G-300 Final
You are the manager of a monopoly that faces an inverse demand curve described by P = 200 − 15Q. Your costs are C = 15 + 20Q. The profit-maximizing price is:
. $110.
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 price is:
. 130.
For the cost function C(Q) = 100 + 2Q + 3Q2, the total variable cost of producing 2 units of output is:
16.
You are the manager of a monopoly that faces a demand curve described by P = 63 − 5Q. Your costs are C = 10 + 3Q. Your firm's maximum profits are:
170
Given the following table, how many workers should be hired to maximize profits?
2
Suppose total benefits and total costs are given by B(Y) = 100Y − 8Y2and C(Y) = 10Y2. Then marginal costs are:
20Y.
For a cost function C = 100 + 10Q + Q2, the average variable cost of producing 20 units of output is:
30.
You are the manager of a monopoly that faces a demand curve described by P = 63 − 5Q. Your costs are C = 10 + 3Q. The profit-maximizing price is:
33.
You are the manager of a firm that sells its product in a competitive market at a price of $40. Your firm's cost function is C = 60 + 4Q2. Your firm's maximum profits are:
40.
When a demand curve is linear,
demand is elastic at high prices.
If the cross-price elasticity between ketchup and hamburgers is −1.2, a 4 percent increase in the price of ketchup will lead to a 4.8 percent:
drop in quantity demanded of hamburgers.
If apples have an own price elasticity of −1.2 we know the demand is:
elastic.
Suppose the demand for good X is given by Qdx= 10 + axPx+ ayPy+ aMM. From the law of demand we know that axwill be:
less than zero.
The curve which summarizes the total quantity producers are willing and able to produce at differing prices is the:
market supply curve.
The quantity consumed of a good is relatively unresponsive to changes in price whenever demand is:
inelastic.
The average product of labor depends on how many units of:
labor and capital are used.
If the marginal product per dollar spent on capital is less than the marginal product per dollar spent on labor, then in order to minimize costs the firm should use:
less capital and more labor.
. Given the benefit function B(Y) = 400Y − 2Y2, the marginal benefit is:
400 − 4Y.
Which of the following is NOT an important factor that affects the magnitude of the own price elasticity of a good?
Supply of the good
Suppose the demand for good X is given by Qdx= 10 + axPx+ ayPy+ aMM. If ayis positive, then:
goods y and x are substitutes.
Demand is more inelastic in the short term because consumers:
have no time to find available substitutes.
. Suppose Q xd= 10,000 − 2 Px+ 3 Py− 4.5M, where Px= $100, Py= $50, and M = $2,000. Then good X has a demand which is:
inelastic.
. If the price of labor increases, in order to minimize the costs of producing a given level of output, the firm manager should use:
less of labor and more of capital.
Suppose market demand and supply are given by Qd= 100 − 2P and Qs= 5 + 3P. The equilibrium price is:
$19.
You are the manager of a firm that sells its product in a competitive market at a price of $48. Your firm's cost function is C = 60 + 2Q2. Your firm's maximum profits are:
$228.
. Suppose market demand and supply are given by Qd= 100 − 2P and Qs= 5 + 3P. If a price ceiling of $15 is imposed, what will be the resulting full economic price?
$25
A monopoly has two production plants with cost functions C1= 50 + 0.1Q12and C2= 30 + 0.05Q22. The demand it faces is Q = 500 − 10P. What is the profit-maximizing price?
$31.25 per unit
Suppose the interest rate is 6 percent, the expected growth rate of the firm is 3 percent, and the firm is expected to continue forever. If current profits are $1,200, what is the value of the firm?
$42,400
If the interest rate is 4 percent, the present value of $500 received at the end of four years is:
$427.40.
Consider a monopoly where the inverse demand for its product is given by P = 50 − 2Q. Total costs for this monopolist are estimated to be C(Q) = 100 + 2Q + Q2. At the profit-maximizing combination of output and price, monopoly profit is:
$92.
The production function for a competitive firm is Q = K.5L.5. The firm sells its output at a price of $10, and can hire labor at a wage of $5. Capital is fixed at one unit. The profit-maximizing quantity of labor is:
1.
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 = 33 + 3Q2. The profit-maximizing output for your firm is:
10
For a cost function C = 100 + 10Q + Q2, the average fixed cost of producing 10 units of output is:
10.
Suppose total benefits and total costs are given by B(Y) = 100Y − 8Y2and C(Y) = 10Y2. Then marginal benefits are:
100 − 16Y.
Suppose total benefits and total costs are given by B(Y) = 100Y − 8Y2and C(Y) = 10Y2. What level of Y will yield the maximum net benefits?
100/36
The demand for good X is estimated to be Qxd= 10,000 − 4PX+ 5PY+ 2M + AXwhere PXis the price of X, PYis the price of good Y, M is income, and AXis the amount of advertising on X. Suppose the present price of good X is $50, PY= $100, M = $25,000, and AX= 1,000 units. What is the quantity demanded of good X?
61,300
. Suppose market demand and supply are given by Qd= 100 − 2P and Qs= 5 + 3P. The equilibrium quantity is:
62.
You are the manager of a monopoly that faces a demand curve described by P = 85 − 5Q. Your costs are C = 20 + 5Q. The profit-maximizing output for your firm is:
8.
Suppose Q xd= 10,000 − 2 Px+ 3 Py− 4.5M, where Px= $100, Py= $50, and M = $2,000. How much of good X is consumed?
950 units
. Suppose that supply increases and demand decreases. What effect will this have on price and quantity?
A. Price will increase and quantity may rise or fall. B. Price will decrease and quantity will increase. C. Price will decrease and quantity will decrease. ->D. None of the statements associated with this question are correct.
The primary difference between monopolistic competition and perfect competition is:
A. the ease of entry and exit into the industry. B. the number of firms in the market. C. Both A and B are correct. ->D. None of the preceding answers is correct.
If the production function is Q = KL and capital is fixed at 1 unit, then the marginal product of labor when L = 25 is:
A. ¼. B. 1/10. C. 15. ->D. None of the answers are correct.
. Suppose the demand for good X is given by Qdx= 10 − 2Px+ Py+ M. The price of good X is $1, the price of good Y is $10, and income is $100. Given these prices and income, how much of good X will be purchased?
A.115 B. 515 C. 1,000 ->D. None of the statements associated with this question are correct
Which of the following is (are) true?
Accounting costs generally understate economic costs. B. Accounting profits generally overstate economic profits. C. In the absence of any opportunity costs, accounting profits equal economic profits. ->D. All of the statements associated with this question are correct.
Which of the following is an implicit cost to a firm that produces a good or service?
Foregone profits of producing a different good or service
. Which of the following is an implicit cost of going to college?
Foregone wages
Which of the following is a correct representation of the profit maximization conditionfor a monopoly?
MC = MR
Which of the following is incorrect?
Managers should only be interested in accounting profits.
Firm managers should use inputs at levels where the:
Marginal benefit equals marginal cost and value marginal product of labor equals wage.
Which of the following market structures would you expect to yield the greatest product variety?
Monopolistic competition
If steak is a normal good, what do you suppose would happen to price and quantity during an economic recession?
Price and quantity would both decrease
Which of the following conditions is true when a producer minimizes the cost of producing a given level of output?
The MRTS is equal to the ratio of input prices, and the marginal product per dollar spent on all inputs is equal.
. Which of the following industries is best characterized as monopolistically competitive?
Toothpaste
. It is profitable to hire labor so long as the:
VMPLis greater than wage.
Suppose perfectly competitive market conditions are characterized by the following inverse demand and inverse supply functions: P = 100 − 5Q and P = 10 + 5Q. The demand curve facing an individual firm operating in this market is:
a horizontal line at $55.
The maximum legal price that can be charged in a market is:
a price ceiling.
If the absolute value of the own price elasticity of steak is 0.4, a decrease in price will lead to:
a reduction in total revenue.
. In the long run, monopolistically competitive firms charge prices:
above the minimum of average total cost.
Sunk costs are those costs that:
are forever lost after they have been paid.
. If the cross-price elasticity between goods A and B is negative, we know the goods are:
complements.
The elasticity which shows the responsiveness of the demand for a good due to changes in the price of a related good is the:
cross-price elasticity.
There is a market supply curve in a:
perfectly competitive market.
Other things held constant, the greater the price of a good:
the lower the consumer surplus.
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 a shortage of 20 units.
The demand for good X is estimated to be Qxd= 10,000 − 4PX+ 5PY+ 2M + AX,where PXis the price of X, PYis the price of good Y, M is income, and AXis the amount of advertising on X. Suppose the present price of good X is $50, PY= $100, M = $25,000, and AX= 1,000 units. What is the own price elasticity of demand for good X?
−0.003
Consider a monopoly where the inverse demand for its product is given by P = 50 − 2Q. Total costs for this monopolist are estimated to be C(Q) = 100 + 2Q + Q2. At the profit-maximizing combination of output and price, consumer surplus is:
. $64.
You are the manager of a firm that sells its product in a competitive market at a price of $40. Your firm's cost function is C = 60 + 4Q2. The profit-maximizing output for your firm is:
. 5.
Suppose 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 size of the resulting surplus?
. 55
The demand for good X is estimated to be Qxd= 10,000 − 4PX+ 5PY+ 2M + AXwhere PXis the price of X, PYis the price of good Y, M is income, and AXis the amount of advertising on X. Suppose the present price of good X is $50, PY= $100, M = $25,000, and AX= 1,000 units. What is the demand curve for good X?
. 61,500 − 4PX
The own price elasticity of demand for apples is −1.2. If the price of apples falls by 5 percent, what will happen to the quantity of apples demanded?
. It will increase 6 percent.
The demand for labor by a profit-maximizing firm is determined by:
. VMPL= W.
The minimum legal price that can be charged in a market is:
. a price floor.
Suppose the demand for good X is given by Qdx= 10 + axPx+ ayPy+ aMM. If aMis negative, then good y is:
. an inferior good.
Average fixed cost:
. declines continuously as output is expanded.
. The demand function recognizes that the quantity of a good consumed depends on:
. demand shifters and price.
We would expect the own price elasticity of demand for food to be:
. less elastic than the demand for cereal.
If quantity demanded for sneakers falls by 10 percent when price increases 25 percent, we know that the absolute value of the own price elasticity of sneakers is:
0.4.
You are the manager of a monopoly that faces a demand curve described by P = 230 − 20Q. Your costs are C = 5 + 30Q. Your firm's maximum profits are:
495.
For the production function Q = 5.2K + 3.8L, if K = 16 and L = 12, we know that MPKis:
5.2.
You are the manager of a monopoly that faces a demand curve described by P = 63 − 5Q. Your costs are C = 10 + 3Q. The profit-maximizing output for your firm is:
6.
Suppose you produce wooden desks, and government legislation protecting the spotted owl has made it more expensive for you to purchase wood. What do you expect to happen to the equilibrium price and quantity of wooden desks?
Price will increase but quantity will decrease.
The demand for good X has been estimated by Q xd= 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.
−0.6
