MT2-Fall08.1

MT2-Fall08.1 - ECONOMICS 211 SECOND MIDTERM EXAMINATION,...

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ECONOMICS 211 SECOND MIDTERM EXAMINATION, Fall 2008 (2 hours, 100 points) Circle the name of your instructor: You Soligo Wu Dinh Ertemel Kumar NAME: __________________________________________________________________________ PLEDGE:_______________________________________________________________________________________ _________________________________________________________________________________________________ _________________________________________________________________________________________________ PART 1: MULTIPLE CHOICE: Circle the correct answer (3 points each; 21 points in total) 1. (3 points) Which of the following is part of a firm’s explicit costs? I. wages paid to workers II. electricity costs III. interest on a bank loan IV. interest forgone on funds used to buy machinery a) I and II. b) III and IV. c) I, II and III. d) I, III and IV. 2. (3 points) A firm will substitute capital for labor when the a) marginal product of capital is higher than the marginal product of labor. b) the ratio of the marginal product of capital to the marginal product of labor is equal to the ratio of the price of capital to the price of labor. c) marginal product of capital per dollar is higher than the marginal product of labor per dollar. 1
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d) average product of capital is higher than the average product of labor. 3. (3 points) Which of the following is NOT true for a U-shaped long-run average cost curve a) is the envelope of the short-run cost curves. b) has a downward slope when production technology exhibits decreasing returns to scale. c) represents the lowest per unit costs for each level of output. d) has a different level of capital corresponding to each point on it. 4. (3 points) In a perfectly competitive market one would expect the demand curve faced by an individual firm relative to the demand curve faced by all sellers, to be a) more elastic. b) more inelastic. c) of the same elasticity. d) less elastic. 5. ( 3 points) When comparing a perfectly competitive firm and a monopolist, a major difference is that a) the monopolist produces where MR = MC, but the perfect competitor does not. b) the perfect competitor achieves productive efficiency, but the monopolist does not.
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MT2-Fall08.1 - ECONOMICS 211 SECOND MIDTERM EXAMINATION,...

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