question
Suppose that a firm that operates a vaccine production line that has a prod function line f(l,k)=5L^1/3K^2/3. Suppose that at some given situation this firm producing 100 million units of output. what happens if the amount of each input is doubled
answer
It doubles
question
A call center has a production function: f(L,K)=40L+200K. The maximal number of calls that the call center may receive given that L=1 and K=2 is?
answer
440
F(1,2)=40(1)+200(2)=440
F(1,2)=40(1)+200(2)=440
question
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?
answer
f(L,2)=40L+400
question
Suppose that a farm has a production function f(L,k)=5LK. Suppose that at some given situation the farm producing 100 units of output. What happens with the production of the amount of each input is trioled
answer
It increases by 800%
5(3L)(3K)=9(100)=900 so
(900-100)/100*100%=800%
5(3L)(3K)=9(100)=900 so
(900-100)/100*100%=800%
question
The following figure shows the production function of a restaurant for a fixed level of capital. Which one can be the production function of the restaurant? (4,300)
answer
F(l.k)= 50(L+K)
question
A firm has production function f(L,K,M)= L+K^2+4M, where L labor, K capital, M materials. If this firm uses 100 units labor, 40 units capital, 100units materials, what is the maximal number of units that they can produce?
answer
2100
plug in #s
plug in #s
question
A firm's production function associates with each combination of inputs (L,K):
answer
The maximal amount of output that the firm is able to produce with (L,K).
question
Consider the following production function when K is fixed. (4,300) slope passes through; can we say that the production function satisfied the law of decreasing marginal returns of labor?
answer
No, the production function does not satisfy law of decreasing marginal returns of labor
question
The following figure shows the graph of the production function of a firm when capital is fixed at some level k. 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)&(200,42).
Is the law of diminishing marginal returns if labor satisfied for this production function (if the graph of all production function when capital is fixed look like this)
Is the law of diminishing marginal returns if labor satisfied for this production function (if the graph of all production function when capital is fixed look like this)
answer
Yes.
question
Consider the following production when K is fixed. Two axis graph; in horizontal measure labor in vertical measure output. Slope line goes through (10,30) but after 10 on labor horizontal line is flat.
Can we say that the production function satisfies the law of decreasing marginal returns if labor?
Can we say that the production function satisfies the law of decreasing marginal returns if labor?
answer
True
question
The following production function satisfies increasing returns to scale: f(L,K)= 100LK
answer
True
question
The following production function is appropriate to represent an industry in which there is free entry: f(L,K)=100L^1/2K^1/3
answer
False.
question
A firm has a production function f. If for each pair (L,K), f(2L, 2K)= 2f(L, K), we say the firm has:
answer
constant returns to scale
question
The following production function satisfies constant return to scale: f(L,K)=3LªK^1-a where 0<a<1
answer
True
question
Consider a Cobb-Douglas production function f(L, K)= AL^2/3K^b, where A and b are positive constants. Then, f has constant returns to scale if and only if:
answer
b=1/3
question
Consider a Cobb-Douglas production function f(L, K)= ALªK^b, where A, a and b are positive constants. Then, f has increasing returns to scale if:
answer
a+b>1
question
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?
answer
Production increases
MRTSLK(L,K) is the amount of capital that the firm can substitute with one unit of labor so the production remains constant. That means that in this particular problem if the firm substitutes one unit of labor for two of capital the production remains constant. Thus, substituting two units of labor for one unit of capital increases production.
MRTSLK(L,K) is the amount of capital that the firm can substitute with one unit of labor so the production remains constant. That means that in this particular problem if the firm substitutes one unit of labor for two of capital the production remains constant. Thus, substituting two units of labor for one unit of capital increases production.
question
Suppose that the marginal rate of technical substitution of L for K is constant and equal to x>1. Then
answer
If the firm substitutes one unit of labor for x units of capital, then production remains constant.
question
Consider a production firm whose prod function has the isoquant shown. The isoquant ks a downward sloping curve in the L vs K space, that passes through (3/2,3) and (3,3/2). Line tangent to isoquant at (3/2,3) also passes through (3,0); line tangent to the isoquant at (3,3/2) also passes through (0,3). What is MRTSlk(3/2,3)?
answer
2
question
Isoquant downward sloping... what is the MRTSlk(3,3/2)
answer
1/2
question
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?
answer
Production increases
MRTSLK(L,K) is the amount of capital that the firm can substitute with one unit of labor so the production remains constant. That means that in this particular problem if the firm substitutes one unit of labor for two of capital the production remains constant. Thus, substituting two units of labor for one unit of capital increases production.
MRTSLK(L,K) is the amount of capital that the firm can substitute with one unit of labor so the production remains constant. That means that in this particular problem if the firm substitutes one unit of labor for two of capital the production remains constant. Thus, substituting two units of labor for one unit of capital increases production.
question
The marginal rate of technical substitution of L for K is equal to?
answer
The absolute value of the slope of the tangent to the isoquant through (L,K) at (L,K)
question
Suppose that the cost of labor w is 100 and the cost of capital r is 1000. Let C be the economic cost of producing 8 units for a firm whose isoquant for q=8 is shown in the following graph.
The isoquant is a downward sloping curve... (3/2,3)&(3,3/2).... Then,
The isoquant is a downward sloping curve... (3/2,3)&(3,3/2).... Then,
answer
5000>C>4500
question
The accounting profit of a firm can be positive even when it's economic profit is zero
answer
True
question
The economic profit is:
answer
Revenue - Economic Cost
question
Suppose that the cost of labor w is 6 and the cost of capital r is 3. What is the economic cost of producing 8 units for a firm whose isoquant for q=8 is shown in following graph. Isoquant dowanward sloping...
answer
18
(0,3) so (3/2)6+33=18
(0,3) so (3/2)6+33=18
question
Consider a firm whose cost function when both L and K are variable is shown below. (Image shown is 45° line labeled C just a typical sloping line on graph) Then the average cost function associated with this production is:
answer
Flat
Bc MC=AC are both constant
Bc MC=AC are both constant
question
Consider a firm .... (Linear curve with positive slope) Then the marginal cost function associated with this production is:
answer
Flat
Flat Mc is constant
Flat Mc is constant
question
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.)
What is the firms fixed cost?
What is the firms fixed cost?
answer
1800
question
A firm has a production function that has strictly increasing returns to scale. Their cost producing 500 units of their prod is 100,00.00 which can be cost of producing 1000 units?
answer
$190,000
question
A firm has a production function satisfying constant returns to scale (there is free entry in the industry in which it operates). Their cost of producing 100 units of their product is $200,000.00. What is their cost of producing 500 units?
answer
$1,000,000.00
question
The following figure shows the marginal and average cost functions of a firm. Single flat line at level c labeled MC=AC
Could this be a marginal cost function for firm participating in mkt with free entry?
Could this be a marginal cost function for firm participating in mkt with free entry?
answer
Yes
question
Following figure shows the marginal and average cost functions of firm. Positive values of output of MC is greater than Ac
Could this be a marginal cost function for a firm participating in free entry?
Could this be a marginal cost function for a firm participating in free entry?
answer
No
Free entry has constant MC
Free entry has constant MC
question
A firm has a production function that has strictly decreasing returns to scale. Their costs of producing 500 units of their products is $100,000. From following which can be cost of producing 1000 units?
answer
210,000
question
Following figure shows the cost function of a firm. Increasing function, the slope of the curve increasing too.
Could this be a cost function for firm participating in free entry?
Could this be a cost function for firm participating in free entry?
answer
No.
question
Suppose that a competitive firm maximized profits when the capital is fixed, by producing q>0 units of output. Which if the following must be true?
answer
P>_ AVC(q)
question
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.)
If the output price is equal to $16, then the firm maximal profit is?
If the output price is equal to $16, then the firm maximal profit is?
answer
-$1800
question
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.)
If the output price is equal to $10, then the firm maximizes profits by producing?
If the output price is equal to $10, then the firm maximizes profits by producing?
answer
0 units
question
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.)
If the output price is equal to $12, then the firm maximizes profits by producing?
If the output price is equal to $12, then the firm maximizes profits by producing?
answer
0 units
question
Consider a market with three firms whose cost functions are C1(q)=2q, C2(q)=5q, C3(q)=q. How is the aggregate supply in this market
answer
It follows the vertical axis from zero to P=1; above P=1 there is infinity of production in the market
question
A price and quantity p and q constitute a competitive equilibrium in a given market with demand D and supply S if the following is satisfied. (I) q=S(p) (II) q=D(p) and S(p)-D(p)=0
answer
True
question
Consider a market with demand D and supply S. For a given price let E(p) be the excess of demand ie the difference E(p)=S(p)-D(p). Then a given price is a competitive equilibrium price only when E(p)=0
answer
True
question
Consider a market with free entry. Suppose both L and K are variable for the firms. Then economic profit of a firm in this market is:
answer
Zero
question
Let p be the price and q the production at a competitive equilibrium in a market. Then consumers demand amount q at price p
answer
True
At a competitive equilibrium, agents maximize their utility at the market prices given their income. Then, q is the amount demanded by the agents at price p.
At a competitive equilibrium, agents maximize their utility at the market prices given their income. Then, q is the amount demanded by the agents at price p.
question
Suppose that in a market firms can adjust all their inputs, ie both L and K are variable. Is it true that firms make zero economic profit in each competitive equilibrium
answer
No, it is false
question
Let p be the price and q the production at a competitive equilibrium in a market with demand D and supply S. Then, q=D(p).
answer
True
question
Let p be the price and q the production at a competitive equilibrium in a market. Then if the firms produce the amount that maximizes their economic profit when prices is p, they produce in aggregate q
answer
True
question
The following figures shows the supply function of a firm. What is the producer surplus if the firm sells q1 units at price 10
answer
D
question
Following figure... what is the producer surplus if the sells q4 units at price 20
answer
C+D+H-M-R-Q
question
The following figure shows the supply function of a firm... what is the producer surplus if the firm q3 units at price 40
answer
A+B+C+D+F+G+H+K+L
question
Following figure... what is the producer surplus if the firm sells q2 units at price 10
answer
D-I
question
The total welfare in an economy is measured by:
answer
The summation of Consumer Surplus, Producer Surplus, and Government's net revenue.
question
In the undergraduate one-commodity market model an outcome is efficient (Pareto efficient) when:
answer
deadweight loss is zero
question
For a market to operate and be efficient it needs to exist. Markets may not exist if there are no social institutions that enforce property rights
answer
True
question
If there are no externalities or information issues, the maximum total welfare in an economy is achieved at the competitive equilibrium
answer
Yes, this is what is called the First Theorem of Welfare Economics.
question
There is a famous result in economics called the first theorem of welfare that says a competitive market is efficient...
answer
False.
question
Economic efficiency also referred to as Pareto efficiency is achieved when
answer
No agent can be better off without another agent being worse off.
question
A firm has supply function S(p)=200p. If consumers pay a price p=50 and the government is collecting an ad-valorem tax of 8.25% from the producers' revenue, then the amount supplied by the firm is?
answer
9175 units
question
A firm has supply function S(p)=40p. If consumers pay a price p=30 and the government is collecting an ad-valorem tax if 8.25% from the producers revenue then the amount supplied by the firm is?
answer
1101
question
The following figure.. suppose that the market price is $40 and the government imposes 25% ad-valorem tax. What is the producer surplus is the firm sells all the output that maximizes its economic profit?
answer
B+C+D+G+H+L
question
Following figure... if the government imposes ad valorem tax of 20% collected from producer what is the firms supply if the agent pays 12 dollars for each unit?
answer
Less than 200
question
Following figure... if the government imposes a specific tax of two dollars per unit collected from the producer what is the firms supply I'd the agent pays 12 dollars for each unit
answer
200
question
Does the following figure show the market supply for a firm and the market supple that would be induced by an ad valorem sales tax of t percent?
answer
False
question
The following friegue shows the demand and supply in a market and the supply when there government decided to impide a specific tax and collect it from the producers. What ad valorem tax would generate same revenue for the government
answer
20%
question
Consider a market with supply and demand shown in following graph. What is the CONSUMER SURPLUS
answer
A+B+D+G
question
Consider a market... what is the Total Welfare in this environment?
answer
A+B+C—F
question
Consider a market with supply and demand shown in following graph. What is the competitive outcome of this economy?
answer
price p1 and quantity q1
question
Consider a market w supply and demand shown... what is the Consumer Surplus in the competitive equilibrium of this economy
answer
A
question
Consider market... what is the producer surplus in the competitive equilibrium of this economy
answer
B+C
question
Consider a market with supply and demand shown in following graph.
Suppose this market is regulated by a populist dictator who imposes a price cap at p2 and forced firms to produce q2 at this price.
What is the Dead Weight Loss in this environment?
Suppose this market is regulated by a populist dictator who imposes a price cap at p2 and forced firms to produce q2 at this price.
What is the Dead Weight Loss in this environment?
answer
-F
question
Consider a market... what is the Total Welfare in the competitive equilibrium of this economy
answer
A+B+C
question
Consider market.. suppose government imposes an ad valorem tax x
What is governments net revenue in the competitive equilibrium of this economy (with government intervention)
What is governments net revenue in the competitive equilibrium of this economy (with government intervention)
answer
b+c+e+f
question
Consider market.. suppose government imposes an ad valorem tax x
What is the competitive equilibrium of this economy (with government intervention)
What is the competitive equilibrium of this economy (with government intervention)
answer
Price is p and quantity q
question
Consider a market w supply and demand shown. The supply without government intervention is denoted by S in the figure.
What is consumer surplus in the competitive equilibrium in this economy if the government does not intervene
What is consumer surplus in the competitive equilibrium in this economy if the government does not intervene
answer
a+b+e+h
question
Consider a market w supply and demand shown. The supply without government intervention is denoted by S in the figure.
What is the Total Welfare in the competitive equilibrium outcome in this economy if the government does not kntervene
What is the Total Welfare in the competitive equilibrium outcome in this economy if the government does not kntervene
answer
a+b+c+d+e+f+g+h+i
question
Consider a market w supply and demand shown. The supply without government intervention is denoted by S in the figure.
What is the competitive equilibrium outcome in this economy if the government does not intervene
What is the competitive equilibrium outcome in this economy if the government does not intervene
answer
Price is p and quantity q
question
Consider a market w supply and demand shown. The supply without government intervention is denoted by S in the figure.
What is Producer Surplus in the competitive equilibrium outcome in this economy if the government does not intervene
What is Producer Surplus in the competitive equilibrium outcome in this economy if the government does not intervene
answer
c+d+g+h+i
question
Consider a market with supply and demand shown in following graph. Suppose government imposes an ad valorem tax x. What is the Dead Weight Loss in the competitive equilibrium of this economy (with government intervention)
answer
-h-i
question
Consider a market with supply and demand shown in following graph. Suppose government imposes an ad valorem tax x.
What is the Producer Surplus in the competitive equilibrium of this economy (with government intervention)
What is the Producer Surplus in the competitive equilibrium of this economy (with government intervention)
answer
d+g
question
Consider a market with supply and demand shown in following graph. Suppose government imposes an ad valorem tax x.
What is the Consumer Surplus in the competitive equilibrium of this economy (with government intervention)
What is the Consumer Surplus in the competitive equilibrium of this economy (with government intervention)
answer
a
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