homework 5_1 - Econ 2005: Principles of Microeconomics Dr....

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Econ 2005: Principles of Microeconomics Dr. Gebre Gebremariam Spring 2008 Homework 5 Due Date: Wednesday, 12 March 2008, at the end of the class    Choose the one alternative that best completes the statement or answers the question and blacken the circle that corresponds  to your answer in the Scantron separately provided.  Refer to the information provided in Scenario 1 below to answer the questions that follow. SCENARIO 1: You own and are the only employee of a company that writes computer software that gamblers use to collect sports  data. Last year your total revenue was $90,000. Your costs for equipment, rent, and supplies were $50,000. To start this business you  invested an amount of your own capital that could pay you a $40,000 a year return.   1) 
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Refer to  Scenario 1. During the year your economic costs were  A) 
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$90,000. 
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B) 
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$60,000. 
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C) 
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$100,000. 
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D)  $ 4   Refer to the  information  provided in  Figure 7.11  below to  answer the  questions  that follow. Figure 7.11   R t h p r ice of  capital and  labor each  decreased  by 50%.  t h f irm s total ʹ   expenditure s increased  by 50%.    Th point of tangency between an isocost  line and an isoquant is necessarily 
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the minimum  amount of output a firm can attain for that level of expenditure.  B) 
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the profit- maximizing combination of inputs a firm can hire to produce that output level.  C) 
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both the profit- maximizing and least costly combination of inputs a firm can use to produce that output level.  D) 
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the least costly  combination of inputs the firm can hire to produce that output level.    Use the information provided in the Figure 7.9 below to answer the question that follows. Figure 7.9   4) 
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Refer to  Figure 7.9 above. If Roller Skates Unlimited moves from isoquant  B  to isoquant  A , the number of roller skates produced  A) 
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remains  constant, but input prices have risen.  B) 
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remains  constant, but Roller Skates Unlimited uses more capital and more labor.  C) 
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decreases.  D) 
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increases.    Refer to the information provided in Figure 7.12 below to answer the questions that follow. Figure 7.12   5) 
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Refer to  Figure  7.12. If this firm's cost of capital is $20 per unit and its cost of labor is $10 per unit, the isocost line represents a total cost  of  A) 
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$8,000. 
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B) 
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$4,000. 
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C) 
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$2,000. 
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D)  $ 3   Refer to the  information  provided in  Figure 7.10  below to  answer the  questions  that follow.
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homework 5_1 - Econ 2005: Principles of Microeconomics Dr....

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