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)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)

(0,3) so (3/2)

**6+3**3=18question

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?**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.

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