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102-SP-08-Exam-3-key-full - ECON 102 Exam-2 ECON 102...

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ECON 102 FORM A Exam-2 1 ECON 102 Name:_________________ Professor Jose J. Vazquez Section:_______ TA ______ Multiple Choice : in each question there is only one correct answer. Select the answer you believe to be MOST correct (2 pts each). USE THE FOLLOWING INFORMATION TO ANSWER QUESTIONS 1- 8. Say the production function for your firm was given table 1 below. The cost of your labor is $100 per employee, while the cost of your capital is $2,000 (for the time being, assume capital is a fixed input). Finally, assume that the firm operates in a perfectly competitive market and sells each unit of output for $4.00 Labor (# of employees) Output Total Costs Average Variable Costs Average Fixed Costs Average Total Costs Marginal Costs Total Revenue Total Profits 0 0 1 100 2 250 3 375 4 400 5 420 6 430 1. The marginal product of the 4 th employee is equal to: a. 100 b. 150 c. 85 d. 25 e. None of the above. 2. The marginal product of labor begins to decrease with the __________ employee. 3. What are the average total costs of production when the firm produces 400 units of output?
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ECON 102 FORM A Exam-2 2 4. When the firms produces 375 units of output the marginal cost of the last unit produced is equal to: 5. How many units of output should this firm produce in order to maximize profits? a. 0 b. 250 c. 375 d. 400 e. None of the above. 6. The correct short-run decision for the owner of this firm will be to: 7. The correct long-run decision for the owner of this firm will be to: 8. We know that in the long-run the market price (of $4.00) for this industry will: 9. Micah’s Coffee Shop is a small coffee shop. If Micah’s produces 4,000 cups of coffee in the first hour of business and incurs a total cost of $10,000, his average total costs are: a. $2.50 b. $5.00. c. $6.00 d. $8.00 e. None of the above
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