MT2 Spring 08

MT2 Spring 08 - ECONOMICS 211 SECOND MIDTERM EXAMINATION,...

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ECONOMICS 211 SECOND MIDTERM EXAMINATION, Spring 2008 (2 hours, 100 points) Circle the name of your instructor: Gilbert Juarez Soligo Wu NAME: _______________________________________________________________________ PLEDGE:_____________________________________________________________________ _____________________________________________________________________________ _ _____________________________________________________________________________ _ PART I: MULTIPLE CHOICE: Circle the correct answer (3 points each; 27 points in total) 1. A firm’s marginal cost can always be thought of as the change in total cost if A) the firm produces one more unit of output. B) the firm buys one more unit of capital. C) the firm’s average cost increases by $1. D) the firm moves to the next highest isoquant. 2. At the current level of output the MPL = 5, the MPK = 10, and the price of labor is $1. If the firm is minimizing its costs, what is the price of capital? A) $1 B) $2 C) $2.50 D) $4 3. Which of the following statements about marginal cost and average cost is correct? A) Marginal cost and average cost are equal when average cost is at its highest point. B) Marginal cost is always less than average cost. C) When marginal cost is less than average cost, average cost must be decreasing. D) When marginal cost is less than average cost, average cost must be increasing. 1/14
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4. With respect to production, the short run is best defined as a time period A) lasting about six months. B) lasting about two years. C) in which all inputs are fixed. D) in which at least one input is fixed. 5. An industry is such that factor prices decreases as output increases. We can conclude that this industry is a(n): A) increasing cost industry. B) constant cost industry. C) decreasing cost industry. D) variable cost industry. 6. Economists define a market to be competitive when the firms A) spend large amounts of money on advertising to lure customers away from the competition. B) watch each other’s behavior closely. C) are price takers. D) All of the above. 7. Producer surplus is equal to A) the area under the supply curve. B) the area under the demand curve and above price. C) the area under the price and above the supply curve. D) the area under the demand and above the supply curve. 8. The deadweight loss generated by a perfect-price-discriminating monopoly A) equals the deadweight loss of a single-price monopoly. B) is greater than the deadweight loss of a single-price monopoly. C) equals zero.
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MT2 Spring 08 - ECONOMICS 211 SECOND MIDTERM EXAMINATION,...

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