ECON 3023 Midterm Exams 1-3 - Kazianga
Suppose the cost function is C(Q)=50 +Q- 10Q^2+ 2Q^3. what is the total cost of producing 10 units?
$1060
You are the manager of a gas station and your goal is to maximize profits. Based on your past experience, the elasticity of demand by Texans for a car wash is -4, while the elasticity of demand by non-Texans for a car wash is -6. If you charge Texans $20 for a car wash, how much should you charge a man with Oklahoma license plates for a car wash?
$18.00
Consider a market characterized by the following inverse demand and supply functions. Px=10-2Qx and Px=2+2Qx. Compute the loss in social welfare when an $8 per unit price floor is imposed on the market.
$2. LEARN HOW TO DO
A new firm enters a market which is initially serviced by a Bertrand duopoly charging a price of $20. What will the new price be should the three firms coexist after entry?
$20
Suppose a firm manager has a base salary of $175,000 and earns .5 percent of all profits. Determine the manager's income if revenues are $10,000,000 and profits are $5,000,000.
$200,000
A monopoly produces widgets at a marginal cost of $8 per unit and zero fixed costs. It faces an inverse demand function given by P=38-Q. What are the profits of the monopoly at equilibrium?
$225
A monopoly produces widgets at a marginal cost of $8 per unit and zero fixed costs. It faces an inverse demand function given by P=38-Q. The monopoly price is:
$23
If the interest rate is 10 percent and cash flows are $1000 at the end of year one and $2000 at the end of year two, then the present value of these cash flows is
$2562
You are the manager of a mom and pop store that can buy milk from a supplier at $2.00 per gallon. If you believe the elasticity of demand for milk by customers at your store is -3, then your profit-maximizing price is:
$3.00
You are the manager of a mom and pop store that can buy milk from a supplier at $3.00 per gallon. If you believe the elasticity of demand for milk by customers at your store is -4, then your profit maximizing price is:
$4.00
Suppose the cost function is C(Q)=50 +Q- 10Q^2+ 2Q^3. What are the fixed costs?
$50
Consider a cournot oligopoly consisting of five identical firms producing good X. If the firms produce good X at a marginal cost of $7 per unit and the market elasticity of demand is -3, determine the profit-maximizing price.
$7.50 per unit
Suppose Qxd=10000-2Px+3Py-4.5M, where Px=$100, Py=$50, and M=$2,000. What is the own price elasticity of demand?
-.21
Suppose you compete in a Cornet oligopoly market consisting of six firms. The equilibrium market price and quantity are $5 and 10 units, respectively. The marginal cost for each firm is $3. Based on this information, we know the price elasticity of the market demand is:
-.417
The demand for good X has been estimated by Qxd=12-3Px+4Py. Suppose that good X sells at $2 per unit and good Y sells for $1 per unit. Calculate the own price elasticity
-.6. =X Demand Coefficient* P/Q
Suppose a consumer with an income of $100 is faced with Px=1 and Py=1/2. What is the market rate of substitution between good X (horizontal axis) and good Y (vertical axis)?
-2.0 Figure out why.
If quantity demanded for sneakers falls by 10 percent when price increases 25%, we know that the absolute value of the own price elasticity of sneakers is:
.4 (CHange in demand/Change in price)
A firm has a marginal cost of $20 and charges a price of $40. The Lerner index for this firm is:
.5
You are the manager of a firm that produces output in two plants. The demand for your firm's product is P=78-15Q, where Q=Q1+Q2. The marginal costs associated with producing in the two plants are MC1=3Q1 and MC2=2Q2. How much output should be produced in plant 1 in order to maximize profits?
1
If the production function is Q=K^.5 L^.5 and capital is fixed at 1 unit, then the average product of labor when L=36 is:
1/6 (Q/L)
For a cost function C=100+10Q+Q^2 the average fixed cost of producing 10 units of output is:
10
What is the maximum amount of good Y that can be purchased if X and Y are the only two goods available for purchase and Px=$10, Py=$20, X=20, and M=400.
10
You are the manager of a firm that sells its product in a competitive market at a price of $60. Your firm's cost function is C=50+3Q^2. The profit-maximizing output for your firm is:
10
Given the linear production function Q=10K+5L, if Q=10000 and K=500, how much labor is utilized?
1000 units
What is the marginal cost of producing the fifth unit? No. of units Total Rev. Total Costs 0 0 0 1 100 50 2 180 110 3 250 180 4 290 270 5 310 380
110
Suppose the market demand and supply are given by Qd=100-2P and Qs=5+3P. The equilibrium pice is:
19
Given the table below, how many workers should be hired to maximize profits? Labor MPL VMP Wage 1 8 32 100 2 32 128 100 3 16 64 100 4 -1 -4 100 5 -12 -48 100
2.
Given the Leontief production function Q=min (5.5K, 6.7L), how much output is produced when K=40 and L=35?
220
During spring break, students have an elasticity of demand for a trip to Cancun, Mexico, of -4. How much should an airline charge students for a ticket if the price it charges the general public is $420? assume the general public has an elasticity of -2.
280
Suppose the production function is given by Q=3K+4L. What is the marginal product of capital when 5 units of capital and 10 units of labor are employed?
3
For a cost function C=100 + 10Q+Q^2, the average variable cost of producing 20 units of output:
30
A local video store estimates its average customer's demand per year is Q=20-4P, and it knows the marginal cost of each rental is $1.00. How much should the store charge for an annual membership in order to extract the entire consumer surplus via an optimal to part pricing strategy? 20 32 64 40
32
What is the maximum amount of good Y that can be purchased if X and Y are the only two goods available for purchase and Px=5, Py=10, X=20, and M=500?
40
You are the manager of a firm that sells its product in a competitive market at a price of $50. Your firm's cost function is C=40+5Q^2. The profit-maximizing output for your firm is:
5
You are the manager of a monopoly that faces a demand curve described by P=230-20Q. Your costs are C=5+30Q. The profit maximizing output of your firm is:
5
Given that income is $200 and the price of good Y is $40, what is the vertical intercept of the budget line?
5 (Income/Py)
Suppose the supply of good X is given by Qsx=10+2Px. How many units of good x are produced if the price of good x is 20.
50
Suppsoe market demand and supply are given by Qd=100-2P and Qs=5+3P. If a price floor of $30 is set, what will be the size of the resulting surplus?
55
What is the marginal revenue of producing the third unit? No. of units Total Rev. Total Costs 0 0 0 1 100 50 2 180 110 3 250 180 4 290 270 5 310 380
70
In a competitive market, the market demand is Qd=60-6P and the market supply is Qs=4P. The full economic price under a price ceiling of $3 is:
8
You are the manager of a firm that sells its product in a competitive market at a price of $50. Your firm's cost function is C=40+5Q^2. Your firm's maximum profits are:
85
The maximum legal price that can be charged in a market is:
A price ceiling
Which of the following cases violates the property of transitivity? A>B, B>C, A>C A~B, B~C, A~C A>B, B>C, C>A
A>B, B>C, C>A
The cost of production include: Accounting Cost The costs that appear on the income statements the opportunity costs foregone by producing a given product accounting costs and opportunity costs
Accounting Costs and opportunity costs
The market demand in a Bertrand duopoly is P=10-3Q, and the marginal costs are $1. Fixed costs are zero for both firms. Which of the following statements is are true? A) Producers surplus for firm1=producers for firm 2 B) Profits of firm=profits of firm 2 C) P=$1 D) All of the above
All of the above
Which of the following is (are) True? A) Accounting costs generally understate economic costs B) In the absence of any opportunity costs, accounting profits equal economic profits C) Accounting profits generally overstate economic profits D) All of the above
All of the above
To engage in first-degree price discrimination, a firm must: A) prevent low-value consumers from reselling to high-value consumers. B) be able to set P>MC C) Know each consumers maximum willingness to pay. D) all of the answers are correct
All of the answers are correct
In a competitive industry with identical firms, long run equilibrium is characterized by: P=MC MR=MC P=AC All of the statements are correct
All of the statements are correct.
Which of the following can explain an increase in the dmand for housing in retirement communities? A) Mandatory government legislation B) A drop in the average age of retirees C) A drop in real estate prices D) An increase in the population of the elderly
An increase in the population of the elderly
Suppose good x is a normal good. Then a decrease in income would lead to: An inward shift in the demand curve A movement along the demand curve An outward shift in the demand curve No shift of the demand curve
An inward shift of the demand curve
Which of the following are least likely to be substitutes? cars and trucks automobile and gasoline chicken and beef automobile and housing
Automobile and gasoline
The difference between average total costs and average variable costs is: fixed cost average fixed cost marginal cost none of the statements are correct
Average fixed cost
Oligopoly differs from monopoly as follows: A) Oligopoly involves a few firms; monopoly involves a single firm and oligopoly involves free entry; monopoly involves no free entry B) Oligopoly involves a few firms; monopoly involves a single firm C) Oligopoly involves free entry; monopoly involves free entry D) Oligopoly does use advertisement; monopoly does not use advertisement
B) Oligopoly involves a few firms; monopoly involves a single firm
Accounting profits are: A) marginal revenue minus total cost B) total revenue minus total cost C) total revenue minus marginal cost D) total cost minus total revenue
B) Total revenue minus total cost
From a consumers point of view, which type of oligolpoly is most desirable? Betrand Cournot Sweezy Stackelberg
Bertrand
The producer's surplus of all firms in a oligopoly is usually the least in the case of a: Bertrand Sweezy Stackelberg Cournot
Bertrand
Which firm would you expect to make the lowest profits, other things equal? Betrand Sweezy Cournot Stackelberg
Betrand Oligopolist
The upper boundary of the budget set is the: Indifference curve Budget Line Vertical Intercept Origin
Budget Line
Which of the following is most likely not an example of a normal good? Bus travel Jacuzzis Lobster Sports cars
Bus Travel
The difference between a price decrease and an increase in income is that A) A price decrease decreases real income, while an increase in income increases real income B) A price decrease does not affect the consumption of other goods, while an in increase in income does C) An increase in income does not affect the slope of the budget line, while a decrease in price does change the slope D) A price decrease leaves real income unchanged, while an increase in income increases real income
C) An increase in income does not affect the slope of the budget line, while a decrease in price does change the slope
Which of the following is the incorrect statement? A) The marginal benefits curve is the slope of the total benefits curve B) dB(Q)/dQ= MB C) The difference in the slope of the total benefit curve and the total cost curve is maximized at the optimal level of Q D) The slope of the net benefit curve is horizontal where MB = MC
C) The difference in the slope of the total benefit curve and the total cost curve is maximized at the optimal level of Q
The Higher the interest rate: A) The greater the present value of a future amount B) The greater the level of inflation C) The smaller the present value of a future amount D) None of the above
C) The smaller the present value of a future amount
Firms have market power in: A) perfectly competitive markets B) monopolistic markets C) monopolistically competitive and monopolistic markets D) monopolistically competitive markets
C) monopolistically competitive and monopolistic markets
CHanges in the price of a good lead to: A) no effects in quantity demanded or supplied B) changes in demand C) changes in quantity supplied of a good D) changes in supply
Changes in the quantity supplied of the good
Suppose two types of consumers buy suits. Consumers of type A will pay $100 for a coat and $50 for pants. Consumers of type B will pay $75 for a coat and $75 for pants. The firm selling suits faces no competition and has a marginal cost of zero. The optimal commodity bundling strategy is: Charge $100 for a suit Charge $125 for a suit Charge $75 for a suit Charge $150 for a suit
Charge $150 for a suit
If money income doubles and the prices of all goods triples, then the: consumer will buy more of normal goods budget line will shift out consumer is worse off due to inflation budget line remains unchanged
Consumer is worse off due to inflation
Consider a two-good world, with commodities X and Y. If X is an inferior good, then an increase in consumer income cannot: Increase the demand for Y Decrease the demand for X make the consumer better off decrease the demand for Y
Decrease the demand for Y
The buyer side of the market is known as the:
Demand Side
The demand function recognizes that the quantity of a good consumed depends on: A) demand shifters and price B) demand shifters only C) price and supply shifters D) the prices of other goods only
Demand shifters and price
What contributes to the existence of multi product firms? Economies of scope and cost complementarity Cost complementarity Economies of Scope Economies of Scale
Economies of scope and cost complementarity
In perfect competition, which is NOT true? Firms produce homogenous goods Firms are price-takers There are a large number of firms Every firm has a small but perceivable market power
Every firm has a small but perceivable market power
Economics:
Exists because of scarcity
Two firms compete in a Stackelberg fashion. If firm 2 is the leader, then: firm 2 views the output of firm 1 as given. Firm 1 views the output of firm 2 as given. Both of the above are correct. None of the answers are correct.
Firm 1 views the output of firm 2 as given.
Which of the following is an implicit cost of going to college? A) Cost of books and supplies B) Foregone wages C) Room and board D) Tuition
Foregone wages
Which of the following pairs of goods is probably not an example of substitutes? A) hamburgers and ketchup B) Potatoes and stuffing C) Chicken and steak D) raincoats and umbrellas
Hamburgers and Ketchup
Good X is a normal good if an increase in income leads to:
In increase in the demand for good x
IF marginal benefits exceed marginal costs, it is profitable to: Stay at the level of Q decrease Q Increase Q All of the above
Increase Q
The quantity consumed of a good is relatively unresponsive to changes in price whenever demand is: Unitary Inelastic Elastic Falling
Inelastic
Demand is perfectly elastic when the absolute value of the own price elasticity of demand is: infinite unknown zero one
Infinite
Second-degree price discrimination: Is the practice of posting a discrete schedule of declining prices for different ranges of quantities. results in transfer pricing. eliminates the problem of double marginalization. none of the answers are correct.
Is the practice of posting a discrete schedule of declining prices for different ranges of quantities.
The cimbinations of inputs that produce a given level of output are depicted by: Isoquants budget lines isocost curves indifference curves
Isoquants
Suppose both supply and demand decrease. What effect will this have on price? It will rise It will fall It will remain the same It may rise or fall
It may rise or fall
If a consumer's income decreases, what will happen to the budget line? A) It will shift outward B) It will shift inward C) It will become steeper D) It will become flatter
It will be a shift inward
The own price elasticity of demand for apples is -1.2. If the price of apples fall by 5 percent. what will happen to the quantity of apples demanded.
It will increase by 6 percent
A firm might choose to produce its own inputs if: Spot markets for the input exist specialized investment is not important the exchange environment is not complex long-term contracts are costly to write
Long-term contracts are costly to write
The maximum quantity of good Y that is affordable is: M/Px M/Py M/Y M/X
M/Py
The absolute value of the slope of the indifference curve is called the: A) Average rate of substitution B) Marginal cost C) Marginal Revenue D) Marginal rate of substitution
Marginal Rate of Substitution
Total product begins to fall when: Average product is below zero Marginal product is maximized Marginal product is zero average product is negative
Marginal product is zero
If you wish to open a store and you do not like risk, it would be wise to sell: A) A mix of normal and inferior goods B) only normal goods C) all inferior goods D) None of the above
Mix of normal and inferior goods
Which of the following market structures would you expect to yield the greatest product variety? perfect competition monopoly bertrand oligopoly monopolistic competition
Monopolistic competition
Joe prefers a three-pack of soda to a six-pack. What properties does this preference violate?
More is better
Suppose the marginal product of labor is 8 and the marginal product of capital is 2. If the wage rate is $4 and the price of capital is $2, then in order to minimize costs the firm should use: More labor and less capital More capital and less labor three times more capital than labor none of the answers are correct
More labor and less capital
When firm 1 enjoys a first mover advantage in a stackelberg duopoly, it will produce: A) less output and charge the same price as firm 2 B) Less output and charge a higher price than firm 2 C) more output and charge a lower price than firm 2 D) more output and charge the same price as firm 2
More output and charge the same price as firm 2
In a sweezy oligopoly, a decrease in a firm's marginal cost generally leads to: Increased output and a lower price reduced output and a higher price higher output and a higher price none of the above
None of the Above
If the production function is Q=KL and capital is fixed at 1 unit, then the marginal product of labor when L=25 is: 15 1/4 1/10 none are correct
None are correct (1)
Which of the following is true? in oligopoly a change in marginal cost never has an effect on output or price. In Bertrand oligopoly each firm believes that its rivals will hold their output constant if it changes its output. In cournot oligopoly firms produce an identical product at a constant marginal cost and engage in price competition. None of the answers is correct.
None of the answers is correct
Which of the the following is true? A) At a point of consumer equilibrium, the MRS always equals 1. B) If income increases, a consumer will always consume more of a good. C) Indifference curves may intersect D) None of the statements are correct
None of the statements are correct
Which of the following statements is true regarding profit-maximizing markup for a Cornet oligopoly with N identical firms? P=((1+NEf)/NEf)MC P(NEf/(1+NEf))=MC P=(NEf/(1+NEf))MC P(N(1+Ef)/NEf)=MC
P=(NEf/(1+NEf))MC
Which of the following is true for perfect competition but not true for monopolistic competition and monopoly? P=MC and positive long run profits P=MC Positive long run profits MC=MR
P=MC
Which of the following is true under monopoly? P=MR Profits are always positive P>MC All of the choices are true
P>MC
Suppose you produce wooden desks, and govermnet legislation protecting the spotted owl has made it more expensive to purchase wood. What do you expect to happen to the equilibrium price and quantity of wooden desks? Price will decrease but quantity will increase Price and quantity will increase Price and quantity will decrease Price will increase but quantity will decrease
Price will increase but quantity will decrease
With a linear inverse demand function and the same constant marginal costs for both firms in a homogenous product stackelberg duopoly, which of the following will result? PL>PF QL=2QF Profits of leader>Profits of follower Profits of leader>Profits of follower and QL=2QF
Profits of leader>Profits of follower and QL=2QF
Two firms compete as a Stackelberg duopoly. The demand they face is P=100-3Q. The cost function for each firm is C(Q)=4Q. The outputs of the two firms are: QL=20; QF=15 QL=24; QF= 12 QL=12; QF=8 QL=16; QF=8
QL=16; QF=8
If a producer offers a price that is in excess of a consumer's valuation of the good, the consumer: A) Must buy the good at that price B) must revalue the good C) Will refuse to purchase the good D) none of the above
Refuse to purchase the good
For a steel factory, a decrease in the cost of electricity to the plant will cause the supply curve to: A) Shift to the right B) Become parallel to the price axis C) become flatter D) shift to the left
Shift to the right
Technological advances will cause the supply curve to:
Shift to the right
Suppose market demand and supply are given by Qd=100-2P and Qs=5+3P. IF a price ceiling of $15 is imposed, there will be shortage of 20 units there will be a surplus of 40 units there will be a surplus of 20 units there will be a shortage of 40 units there will be neither a shortage or surplus
Shortage of 20 units
Which would you expect to make the highest profits, other things equal? Cournot oligopolist Bertrand Oligopolist Stackelberg follower Stackelberg leader
Stackelberg leader
If the cross-price elasticity between goods A and B is negative, we know the goods are: compliments substitutes inferior inelastic
Substitutes
Which of the following conditions is true when a producer minimizes the cost of producing a given level of output? The marginal products of all inputs are equal The MRTS is equal to the ratio of input prices, and the marginal product per dollar spent on all inputs is equal The MRTS is equal to the ratio of input prices The marginal product per dollar spent on all inputs is equal
The MRTS is equal to the ratio of input prices, and the marginal product per dollar spent on all inputs is equal
An isoquant defines the combination of inputs that yield the producer: The same level of output Higher levels of output than the desired level of output lower levels of output than the desired level of output none of the statements are correct
The same level of output
Which of the following "costs" could a firm that wants to remain in business avoid if it halted current production? Fixed costs Variable costs Opportunity costs Sunk costs
Variable costs
The marginal product of capital for the Cobb-Douglas production function is given by: bK^a L^b-1 aK^a-1 L^b-1 bK^a L^b aK^a-1 L^b
aK^a-1 L^b
Good x is a normal good and its demand is given by Qxd=a0+axPx+ayPy+amM+ahH. Then we know that: ah>0 am>0 ay>0 ax>0
am>0. BECAUSE ITS NORMAL GOOD, with positive income elasticity of demand!
Which of the following is least likely to be a normal good? Airline travel bologna home steak
bologna
A price increase causes a consumers "real" income to:
decrease
Assume that the price elasticity of demand is -2 for a certain firm's product. If the firm raises price, the firm's managers can expect total revenue to: remain constant decrease increase either increase or remain constant, depending on the size of the price increase.
decrease
Chris raises cows and produces cheese and milk because he enjoys: economies of scope economies of scale cost complementarity none of the answers are correct
economies of scope
It is profitable to hire units of labor as long as the value of marginal product: exceeds wage exceeds average product equals price is less than wage
exceeds wage
Suppose the demand for good X is given by Qdx= 10 +axPx+ayPy=AmM. IF ay is positive, then: A) goods y and x are normal goods B) goods y and x are inferior goods C) goods y and x are substitutes D) goods y and x are compliments
goods y and x are substitutes
With linear demand and constant marginal cost, a Stackelberg leader's profits are ________ the follower. less than equal to greater than either less than or greater than
greater than
As long as marginal product is increasing, marginal product is: equal to total product less than average product greater than average product equal to average output
greater than average product
Monopolistic competition is characterized by: employing labor from a perfectly competitive labor market no free entry heterogenous products large markets
heterogenous products
the leontief production function: implies inputs are used in fixed proportions is Q=max (bK,cL) is Q=aK+bL implies inputs are used in variable proportions
implies inputs are used in fixed proportions
The Cournot theory of oligopoly assumes rivals will: decrease output whenever a firm increases its output. increase their output whenever a firm increases its output. follow the learning curve. keep their output constant.
keep their output constant
Suppose the demand for good X is given by Qdx= 10 +axPx+ayPy=AmM. From the law of demand we know that ax will be: Greater than, less than, or equal to 0.
less than 0. Figure out why.
Often owners of firms who hire managers must install incentive or bonus plans to ensure that the: manager will work hard company will have positive economic profits company is financially secure manager will maintain employee morale
manager will work hard
The additional benefits that arise by using an additional unit of the managerial control variable is defined as the: A) marginal benefit B) present value of benefits C) total benefit D) opportunity cost
marginal benefit
The optimal amount of studying is determined by comparing: A) total benefit and total cost of studying B) marginal benefit and marginal cost of studying C) marginal benefit and the total cost of studying D) marginal benefit and the total benefit of studying
marginal benefit and the marginal cost of studying
There is no market supply curve in: a monopolistic market monopolistically competitive and monopolistic markets a perfectly competitive market a monopolistically competitive market
monopolistically competitive and monopolistic markets
In order for isoquants to have a diminishing marginal rate of substitution, they must be: straight lines l-shaped vertical None of the above
none of the above
The idea of charging two different groups of consumers two different prices is practiced in: commodity bundling two-part pricing price matching none of the answers are correct
none of the answers are correct
The spirit of equating marginal cost with marginal revenue is not held by: oligopolistic firms perfectly competitive firms and oligopolistic firms perfectly competitive firms none of the answers are correct
none of the answers are correct
First-degree price discrimination: A) results in the firm extracting all surplus from consumers B) occurs when a firm charges each consumer the maximum price he or she would be willing to pay for each unit of the good purchased and results in the firm extracting all surplus from consumers. C) Occurs when a firm charges each consumer the maximum price he or she would be willing to pay for each unit of the good purchased D) None of the above
occurs when a firm charges each consumer the maximum price he or she would be willing to pay for each unit of the good purchased and results in the firm extracting all surplus from consumers.
If firms compete in a cournot fashion then each firm views the: output of rivals as given profits of rivals as given prices of rivals as given All of the statements are corrrect
output of rivals as given
With a linear production function there is a: Variale Proportion relationship between all inputs fixed-proportion relationship between all inputs perfect complementary relationship between all inputs perfect substitutable relationship between all inputs
perfect substitutable relationship between all inputs
The bertrand model of the oligopoly reveals that: perfectly competitive prices can arise in markets with only a few firms. capacity constraints are not important in determining market performance. changes in marginal cost do not affect prices. All of the statements associated with this question are true.
perfectly competitive prices can arise in markets with only a few firms.
If the last unit of input increases total product, we know that the marginal product is: Postive, negative, indeterminate, zero
positive
The primary inducement for new firms to enter an industry is:
presence of economic profits
Lemonade, a good with many close substitutes, should have an one price elasticity that is: Relatively inelastic Relatively elastic Perfectly inelastic Unitary
relatively elastic
An isocost line: has a convex shape represents the combination of K and L that cost the firm the same amount of money Represents the combinations of w and K that cost the firm the same amount of money Represents the combinations of r and w that cost the firm the same amount of money
represents the combination of K and L that cost the firm the same amount of money
In a competitive market, the market demand is Qd=60-6P and the market supply is Qs=4P. A price ceiling of $3 will result in: Surplus or Shortage of how many units
shortage of 30 units
You are an efficiency expert hired by a manufacturing firm that uses K and L as inputs. The firm produces and sells a given output. If w=$40, r=$100, MPl=4, and MPk=40 the firm: is profit maximizing but not cost minimizing should use more K and less L to cost minimize should use less L and more K to cost minimize is cost minimizing
should use more K and less L to cost minimize
The equilibrium consumption bundle is : Any bundle that is the farthest from the origin The bundle where the budget line and the indifference curve meet The affordable bundle that yields the greatest satisfaction to the consumer Any affordable bundle in the budget set
the affordable bundle that yields the greatest satisfaction to the consumer
Demand shifters do not include: Price of the good Price of other goods the level of advertising the consumers income
the price of the good
Economic Profits are:
total revenue minus total opportunity cost
Economic Profits are: A) Total profits of the economy as a whole B) marginal revenue minus marginal cost C) Total revenue minus total cost D) total revenue minus total opportunity cost
total revenue minus total opportunity cost
The economic principle that producers are willing to produce more output when price is high is depicted by the:
upward slope of the supply curve
A price elasticity of zero corresponds to a demand curve that is
vertical
