ECON 323 TEST 2 - Filipe
Flat
Consider a firm whose cost function when both L and K are variable is shown in the figure below. (The following is a description of the figure. In a two-axis graph we measure q in the horizontal axis and dollars $ in the vertical axis. A single curve labeled C is shown in the figure. It is a linear curve with positive slope). Increasing Vertical Flat Decreasing First decreasing and then increasing
25
Consider a firm whose production function is f(L,K)=5L1/2K1/2. If K is equal to 1, for what level of labor is the Average Product of Labor equal to 1? For no level of labor APL is equal to 1. 1 25 15 5
a=1 and any values of b, L, and K.
Consider a firm whose production function is f(L,K)=ALaKb. For which values of A, L,K, a, and b is the Average Product of Labor for this company equal to the Marginal Product of Labor? a=1 and any values of b, L, and K. a=1/2, b=1/2, L=1, and K=3. a+b>1, a<1, and any values of b, L, and K. a+b<1, a>0, b>0, and any values of L and K. a+b=1, b>0, and any values of L and K.
AC(q)=3/4
Consider a firm with production function f(L,K)=2L+4K. Assume also that the price of capital r=3 and the price of labor w=2. What is this firm's average cost function when both L and K are variable? AC(q)=3q/4. AC(q)=3/4 AC(q)=3. AC(q)=1/4. AC(q)=3/4q.
C(q)=3q/4
Consider a firm with production function f(L,K)=2L+4K. Assume also that the price of capital r=3 and the price of labor w=2. What is this firm's cost function when both L and K are variable? C(q)=3q/4 C(q)=3q. C(q)=3/4. C(q)=3q2/4. C(q)=q/4.
AC(q)=24/q+1
Consider a firm with production function f(L,K)=3L+8K. Assume that capital is fixed at K=12. Assume also that the price of capital r=10 and the price of labor w=3. Then, the average cost of producing q units is? AC(q)=24/q+1 AC(q)=114/q+9/8 AC(q)=88/q+1/12 AC(q)=24/q+3 AC(q)=24/q+q
AVC(q)=1-96/q
Consider a firm with production function f(L,K)=3L+8K. Assume that capital is fixed at K=12. Assume also that the price of capital r=10 and the price of labor w=3. Then, the average variable cost of producing q units is? AVC(q)=9/8-6/q AVC(q)=1-96/q AVC(q)=3-96/q AVC(q)=1/12-32/q AVC(q)=q-96/q
C(q)=24+q
Consider a firm with production function f(L,K)=3L+8K. Assume that capital is fixed at K=12. Assume also that the price of capital r=10 and the price of labor w=3. Then, the cost of producing q units is? C(q)=114+9q/8 C(q)=24+q2 C(q)=24+q C(q)=88+q/12 C(q)=24+3q
F=120.
Consider a firm with production function f(L,K)=3L+8K. Assume that capital is fixed at K=12. Assume also that the price of capital r=10 and the price of labor w=3. Then, the fixed cost of producing q units is? F=120. F=100. F=80. F=40. F=36.
VC(q)=q-96
Consider a firm with production function f(L,K)=3L+8K. Assume that capital is fixed at K=12. Assume also that the price of capital r=10 and the price of labor w=3. Then, the variable cost of producing q units is? VC(q)=q/12-32 VC(q)=q-96 VC(q)=9q/8-6 VC(q)=q2-96 VC(q)=3q-96
L(q,12)= q/3-32
Consider a firm with production function f(L,K)=3L+8K. Assume that capital is fixed at K=12. Then, the amount of labor necessary to produce q units is? L(q,12)= 3q/8-2 L(q,12)= q-24 L(q,12)= q/36-8 L(q,12)= q/3-32 L(q,12)= q2/3-24
AC(q)=5/q+q2/9.
Consider a firm with production function f(L,K)=3L1/3K2/3. Assume that capital is fixed at K=1. Assume also that the price of capital r=5 and the price of labor w=3. Then, the average cost of producing q units is? AC(q)=10/q+q2. AC(q)=5/q+q2/9. AC(q)=2/3q+q/3. AC(q)=1/3q+q2/3. AC(q)=3/q+q/9.
AF(q)=5/q.
Consider a firm with production function f(L,K)=3L1/3K2/3. Assume that capital is fixed at K=1. Assume also that the price of capital r=5 and the price of labor w=3. Then, the average fixed cost of producing q units is? AF(q)=5/q. AF(q)=3/q. AF(q)=10/q. AF(q)=1/3q. AF(q)=2/3q.
C(q)=5+q3/9.
Consider a firm with production function f(L,K)=3L1/3K2/3. Assume that capital is fixed at K=1. Assume also that the price of capital r=5 and the price of labor w=3. Then, the cost of producing q units is? C(q)=10+q3. C(q)=2/3+q2/3. C(q)=5+q3/9. C(q)=1/3+q3/3. C(q)=3+q2/9.
F=5.
Consider a firm with production function f(L,K)=3L1/3K2/3. Assume that capital is fixed at K=1. Assume also that the price of capital r=5 and the price of labor w=3. Then, the fixed cost of producing q units is? F=5. F=2/3. F=10. F=3. F=1/3.
MC(q)=q2/3.
Consider a firm with production function f(L,K)=3L1/3K2/3. Assume that capital is fixed at K=1. Assume also that the price of capital r=5 and the price of labor w=3. Then, the marginal cost of producing q units is? MC(q)=q2. MC(q)=q2/3. MC(q)=2q/9. MC(q)=3q2. MC(q)= 2q/3.
VC(q)=q3/9.
Consider a firm with production function f(L,K)=3L1/3K2/3. Assume that capital is fixed at K=1. Assume also that the price of capital r=5 and the price of labor w=3. Then, the variable cost of producing q units is? VC(q)=q3/3. VC(q)=q2/3. VC(q)=q3. VC(q)=q2/9. VC(q)=q3/9.
K*/L*=4.
Consider a firm with production function f(L,K)=L1/7K6/7 (cost minimization for this firm is characterized by the tangency rule). Assume also that the price of capital r=3 and the price of labor w=2. If L* and K* are the amounts used by the firm to produce q units of output when both L and K are variable, then K*/L*=7. K*/L*=6. K*/L*=3. K*/L*=4. K*/L*=5.
2x/3
Consider a firm with production function f(L,K)=L1/7K6/7 (cost minimization for this firm is characterized by the tangency rule). Assume also that the price of capital r=3 and the price of labor w=2. Suppose that a worker strike constrains the firm to a level of labor x units lower than its original level, where x is a small number. What is a good approximation of the amount of capital that the firm should increase in order to maintain its original level of production? 7x/6 2x/3 3x/2 6x/7 2x
0
Consider the firm whose MC, AC, AVC, AFC functions are shown in the following graph. (The following is a description of the figure: This figure is a two-axis graph; in the horizontal line we measure output q, and in the vertical line dollars $; there are four curves. The first, MC starts at a positive level when q=0; more precisely, MC(0) is greater than 16 and lower than 30; then MC is decreasing for values of q in between 0 and 50; at 50 MC has a minimum; this minimum is MC(50)=10; after q=50, MC is increasing; in particular MC(100)=16, MC(120)=30. The second curve, AVC, starts at the same level of MC(0); it is decreasing when q is between 0 and 100; in this range AVC is above MC; at q=100, AVC crosses MC; more precisely, AVC(100)=MC(100)=16; for q>100, AVC is increasing and below MC. The third curve, AC, has a positive asymptote at zero, that is, it grows to plus infinity when q is very small; AC is decreasing when q is in between 0 and 120; in this range is above MC; AC(100)=34; AC and MC cross at q=120; more precisely, AC(120)=MC(120)=30; for q>=120, AC is increasing, below MC and above AVC.) 0 units 100 units 50 units 120 units 25 units
$1800
Consider the firm whose MC, AC, AVC, AFC functions are shown in the following graph. (The following is a description of the figure: This figure is a two-axis graph; in the horizontal line we measure output q, and in the vertical line dollars $; there are four curves. The first, MC starts at a positive level when q=0; more precisely, MC(0) is greater than 16 and lower than 30; then MC is decreasing for values of q in between 0 and 50; at 50 MC has a minimum; this minimum is MC(50)=10; after q=50, MC is increasing; in particular MC(100)=16, MC(120)=30. The second curve, AVC, starts at the same level of MC(0); it is decreasing when q is between 0 and 100; in this range AVC is above MC; at q=100, AVC crosses MC; more precisely, AVC(100)=MC(100)=16; for q>100, AVC is increasing and below MC. The third curve, AC, has a positive asymptote at zero, that is, it grows to plus infinity when q is very small; AC is decreasing when q is in between 0 and 120; in this range is above MC; AC(100)=34; AC and MC cross at q=120; more precisely, AC(120)=MC(120)=30; for q>=120, AC is increasing, below MC and above AVC.) $0 -$1700 -$1900 $1600 -$1800
MPL(L1,K)>MPL(L2,K)
Consider the following graph of a production function when capital is constant. (The following is a description of the figure: it shows a two-axis graph; the horizontal axis measures labor and the vertical axis measures output; for a K fixed, the graph shows that maximal production that the firm can achieve with different levels of labor; the graph starts at cero production for zero labor; then it is increasing in all of its range; three levels of labor are shown as reference; there are L1, L2, and L3; they are related as follows L1<L2<L3; the graph is convex from 0 to L1, that is, its slope is increasing; the graph is concave from L1 on, that is, its slope is decreasing; the line that is tangent to the curve at L2, passes through the origin of the graph.) MPL(L1,K)>MPL(L2,K) MPL(L1,K)<MPL(L2,K) MPL(L1,K)=MPL(L2,K) MPL(L2,K)=MPL(L3,K) MPL(L3,K)>MPL(L2,K)
False
Consider the following production function when K is fixed. (This is a description of the figure: it shows a two-axis graph; in the horizontal axis we measure labor and in the vertical axis we measure meals; the graph of the production function is a line that intersects the vertical axis at a positive amount; this graph is a line with positive slope and passes through the point (4,300)). True False
True
Consider the following production function when K is fixed. (This is a description of the figure: it shows a two-axis graph; in the horizontal axis we measure labor and in the vertical axis we measure output, in this case articles as in the production function of a newspaper; the graph of the production function, for the given level of capital K fixed, is composed of two line segments; the first goes from the origin to the point (10,30); the second, starting from 10 on, is a horizontal line; it is also shown that the production for five units of labor is 15). True False
True
Consider the following production function when K is fixed. (This is a description of the figure: it shows a two-axis graph; in the horizontal axis we measure labor and in the vertical axis we measure output, in this case units of juice; the graph of the production function is a curve that has decreasing slope in all of its domain.) True False
$90,000 per year
John manages his own company and receives $35,000 a year for it. The best salary that John would be able to find in a different company is $90,000 a year. The economic cost of John's labor is: $40,000 per year $90,000 per year $125,000 per year $55,000 per year $60,000 per year
36
Suppose a firm has the following cost function when capital is fixed: C(q)=54+6q2. The minimum price necessary for the firm to earn non-negative profit is? 32 54 24 45 36
p ≥ AVC(q)
Suppose that a competitive firm maximizes profits, when capital is fixed, by producing q>0 units of output. Which of the following must be true? p > MC(q) p< AVC(q) AVC(q)=AC(q) p < MC(q) p ≥ AVC(q)
(5,6)
Suppose that a firm has a production function f(L,K)=min{2L,K}. From the following combination of labor and capital (L,K), which one belongs to the same iso-quant as (3,90)? (30,3) (90,4) (3,5) (15,15) (5,6)
$1200
Suppose that a firm's cost function is given by: C(q)=4q. If the market price is $10, then the firm's profit from producing and selling 200 units is? $1100 $1000 $1300 $1200 $1400
S(p)=5p
Suppose that the cost function for an orange juice firm is C(q) = 10 + 0.1q2. What is the supply function of this firm? S(p)=5p S(p)=0.2p S(p)=15p S(p)=0.1p S(p)=10p
S(p)=500p
Suppose that the cost function for an orange juice producer is C(q) = 10 + 0.1q2. If there are 100 identical orange juice producers in the market, the market supply curve is? S(p)=1000p S(p)=20p S(p)=10p S(p)=1500p S(p)=500p
If the firm substitutes one unit of labor for x units of capital, then production remains constant.
Suppose that the marginal rate of technical substitution of L for K is constant and equal to x. Then? -If the firm substitutes one unit of labor for x units of capital, then production remains constant. -If the firm substitutes one unit of capital for x units of labor, then production remains constant. -The partial derivative of the marginal revenue with respect to capital is x. -If the firm substitutes x units of labor for 1 unit of capital, then production remains constant. -If the firm substitutes x units of capital for 1 unit of labor, then production decreases.
Production increases
The MRTSLK(L,K) for a certain firm is constant and equal to 2. Then, if the firm substitutes 2 units of labor FOR one unit of capital? Production increases Production decreases Production remains constant The Marginal product of labor increases The Marginal product of labor decreases
$44,000.00
The economic cost of education of a student is the summation of all the economic cost of the resources used by the student in order to obtain his or her education. This includes the time the student dedicates to study. Consider Juana's case. Her tuition is $32,000.00 per year; Juana works part time on a Bookstore and receives $10,000.00 a year for it; if she were going to drop out of college and work full time, Juana would receive $22,000.00 a year. The economic cost of Juana's education (per year) is? $54,000.00 $42,000.00 $32,000.00 $44,000.00 $12,000.00
Yes
The following figure shows the marginal and average cost functions of a firm. It is a two-axis graph in which the horizontal axis measures production output and the vertical axis measures marginal and average costs in $. The graph shows a single flat line at level c that is labeled MC=AC. No. Yes.
No
The following figure shows the marginal and average cost functions of a firm. It is a two-axis graph in which the horizontal axis measures production output and the vertical axis measures marginal and average costs in $. The graph shows two increasing curves labeled MC and AC. The two curves have the same vertical intercept. For positive values of output MC is always greater than AC. No. Yes.
False
The following production function represents an industry in which there is free entry: f(L,K)=100L1/2K1/3. True False
There is no level of labor for which APL is equal to 10.
Consider a call center with production function f(L,K)=30L+300K, where L is units of labor and K is units of capital. Suppose that K=2. For which amounts of labor is the Average Product of Labor equal to 10? Between 21 and 30 There is no level of labor for which APL is equal to 10. Between 11 and 20 Between 31 and 40 Between 1 and 10
True
Consider a firm that has production function f(L,K)=5L1/3K2/3. Does this production function satisfy the law of decreasing marginal returns of capital? True False
K/2L
Consider a firm that has production function f(L,K)=5L1/3K2/3. What is the expression for the marginal rate of technical substitution MRTSLK at (L,K)? 10K/L K/2L K/10L 2K/L K/L
MPK(L,K)= 10L1/3/3K1/3
Consider a firm that has production function f(L,K)=5L1/3K2/3. What is the expression for this firm's Marginal Product of capital? MPK(L,K)= 10L2/3/3K1/3. MPK(L,K)= 10L1/3/3K1/3. MPK(L,K)= 5L1/3/3K1/3. MPK(L,K)= 10L1/3/3K2/3. MPK(L,K)= 10L1/3/5K1/3.
3%
Assume that the economic cost of capital in the market (also called return) is 3% a year. Jane is analyzing the prospect of investing in a restaurant in a segment of the market that is competitive and for which there is free entry. She has the option to invest $100,000.00 in the restaurant, and sign a contract that determines her return as follows: she will be paid x% of interest on her capital contribution, plus a 90% share of the business profit. What is the minimum x% for which Jane is willing to invest if all other resources used by the restaurant are paid its economic cost? 3% 1% 2% 2.5% 4%
20/3
Consider a firm that has production function f(L,K)=5L1/3K2/3. What is the value of the Marginal Product of labor when L=1 and K=8? 20. 6/5. 12/5. 20/3. 10/3.
f(L,K) = 30L + 240K
A call center employs workers and automatic answering machines. Each worker is able to answer a maximum of 5 calls per hour (6 hours a day; a total of 30 calls per day); each automatic answering machine is able to answer a maximum of 10 calls per hour (24 hours a day; a total of 240 calls a day). Denote the number of workers employed by the company by L and the number of automatic answering machines employed by the company by K. The firm's daily production function is? f(L,K) = 240K f(L,K) = min {30L, 240K} f(L,K) = max {30L, 240K} f(L,K) = 30L + 240K f(L,K) = 30L
30
A call center has a production function: f(L,K)= 30L + 240K. What is the Marginal Product of Labor when L=1200 and K=1? 30 360240 240 240 360000
1/8
A call center has a production function: f(L,K)= 30L + 240K. What is the Marginal Rate of Technical Substitution of labor for capital MRTSLK(L,K)? 1/8 8 240 1 30
f(L,2)=40L+400
A call center has a production function: f(L,K)=40L+200K. If capital is fixed at K=2, what is the expression for the maximal production as a function of labor? f(L,2)=80L+800 f(L,2)=40L+400 f(L,2)=20L+200 f(L,2)=40L+40 f(L,2)=80L+400
440
A call center has a production function: f(L,K)=40L+200K. The maximal amount of calls that the call center may receive given that L=1 and K=2 is? 400 480 280 300 440
True
A firm has constant MRTSLK. Suppose that when the firm substitutes x units of labor FOR y units of capital production remains constant. Then, if the firm substitutes x units of labor WITH y units of capital production remains constant. False. True.
1101
A firm has supply function S(p)=40p. If consumers pay a price p=30 and the government is collecting an ad-valorem tax of 8.25% from the producers' revenue, then the amount supplied by the firm is? 1101 units 9175 units 99 units 1200 units 8350 units
2.5%
Assume that the economic cost of capital in the market (also called return) is 3% a year. Jane is analyzing the prospect of investing in a restaurant in a segment of the market that is competitive and for which there is free entry. She has the option to invest $100,000.00 in the restaurant, and sign a contract that determines her return as follows: she will be paid 2% of interest on her capital contribution, plus a 50% share of the business profit. What will be the return of Jane's investment if all other resources used by the restaurant are paid its economic cost? 1% 3% 1.5% 2% 2.5%
β=1/3
Consider a Cobb-Douglas production function f(L, K)= AL2/3Kβ, where A and β are positive constants. Then, f has constant returns to scale if and only if: β=1/3 A=2 A+β<1 A+β>1 Aβ+2=1
α+β>1
Consider a Cobb-Douglas production function f(L, K)= ALαKβ, where A, α and β are positive constants. Then, f has increasing returns to scale if: α+β<1 α+β>1 α+β≤1 α+β=1 α+β=0
$1800
Consider the firm whose MC, AC, AVC, AFC functions are shown in the following graph. (The following is a description of the figure: This figure is a two-axis graph; in the horizontal line we measure output q, and in the vertical line dollars $; there are four curves. The first, MC starts at a positive level when q=0; more precisely, MC(0) is greater than 16 and lower than 30; then MC is decreasing for values of q in between 0 and 50; at 50 MC has a minimum; this minimum is MC(50)=10; after q=50, MC is increasing; in particular MC(100)=16, MC(120)=30. The second curve, AVC, starts at the same level of MC(0); it is decreasing when q is between 0 and 100; in this range AVC is above MC; at q=100, AVC crosses MC; more precisely, AVC(100)=MC(100)=16; for q>100, AVC is increasing and below MC. The third curve, AC, has a positive asymptote at zero, that is, it grows to plus infinity when q is very small; AC is decreasing when q is in between 0 and 120; in this range is above MC; AC(100)=34; AC and MC cross at q=120; more precisely, AC(120)=MC(120)=30; for q>=120, AC is increasing, below MC and above AVC.) $1900 $1600 $1700 $0 $1800
0
Consider the firm whose MC, AC, AVC, AFC functions are shown in the following graph. (The following is a description of the figure: This figure is a two-axis graph; in the horizontal line we measure output q, and in the vertical line dollars $; there are four curves. The first, MC starts at a positive level when q=0; more precisely, MC(0) is greater than 16 and lower than 30; then MC is decreasing for values of q in between 0 and 50; at 50 MC has a minimum; this minimum is MC(50)=10; after q=50, MC is increasing; in particular MC(100)=16, MC(120)=30. The second curve, AVC, starts at the same level of MC(0); it is decreasing when q is between 0 and 100; in this range AVC is above MC; at q=100, AVC crosses MC; more precisely, AVC(100)=MC(100)=16; for q>100, AVC is increasing and below MC. The third curve, AC, has a positive asymptote at zero, that is, it grows to plus infinity when q is very small; AC is decreasing when q is in between 0 and 120; in this range is above MC; AC(100)=34; AC and MC cross at q=120; more precisely, AC(120)=MC(120)=30; for q>=120, AC is increasing, below MC and above AVC.) -$1800 -$1700 $1600 -$1900 $0
0
Consider the firm whose MC, AC, AVC, AFC functions are shown in the following graph. (The following is a description of the figure: This figure is a two-axis graph; in the horizontal line we measure output q, and in the vertical line dollars $; there are four curves. The first, MC starts at a positive level when q=0; more precisely, MC(0) is greater than 16 and lower than 30; then MC is decreasing for values of q in between 0 and 50; at 50 MC has a minimum; this minimum is MC(50)=10; after q=50, MC is increasing; in particular MC(100)=16, MC(120)=30. The second curve, AVC, starts at the same level of MC(0); it is decreasing when q is between 0 and 100; in this range AVC is above MC; at q=100, AVC crosses MC; more precisely, AVC(100)=MC(100)=16; for q>100, AVC is increasing and below MC. The third curve, AC, has a positive asymptote at zero, that is, it grows to plus infinity when q is very small; AC is decreasing when q is in between 0 and 120; in this range is above MC; AC(100)=34; AC and MC cross at q=120; more precisely, AC(120)=MC(120)=30; for q>=120, AC is increasing, below MC and above AVC.) more than 100 but less than 120 units more than 0 but less than 50 units more than 50 but less than 100 units 0 units more than 120 units
more than 100 but less than 120 units
Consider the firm whose MC, AC, AVC, AFC functions are shown in the following graph. (The following is a description of the figure: This figure is a two-axis graph; in the horizontal line we measure output q, and in the vertical line dollars $; there are four curves. The first, MC starts at a positive level when q=0; more precisely, MC(0) is greater than 16 and lower than 30; then MC is decreasing for values of q in between 0 and 50; at 50 MC has a minimum; this minimum is MC(50)=10; after q=50, MC is increasing; in particular MC(100)=16, MC(120)=30. The second curve, AVC, starts at the same level of MC(0); it is decreasing when q is between 0 and 100; in this range AVC is above MC; at q=100, AVC crosses MC; more precisely, AVC(100)=MC(100)=16; for q>100, AVC is increasing and below MC. The third curve, AC, has a positive asymptote at zero, that is, it grows to plus infinity when q is very small; AC is decreasing when q is in between 0 and 120; in this range is above MC; AC(100)=34; AC and MC cross at q=120; more precisely, AC(120)=MC(120)=30; for q>=120, AC is increasing, below MC and above AVC.) more than 50 but less than 100 units more than 100 but less than 120 units more than 0 but less than 50 units 0 units more than 120 units
APL(5,K)=40
Consider the following figure (The following is a description of the figure: it shows a two-axis graph; the horizontal axis measures labor and the vertical axis measures output; for a level of K fixed, the graph shows that maximal production that the firm can achieve with different levels of labor; the graph starts at cero production for zero labor; then it is increasing in all of its range; five units of labor is shown as reference in the horizontal axis; the corresponding production for this level of labor is 200; the graphs slope is initially increasing, then there is an inflexion point to the left of five levels of labor; after this inflexion point, the slope of the graph is decreasing; a line that passes through zero and is tangent to the graph is also shown; this line is tangent to the graph for a level of labor that is to the left of 5.) APL(5,K)=40 APL(L,K) is decreasing in all the range of L shown in the figure. APL(5,K)=205 APL(5,K)=100 APL(5,K)=52
APL(L1,K)<MPL(L1,K)
Consider the following graph of a production function when capital is constant. (The following is a description of the figure: it shows a two-axis graph; the horizontal axis measures labor and the vertical axis measures output; for a K fixed, the graph shows that maximal production that the firm can achieve with different levels of labor; the graph starts at cero production for zero labor; then it is increasing in all of its range; three levels of labor are shown as reference; there are L1, L2, and L3; they are related as follows L1<L2<L3; the graph is convex from 0 to L1, that is, its slope is increasing; the graph is concave from L1 on, that is, its slope is decreasing; the line that is tangent to the curve at L2, passes through the origin of the graph.) APL(L1,K)>MPL(L1,K) APL(L1,K)=MPL(L1,K) APL(L1,K)<MPL(L1,K) APL(L2,K)<MPL(L2,K) APL(L2,K)>MPL(L2,K)
to maximize economic profits
In our theory of production, our main assumption is that a firms' only purpose is? -the fair treatment of employees -to reduce environmental impact -to maximize economic profits -to reduce unemployment rate -to maximize the marginal rate of substitution
it will not produce 1000 units
If a competitive firm's marginal profit is positive at an output of 1000 units, it will not produce 1000 units it should produce 1000 units at 1000 units, Marginal revenue < MC at 1000 units, marginal price derivative is equal to the Marginal Giffen good. at 1000 units, Marginal revenue = MC
0.16%
In a competitive market, the demand and supply curves are Q(p) = 12 - p and S(p) = 5P, respectively. What percentage of the total surplus is lost if the government imposes a sales tax (ad valorem) of 20% collected from the producer? 0.5% 5.8% 16.3% 0.16% 22.6%
50
In a competitive market, the demand and supply curves are Q(p) = 12 - p and S(p) = 5p respectively. Consumer surplus in this market equals? 12 15 60 65 50
10
In a competitive market, the demand and supply curves are Q(p) = 12 - p and S(p) = 5p respectively. Producer surplus in this market equals? 4 3 5 10 0
-c-f
The following figure shows demand and supply in a certain market. (The following is a description of the figure: In a two-axis graph we measure q in the horizontal axis and dollars $ in the vertical axis. Two curves S and Q are shown. S is a line with positive slope whose vertical intercept is positive. Q is a decreasing line whose vertical intercept is above the vertical intercept of S. Denote by (q*,p*) the point at which S and Q intersect; this point is such that q* is positive and p* is in between the vertical intercepts of S and Q. A level of prices p1 is shown. This price is above the vertical intercept of S, and below p*. The level of q associated by S to p1 is labeled q1. This q1 is to the left of q*. Denote by p' the level of price such that Q(p')=q1. This p' is greater than p*. Six labels for areas in the figure are shown. These labels represent the size of the respective area. They are: a is the triangle with vertices given by the vertical intercept of Q, (0,p'), and (q1,p'); b is the rectangle with extremes (0,p') and (q1,p*); c is the rectangle with extremes (0,p*) and (q1,p1); d is the triangle with vertices given by the vertical intercept of S, (0,p1), and (q1,p1); e is the triangle with vertices (q1,p'), (q1,p*), and (q*,p*); and f is the triangle with vertices (q1,p1), (q1,p*), and (q*,p*).) -c-f -e-f -c-d -f -d
-e-f
The following figure shows demand and supply in a certain market. (The following is a description of the figure: In a two-axis graph we measure q in the horizontal axis and dollars $ in the vertical axis. Two curves S and Q are shown. S is a line with positive slope whose vertical intercept is positive. Q is a decreasing line whose vertical intercept is above the vertical intercept of S. Denote by (q*,p*) the point at which S and Q intersect; this point is such that q* is positive and p* is in between the vertical intercepts of S and Q. A level of prices p1 is shown. This price is above the vertical intercept of S, and below p*. The level of q associated by S to p1 is labeled q1. This q1 is to the left of q*. Denote by p' the level of price such that Q(p')=q1. This p' is greater than p*. Six labels for areas in the figure are shown. These labels represent the size of the respective area. They are: a is the triangle with vertices given by the vertical intercept of Q, (0,p'), and (q1,p'); b is the rectangle with extremes (0,p') and (q1,p*); c is the rectangle with extremes (0,p*) and (q1,p1); d is the triangle with vertices given by the vertical intercept of S, (0,p1), and (q1,p1); e is the triangle with vertices (q1,p'), (q1,p*), and (q*,p*); and f is the triangle with vertices (q1,p1), (q1,p*), and (q*,p*).) -e-f -f -b-e -c-f -c-d
d
The following figure shows demand and supply in a certain market. (The following is a description of the figure: In a two-axis graph we measure q in the horizontal axis and dollars $ in the vertical axis. Two curves S and Q are shown. S is a line with positive slope whose vertical intercept is positive. Q is a decreasing line whose vertical intercept is above the vertical intercept of S. Denote by (q*,p*) the point at which S and Q intersect; this point is such that q* is positive and p* is in between the vertical intercepts of S and Q. A level of prices p1 is shown. This price is above the vertical intercept of S, and below p*. The level of q associated by S to p1 is labeled q1. This q1 is to the left of q*. Denote by p' the level of price such that Q(p')=q1. This p' is greater than p*. Six labels for areas in the figure are shown. These labels represent the size of the respective area. They are: a is the triangle with vertices given by the vertical intercept of Q, (0,p'), and (q1,p'); b is the rectangle with extremes (0,p') and (q1,p*); c is the rectangle with extremes (0,p*) and (q1,p1); d is the triangle with vertices given by the vertical intercept of S, (0,p1), and (q1,p1); e is the triangle with vertices (q1,p'), (q1,p*), and (q*,p*); and f is the triangle with vertices (q1,p1), (q1,p*), and (q*,p*).) d b+c+d c+d+f b+e+c+f+d f
c+d+f
The following figure shows demand and supply in a certain market. (The following is a description of the figure: In a two-axis graph we measure q in the horizontal axis and dollars $ in the vertical axis. Two curves S and Q are shown. S is a line with positive slope whose vertical intercept is positive. Q is a decreasing line whose vertical intercept is above the vertical intercept of S. Denote by (q*,p*) the point at which S and Q intersect; this point is such that q* is positive and p* is in between the vertical intercepts of S and Q. A level of prices p1 is shown. This price is above the vertical intercept of S, and below p*. The level of q associated by S to p1 is labeled q1. This q1 is to the left of q*. Denote by p' the level of price such that Q(p')=q1. This p' is greater than p*. Six labels for areas in the figure are shown. These labels represent the size of the respective area. They are: a is the triangle with vertices given by the vertical intercept of Q, (0,p'), and (q1,p'); b is the rectangle with extremes (0,p') and (q1,p*); c is the rectangle with extremes (0,p*) and (q1,p1); d is the triangle with vertices given by the vertical intercept of S, (0,p1), and (q1,p1); e is the triangle with vertices (q1,p'), (q1,p*), and (q*,p*); and f is the triangle with vertices (q1,p1), (q1,p*), and (q*,p*).) f c+d+f b+e+c+f+d d b+c+d
No
The following figure shows the cost function of a firm. It is a two-axis graph in which the horizontal axis measures production output and the vertical axis measures cost in $. The graph shows and increasing function. The slope of the curve is increasing too No. Yes.
20%
The following figure shows the demand and supply in a market, and the supply when there government decides to impose a specific tax and collect it from the producers. What ad-valorem tax (% collected from the producers revenue) would generate the same revenue for the government? (This is a description of the figure: In a two-axis graph we measure quantity q in the horizontal axis and dollars $ in the vertical axis. We show three curves: one is labeled S, another S+t, and a third one Q; curve S follows the vertical axis until a positive value, then it is strictly increasing; that is, a higher price has a higher associated quantity; for price $8, S associates a positive value q*; curve S+t is the vertical translation of curve S by value t=2; in particular for price $10, curve S+t associates value q*; finally Q is a decreasing curve; for q=0 it starts from a value that is higher than 10 and decreases in all of its range; Q intersects S+t at p=$10 and q=q*.) 20% 2% 10% 8.25% 16%
Yes
The following figure shows the graph of the production function of a firm when capital is fixed at some level K. This is a description of the graph. This is a two axis graph in which the horizontal axis measures L and the vertical axis measures output units. A concave increasing curve is shown. It passes through the points (100,23) and (200,42). No. Yes.
180
The following figure shows the graph of the production function of a firm when capital is fixed at some level K. This is a description of the graph. This is a two axis graph in which the horizontal axis measures L and the vertical axis measures output units. A concave increasing curve is shown. It passes through the points (100,23) and (200,42). 120 180 195 140 160
23
The following figure shows the demand and supply in a market. At what price is total welfare maximized? (The following is a description of the graph: In a two-axis graph we measure q in the horizontal axis and dollars $ in the vertical axis. Two curves are shown S and Q. Curve S is an increasing function. It is piece-wise linear, i.e., it is formed by two line segments; the first line segment connects the point (0,3) to the point (20,16.7); for q>=20 S continues as an increasing line that starts at (20,16.7) and passes through the point (30,23). Curve Q is also piece-wise linear; it is a decreasing function formed by two line segments; the first segment connects the points (0,40) and (20,28.6); for q>=20 Q continues as a decreasing line that starts at (20,28.8) and passes through (30,23). Six areas in the figure are labeled with lowercase letters: a is the triangle with vertices (0,40), (0,28.6), and (20,28.6); b is the rectangle with extremes (0,28.6) and (20,23); c is the rectangle with extremes (0,23) and (20,16.7); d is the triangle with vertices (0,3), (0,16.7) and (20,16.7); e is the triangle with vertices (20,28.6), (20,23) and (30,23); and f is the triangle with vertices (20,23), (20,16.7) and (30,23).) 40 16.7 28.6 23 3
specific tax of $11.9
The following figure shows the demand and supply in a market. What generates a greater dead weight loss: a specific tax of $11.9 collected from the producer or a sales (ad-valorem) tax of 11.9% collected from the producer's revenue? (The following is a description of the graph: In a two-axis graph we measure q in the horizontal axis and dollars $ in the vertical axis. Two curves are shown S and Q. Curve S is an increasing function. It is piece-wise linear, i.e., it is formed by two line segments; the first line segment connects the point (0,3) to the point (20,16.7); for q>=20 S continues as an increasing line that starts at (20,16.7) and passes through the point (30,23). Curve Q is also piece-wise linear; it is a decreasing function formed by two line segments; the first segment connects the points (0,40) and (20,28.6); for q>=20 Q continues as a decreasing line that starts at (20,28.8) and passes through (30,23). Six areas in the figure are labeled with lowercase letters: a is the triangle with vertices (0,40), (0,28.6), and (20,28.6); b is the rectangle with extremes (0,28.6) and (20,23); c is the rectangle with extremes (0,23) and (20,16.7); d is the triangle with vertices (0,3), (0,16.7) and (20,16.7); e is the triangle with vertices (20,28.6), (20,23) and (30,23); and f is the triangle with vertices (20,23), (20,16.7) and (30,23).) sales tax (ad-valorem) of 11.9% specific tax of $11.9
548.5
The following figure shows the demand and supply in a market. What is the total welfare in the market equilibrium? (The following is a description of the graph: In a two-axis graph we measure q in the horizontal axis and dollars $ in the vertical axis. Two curves are shown S and Q. Curve S is an increasing function. It is piece-wise linear, i.e., it is formed by two line segments; the first line segment connects the point (0,3) to the point (20,16.7); for q>=20 S continues as an increasing line that starts at (20,16.7) and passes through the point (30,23). Curve Q is also piece-wise linear; it is a decreasing function formed by two line segments; the first segment connects the points (0,40) and (20,28.6); for q>=20 Q continues as a decreasing line that starts at (20,28.8) and passes through (30,23). Six areas in the figure are labeled with lowercase letters: a is the triangle with vertices (0,40), (0,28.6), and (20,28.6); b is the rectangle with extremes (0,28.6) and (20,23); c is the rectangle with extremes (0,23) and (20,16.7); d is the triangle with vertices (0,3), (0,16.7) and (20,16.7); e is the triangle with vertices (20,28.6), (20,23) and (30,23); and f is the triangle with vertices (20,23), (20,16.7) and (30,23).) 650.5 489.5 600.0 548.5 530.5
114
The following figure shows the demand and supply in a market. What is the value of the Consumer Surplus in this market if consumers pay a price of $28.6 and consume 20 units? (The following is a description of the graph: In a two-axis graph we measure q in the horizontal axis and dollars $ in the vertical axis. Two curves are shown S and Q. Curve S is an increasing function. It is piece-wise linear, i.e., it is formed by two line segments; the first line segment connects the point (0,3) to the point (20,16.7); for q>=20 S continues as an increasing line that starts at (20,16.7) and passes through the point (30,23). Curve Q is also piece-wise linear; it is a decreasing function formed by two line segments; the first segment connects the points (0,40) and (20,28.6); for q>=20 Q continues as a decreasing line that starts at (20,28.8) and passes through (30,23). Six areas in the figure are labeled with lowercase letters: a is the triangle with vertices (0,40), (0,28.6), and (20,28.6); b is the rectangle with extremes (0,28.6) and (20,23); c is the rectangle with extremes (0,23) and (20,16.7); d is the triangle with vertices (0,3), (0,16.7) and (20,16.7); e is the triangle with vertices (20,28.6), (20,23) and (30,23); and f is the triangle with vertices (20,23), (20,16.7) and (30,23).) 114 375 300 255 600
294.5
The following figure shows the demand and supply in a market. What is the value of the Producer Surplus in equilibrium? (The following is a description of the graph: In a two-axis graph we measure q in the horizontal axis and dollars $ in the vertical axis. Two curves are shown S and Q. Curve S is an increasing function. It is piece-wise linear, i.e., it is formed by two line segments; the first line segment connects the point (0,3) to the point (20,16.7); for q>=20 S continues as an increasing line that starts at (20,16.7) and passes through the point (30,23). Curve Q is also piece-wise linear; it is a decreasing function formed by two line segments; the first segment connects the points (0,40) and (20,28.6); for q>=20 Q continues as a decreasing line that starts at (20,28.8) and passes through (30,23). Six areas in the figure are labeled with lowercase letters: a is the triangle with vertices (0,40), (0,28.6), and (20,28.6); b is the rectangle with extremes (0,28.6) and (20,23); c is the rectangle with extremes (0,23) and (20,16.7); d is the triangle with vertices (0,3), (0,16.7) and (20,16.7); e is the triangle with vertices (20,28.6), (20,23) and (30,23); and f is the triangle with vertices (20,23), (20,16.7) and (30,23).) 600 294.5 510 228 375
No
The following figure shows the graph of the production function of a firm when capital is fixed at some level K. This is a description of the graph. This is a two axis graph in which the horizontal axis measures L and the vertical axis measures output units. A concave increasing curve is shown. It passes through the points (100,23) and (200,42). No. Yes.
No
The following figure shows the graph of the production function of a firm when capital is fixed at some level K. This is a description of the graph. This is a two axis graph in which the horizontal axis measures L and the vertical axis measures output units. A concave increasing curve is shown. It passes through the points (100,23) and (200,42). No. Yes.
