211-1 F14 Practice Exam 2 Questions w Key

211-1 F14 Practice Exam 2 Questions w Key - MMSS 211-1...

Info icon This preview shows pages 1–3. Sign up to view the full content.

MMSS 211-1 Practice Exam 2 Questions, Part I 1. A PC firm must sell its output at a market price of $2. Its present operating figures are: AC = $4 MC = $2,TFC = $1,750, Q = 1,000. To earn maximum profit this firm should A. increase the output level. B. reduce the output level. C. shut down. D. keep the output unchanged. 2. A bakery that specializes in wedding cakes employs 5 workers. The bakery is currently producing 500 cakes per week. Assuming that labor is the only variable factor of production, that the weekly wage is $700 per worker, and that the firm’s fixed cost is $1,000, the average variable cost is __________. 3. Which of the following is false? 4. Fill in the blank: All firms in a competitive industry have LRTC curves given by C = Q 3 – 10Q 2 + 50Q. The industry’s long run equilibrium price is __________. 5. Suppose the TFC of a competitive firm increases due to an increase in the firm’s property tax. The price at which the firm will optimally decide to shut down is _________ before the TFC change. 6. If C = 200 + 2Q + 4Q 2 , what is the minimum level of average variable cost? 7. Roma Ronnie’s uses labor and capital to produce pizzas. One more unit of labor will increase production by 200 pizzas. An additional unit of capital will increase output by 250 pizzas. The price of labor is $5 and the price of capital is $10. A. Roma Ronnie’s is using the correct amount of capital and labor. B. Roma Ronnie’s should increase the amount of capital it is using and decrease the amount of labor. C. Roma Ronnie’s should increase the amount of labor it is using and decrease the amount of capital. D. None of the above. 8. A firm produces output using labor as its only variable factor of production. By using 100 workers, the firm is able to produce 200 units of output at an average variable cost of $4 per unit. What wage is the firm paying its workers?
Image of page 1

Info icon This preview has intentionally blurred sections. Sign up to view the full version.

9. For a particular firm, SRTC = 100 + 20Q + Q 2 . If the market price is $40, at what level of output should the firm operate to maximize profit?
Image of page 2
Image of page 3
This is the end of the preview. Sign up to access the rest of the document.
  • Spring '14
  • EricSchulz
  • Economics, Economics of production, Firm, tc

{[ snackBarMessage ]}

What students are saying

  • Left Quote Icon

    As a current student on this bumpy collegiate pathway, I stumbled upon Course Hero, where I can find study resources for nearly all my courses, get online help from tutors 24/7, and even share my old projects, papers, and lecture notes with other students.

    Student Picture

    Kiran Temple University Fox School of Business ‘17, Course Hero Intern

  • Left Quote Icon

    I cannot even describe how much Course Hero helped me this summer. It’s truly become something I can always rely on and help me. In the end, I was not only able to survive summer classes, but I was able to thrive thanks to Course Hero.

    Student Picture

    Dana University of Pennsylvania ‘17, Course Hero Intern

  • Left Quote Icon

    The ability to access any university’s resources through Course Hero proved invaluable in my case. I was behind on Tulane coursework and actually used UCLA’s materials to help me move forward and get everything together on time.

    Student Picture

    Jill Tulane University ‘16, Course Hero Intern