is currently producing 10,000 gallons of milk per day.The government is considering two alternative policies.One is to give the farm a lump sum subsidy of $500 per month.The other policy is to give the farm a subsidy of $.05 per gallon of output.

A firm's production function is f(x1,x2) =(min{x1,5x2}) 1/2.If the price of factor 1 is w1 =0 $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 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

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{x3,1000}.Let p be the price of output,and let the price of input x be $1.The profit maximizing output for this firm is

A competitive firm uses two inputs and has a production function f(x1,x2) = 23x.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 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

Irma's production function is f(x1,x2) =(min{x1,5x2}) 1/2.If the price of factor 1 is w1 =0 $5 and the price of factor 2 is w2 =0 $20,then her supply function is given by the equation

Irma's production function is f(x1,x2) =(min{x1,3x2}) 1/2.If the price of factor 1 is w1= $3 and the price of factor 2 is w2= $9,then her supply function is given by the equation

Average fixed costs never increase with output.

A firm's production function is f(x1,x2) =(min{x1,4x2}) 1/2.If the price of factor 1 is w1 = $5 per unit and the price of factor 2 is w2 = $8 per unit,then its supply function is given by the equation S(p) =

Suppose that Dent Carr's long-run total cost of repairing s cars per week is c(s) = 3s2 + 108.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?

Mr.O.Carr has the cost function c(y)=y2 + 144 if his output,y,is positive and c(0)= 0.If the price of output is 18,Mr.Carr's profit-maximizing output is zero.

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

A firm's production function is f(x1,x2) =(min{x₁,5x₂}) ^1/2.If the price of factor 1 is w1 =0 $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) =

Irma's production function is f(x1,x2) =(min{x₁,5x₂}) ^1/2.If the price of factor 1 is w1 =0 $5 and the price of factor 2 is w2 =0 $20,then her supply function is given by the equation

Irma's production function is f(x1,x2) =(min{x₁,3x₂}) ^1/2.If the price of factor 1 is w1= $3 and the price of factor 2 is w2= $9,then her supply function is given by the equation

A firm's production function is f(x1,x2) =(min{x₁,4x₂}) ^1/2.If the price of factor 1 is w1 = $5 per unit and the price of factor 2 is w2 = $8 per unit,then its supply function is given by the equation S(p) =