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2009midterm

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Midterm Thursday, March 12th, 2009 (7 pages) name:_____________________________ student ID:__________________________ (a) Multiple choice Please provide your answers on the enclosed bubble sheet 1. Helen is willing to give up 3 cups of soup to obtain 5 slices of bread. For Helen, a. Bread and soup are complements. b. Bread and soup are substitutes. d. None of the above 2. When the ±rm is using the least-cost combination of inputs, a. the ratio of the marginal products of the two inputs is equal to the ratio of the prices of the two inputs. b. the marginal product of the last dollar spent on input A is equal to the marginal product of the last dollar spent on input B. c. the ratio of the prices of the two inputs is equal to MRTS. d. all of the above 3. Suppose a lottery pays out \$36 with probability 0.25, \$49 with probability 0.5 and \$100 with probability 0.25. A person with a utility function p W over realized winnings would view this lottery as equivalent to receiving: a. \$53.50 b. \$58.50 c. \$56.25 d. \$57.75 4. Suppose that a ±rm produces both bottled water and carbonated soft drinks. It is cheaper for this ±rm to produce both goods than it would be if they were produced by two separate ±rms. Further, as this ±rm increases its production levels, the average costs of producing both bottled water and carbonated soft drinks fall. This ±rm experiences a. Economies of scope and diseconomies of scale b. Both economies of scope and economies of scale c. Both diseconomies of scope and diseconomies of scale d. Diseconomies of scope and economies of scale quantity is ______ its price. a. Greater than

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