MicrolFinal05-09-2019ss.doc - Microeconomics Final Exam Dr Soon Paik ID 22532 Serkan SARICA Due on Final Exam and Paper to [email protected] Name 1.True or

MicrolFinal05-09-2019ss.doc - Microeconomics Final Exam Dr...

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Microeconomics - Final Exam (05/09/2019) Dr. Soon Paik ID: 22532 Name : Serkan SARICA Due on 05/12/2019 , Final Exam and Paper to [email protected] 1.True or False (O or X) (X) 1. Opportunity cost is the cost of earning the opportunity. (X) 2. Marginal Cost(MC) and Average Cost(AC) meet at the lowest M C. (O) 3. Economies of Scope decreases production cost by increasing production. (O) 4. Economies of Scale is the case for decreasing Short-Run Average Cost. (X) 5. Profit Function's Independent Variable is the Output. (O) 6. Production Function's Independent Variable is the Output. (O) 7. Cost Function's Independent Variable is the Output. (X) 8. Cost Equation's Independent Variable is the Output. (X) 9. Marginal Revenue is the Price in all cases. (X) 10. Firm's Supply Curve is the average Cost Curve. (X) 11. Consumer Surplus is a surplus vale of buying less than market price. (X) 12. Producer Surplus is a surplus value of selling higher than market price. (X) 13. The firm’s demand is the market demand in perfect competition market. (X) 14. The regulation on monopoly is done by government administration. (O) 15. Water supply is not Monopoly. (O) 16. Monopoly Price is the same level where MR meets MC. (O) 17. Monopoly Demand is the Average Revenue. (O) 18. Airline Ticket is the Peak-Load Pricing. (O) 19. Amusement park fees are two-parts tariffs. (X) 20. Electricity is the inter-temporal pricing. (O) 21. Oligopoly quantity is the same level where MR and MC meet. (X) 22. Cartel is oligopoly. (X) 23. Reaction Curve is the producer's production reaction to consumption. (X) 24. Prisoners’ dilemma game is a game where both sides have to choose with own best intrests. (X) 25. Monopolistic Competition is where few sellers compete with same output. (X) 26. As Bond Price increases, Bond Yield increases. (X) 27. Principals have more information than agents. (O) 28. Externalities are not good always to market economy. (O) 29. Demand for labor is a derived demand.
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2. Summarize (1) Duality Theory Duality theory in economics deals with a primal problem and a dual problem. The solution of the primal problem depends on the achievement of the dual problem. For instance, in production function, the primal problem is to maximize the production and the dual problem is to minimize the cost. The production can be maximized and is successful only when the cost is minimized. This can be achieved by making use of Isoquant which would give the factor combination to produce a given level of output. The isocost line represents the output produced in a given budget. The optimum condition where the objectives are met is the tangential point where the isocost line meets the isoquant and thus the production is maximized and the cost is minimized (2) Production Optimum Condition The optimum condition of the production, we can also call as “equilibrium level of price and quantity” in the market. The optimum price and optimum quantity can decide the individual’s or firm’s or industry’s profit maximization. At the optimum condition of the production, the quantity demanded by consumers equals the quantity supplied by producers. This has shown in the following graph.
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