Question 1

Two firms have the same technology and must pay the same wages for labor.They have identical factories,but firm 1 paid a higher price for its factory than firm 2 did.If they are both profit maximizers and have upward-sloping marginal cost curves,then we would expect firm 1 to have a higher output than firm 2.

Accepted Answer

A) True 
 B)False

Question 2

Irma's production function is f(x1,x2)= (min{x1,2x2})1/2.If the price of factor 1 is w1 = $3 and the price of factor 2 is w2 = $4,then her supply function is given by the equation

Accepted Answer

A)  S(p)=p(min{w1,2w2})2. 
B)  S(p)=p/10. 
C)  S(p)=p(max{w1,2w2})2. 
D)  S(p)=5p. 
E)  S(p)=min{3p,8p}.

Question 3

Price equals marginal cost is a sufficient condition for profit maximization.

Accepted Answer

A) True 
 B)False

Question 4

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 5

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 6

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 $8 and the price of factor 2 is $5.Due to a lack of warehouse space,the company cannot use more than 10 units of x1.The firm must pay a fixed cost of $80 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)  $44 
B)  $41 
C)  $29 
D)  $13 
E)  $21

Question 7

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?

Accepted Answer

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

Question 8

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 9

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 10

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

Accepted Answer

A) True 
 B)False

Question 11

A competitive firm is choosing an output level to maximize its profits in the short run.Which of the following is not necessarily true? (Assume that marginal cost is not constant and is well defined at all levels of output. )

Accepted Answer

A)  Marginal cost is at least as large as average variable cost. 
B)  Total revenues are at least as large as total costs. 
C)  Price is at least as large as average variable cost. 
D)  Price equals marginal cost. 
E)  The marginal cost curve is rising.

Question 12

The change in producer's surplus when the market price changes from p1 to p2 is half of the area to the left of the marginal cost curve between p1 and p2.

Accepted Answer

A) True 
 B)False

Question 13

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 14

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 15

A firm in a competitive industry takes account of the fact that the demand curve it confronts has a significant negative slope.

Accepted Answer

A) True 
 B)False

Question 16

The Lost Mountains of northern Iowa are inhabited by the rare Marshallian deer.Patches of grass are far apart in this rugged land.If a deer finds a fresh patch of grass and spends h hours grazing it,it gets the square root of h units of grass.The deer compete for grass.When there are n deer,it takes a deer n 2 minutes to find a fresh patch.A deer can survive if it gets 1 unit of grass every 200 minutes.
a.Find the average cost in time of a unit of grass if a deer gets y units of grass from each patch.
b.How much time will an efficient deer spend in each patch when there are n deer? (Hint: Minimize aver-age cost. )
c.Since there is free entry into the deer business,the equilibrium population is the maximum number of efficient deer who can survive.How many is this?

Accepted Answer

The answer of The Lost Mountains of northern Iowa are...

Question 17

A competitive firm has a long-run total cost function c(y)= 5y2 +1,125 for y$\gt$0 and c(0)= 0.Its long-run supply function is described as

Accepted Answer

A)  y = p/5 if p $\gt$ 148,y =0 if p   $\lt$ 148. 
B)  y = p/10 if p $\gt$ 150,y = 0 if p  $\lt$150. 
C)  y = p/10 if p $\gt$ 153,y =0 if p   $\lt$153. 
D)  y=p/5 if p$\gt$ 153,y =0 if p   $\lt$165. 
E)  y = p/5 if p $\gt$ 155,y =0 if p  $\lt$145.

Question 18

A competitive firm has a long-run total cost function c(y)= 3y2 +675 for y $\gt$0 and c(0)=0.Its long-run supply function is described as

Accepted Answer

A)  y = p/6 if p $\gt$ 90,y = 0 if p$\lt$90. 
B)  y = p/3 if p $\gt$ 88,y= 0 if p $\lt$88. 
C)  y = p/3 if p $\gt$ 93,y = 0 if p $\lt$ 99. 
D)  y =p/6 if p $\gt$93,y = 0 if p $\lt$ 93. 
E)  y =p/3 if p$\gt$ 95,y = 0 if p $\lt$ 85.

Question 19

A firm faces competitive markets both for its inputs and its outputs.If its long-run supply curve is q =3p,then it cannot have constant returns to scale.

Accepted Answer

A) True 
 B)False

Question 20

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.

Exam 23:Firm Supply-Part A

Irma's production function is f(x1,x2) = (min{x₁,2x₂}) ^1/2.If the price of factor 1 is w1 = $3 and the price of factor 2 is w2 = $4,then her supply function is given by the equation

Price equals marginal cost is a sufficient condition for profit maximization.

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 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

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?

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

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

A competitive firm is choosing an output level to maximize its profits in the short run.Which of the following is not necessarily true? (Assume that marginal cost is not constant and is well defined at all levels of output. )

The change in producer's surplus when the market price changes from p1 to p2 is half of the area to the left of the marginal cost curve between p1 and p2.

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.

A firm in a competitive industry takes account of the fact that the demand curve it confronts has a significant negative slope.

A competitive firm has a long-run total cost function c(y) = 5y2 +1,125 for y $\gt$ 0 and c(0) = 0.Its long-run supply function is described as

A competitive firm has a long-run total cost function c(y) = 3y2 +675 for y $\gt$ 0 and c(0) =0.Its long-run supply function is described as

A firm faces competitive markets both for its inputs and its outputs.If its long-run supply curve is q =3p,then it cannot have constant returns to scale.

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

Exam 23:Firm Supply-Part A

Irma's production function is f(x1,x2) = (min{x1,2x2}) 1/2.If the price of factor 1 is w1 = $3 and the price of factor 2 is w2 = $4,then her supply function is given by the equation

Price equals marginal cost is a sufficient condition for profit maximization.

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 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

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?

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

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

A competitive firm is choosing an output level to maximize its profits in the short run.Which of the following is not necessarily true? (Assume that marginal cost is not constant and is well defined at all levels of output. )

The change in producer's surplus when the market price changes from p1 to p2 is half of the area to the left of the marginal cost curve between p1 and p2.

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.

A firm in a competitive industry takes account of the fact that the demand curve it confronts has a significant negative slope.

A competitive firm has a long-run total cost function c(y) = 5y2 +1,125 for y >\gt> 0 and c(0) = 0.Its long-run supply function is described as

A competitive firm has a long-run total cost function c(y) = 3y2 +675 for y >\gt> 0 and c(0) =0.Its long-run supply function is described as

A firm faces competitive markets both for its inputs and its outputs.If its long-run supply curve is q =3p,then it cannot have constant returns to scale.

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

Irma's production function is f(x1,x2) = (min{x₁,2x₂}) ^1/2.If the price of factor 1 is w1 = $3 and the price of factor 2 is w2 = $4,then her supply function is given by the equation

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.

A competitive firm has a long-run total cost function c(y) = 5y2 +1,125 for y $\gt$ 0 and c(0) = 0.Its long-run supply function is described as

A competitive firm has a long-run total cost function c(y) = 3y2 +675 for y $\gt$ 0 and c(0) =0.Its long-run supply function is described as