question

Both the monopolist and the firm in pure competition set their quantity so that marginal revenue equals marginal cost.

answer

True

question

A fixed factor is a factor of production that is used in fixed proportion to the level of output.

answer

False

question

The economist's distinction between the long run and the short run captures the idea that quantities of some factor inputs can be varied in the long run but not in the short run.

answer

True

question

Marginal cost curves are always upward sloping.

answer

False

question

If there are constant returns to scale, then doubling the amount of every input will exactly double the amount of output.

answer

True

question

The economist's distinction between the long run and the short run captures the idea that quantities of some factor inputs can be varied in the short run but not in the long run.

answer

True

question

An economic situation is Pareto efficient only if there is no way to make someone better off.

answer

True

question

The area under the marginal cost curve measures total variable costs

answer

True

question

A perfectly competitive market has 100 buyers and 20 sellers. Each buyer's demand function is:

D(p) = 26 - 2.5p

Each seller's supply function is:

S(p) = p/2

Find the market demand and market supply functions and calculate the equilibrium price and quantity.

The equilibrium price is

and the equilibrium quantity is

D(p) = 26 - 2.5p

Each seller's supply function is:

S(p) = p/2

Find the market demand and market supply functions and calculate the equilibrium price and quantity.

The equilibrium price is

and the equilibrium quantity is

answer

10, 100

question

Mitchell Energy uses many inputs to produce oil and natural gas, but for the purposes of describing their production process, we will focus on the choice of quantities for two inputs: gel, and ``slick water'' (water with a small amount of bleach and soap). Nick Steinsberger discovered that either gel OR ``slick water'' could work for fracking.

Suppose that 1 gallon of ``slick water'' is required to produce one barrel of oil, no matter how much or how little oil is being produced; 3 gallons of gel is required to produce 1 barrel of oil.

Which of the following production functions is the best match for the firm described above? (G gallons of gel and S is gallons of "slick water", and y is barrels of oil.)

Suppose that 1 gallon of ``slick water'' is required to produce one barrel of oil, no matter how much or how little oil is being produced; 3 gallons of gel is required to produce 1 barrel of oil.

Which of the following production functions is the best match for the firm described above? (G gallons of gel and S is gallons of "slick water", and y is barrels of oil.)

answer

y=G/3+S

question

The production plan A in the figure above [Figure 2] is:

answer

Feasible but technically inefficient

question

For the production function f ( x 1 , x 2 ) = x 1^1/2 x 2^1/2

what is the marginal physical product of input 1 when x 1 = 4 , x 2 = 16 ?

what is the marginal physical product of input 1 when x 1 = 4 , x 2 = 16 ?

answer

1

question

The production function f(K,L)=K^2+L

answer

has increasing returns to scale

question

Suppose that the price of coal decreases due to competitive pressures from other fuel sources such as natural gas and renewable energy. Consider the isoprofit line for a coal producer. What will the effect of a decrease in price of output (p), in this case the price of coal, have on the slope of the isoprofit line?

answer

The isoprofit line gets steeper.

question

A firm's production function is f(x1, x2, x3, x4) = min{x1, x2, x3, x4}

If the prices of the four inputs are p1 = 3, p2 = 5, p3 = 2, p4 = 4, what is the minimum cost of producing 1 unit of the good?

If the prices of the four inputs are p1 = 3, p2 = 5, p3 = 2, p4 = 4, what is the minimum cost of producing 1 unit of the good?

answer

14

question

A firm's cost function is c ( y ) = 4 y^2 + 7 y + 200.

What is the marginal cost function?

What is the marginal cost function?

answer

8y+7

question

A firm's cost function is c ( y ) = 4 y^2 + 7 y + 200.

What is the fixed cost function?

What is the fixed cost function?

answer

200

question

A firm's cost function is c ( y ) = 4 y^2 + 7 y + 200.

What is the average fixed cost function?

What is the average fixed cost function?

answer

200/y

question

A firm's cost function is c ( y ) = 4 y^2 + 7y + 200.

What is the variable cost function?

What is the variable cost function?

answer

4y^2+7y

question

A firm's cost function is c ( y ) = 5 y^2 + 4 y + 125. At what quantity of output y does marginal cost MC equal average cost AC?

answer

5

question

A friend owns a hotel that gets a lot of seasonal business. The average total cost per day, per room of running the hotel is $75. She tells you that during the off-season (when there are a lot of empty rooms), she had someone offer her $70 for a room. She indignantly tells you she turned the offer down.

Was it a good decision?

Was it a good decision?

answer

It depends on whether the average variable cost is greater than or less than $70.

question

A firm in a competitive market has cost function c(y) = y2/2 + 50. At what price will this firm break even?

answer

10

question

In the figure above, does the firm make a profit, a loss, or break even at the equilibrium price? [Figure 5]

answer

Loss

question

How does the monopolist's quantity and price compare to the quantity and price in a competitive market?

answer

The monopolist sells a LESSER quantity at a HIGHER price

question

Which of the following markets, if any, are good examples of monopoly?

answer

Both local utilities and a new patented drug

question

A monopoly has inverse demand function P(y) = 210 - 3y. What is the marginal revenue function?

answer

210-6y

question

In the graph below, if the monopolist's constant marginal cost is 5, the monopolist's profit-maximizing quantity is _____ and the monopolist's profit-maximizing price is _____.

answer

4, 7

question

[Figure 6] The monopolist has constant marginal cost c = 5. When the monopolist sets a profit-maximizing uniform price:

The monopolist's producer surplus is

The consumer surplus is

The deadweight loss is

The monopolist's producer surplus is

The consumer surplus is

The deadweight loss is

answer

8,4,4