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april 2002 prelim 2 key

# april 2002 prelim 2 key - 7 0 0 6 0 0 3 0 0 4 0 0 5 0 0 6 0...

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Unformatted text preview: 7 0 0 6 0 0 3 0 0 4 0 0 5 0 0 6 0 0 7 0 0 5 0 0 4 0 0 3 0 0 2 0 0 1 0 0 1 0 0 2 0 0 A B E F G H \$ Y \$ X B L O B L 1 B L 2 IC – A b e ( C a s h ) IC A b e ( B u s h P l a n ) IC B e t t y 7 0 0 6 0 0 3 0 0 4 0 0 5 0 0 6 0 0 7 0 0 5 0 0 4 0 0 3 0 0 2 0 0 1 0 0 1 0 0 2 0 0 A B E F G H \$ Y \$ X B L O B L 1 B L 2 IC – A b e ( C a s h ) IC A b e ( B u s h P l a n ) IC B e t t y Econ 101 – Wissink - Spring 2002 - Prelim 2 – Answers Part I . 1. C 2. D 3. C 4. D 5. D 6. C 7. B 8. E 9. A 10. E 11. A 12. B 13. C 14. D Part II . 1. a. Total cost = P H • H + P M • M = 2 • 142 + 6 • 120 = 284+720 = 1004 b. Set up the Bang/Buck for both inputs. Bang/Buck for H is 4/2 = 2 and the Bang/Buck for M is 20/6 = 2.33. Since 2 < 3.33, the bang/buck is not equal and LSG is not minimizing the cost of producing 157 gadgets. c. Need to use more M and less H. If we use one less unit of H, output decreases by 4 units, and costs decrease by \$2. At the same time, if we now use 2 more units of M...
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april 2002 prelim 2 key - 7 0 0 6 0 0 3 0 0 4 0 0 5 0 0 6 0...

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