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Unformatted text preview: Name Test Form A Economics 1 Quiz 3 May 20, 2009 True-False Questions: Fill in Bubble A for True, Bubble B for False. 1. A profit-maximizing firm will always want to hire the number of workers that gives it the highest average profit per worker. 2. If a price ceiling is set lower than the competitive equilibrium price for a good, we will expect to see excess supply of this good. 3. If a competitive industry with free entry and exit is in long run equilibrium, any firm that is not currently producing in the industry could not make a profit by entering the industry. 4. If a small increase in a firms output would decrease its average variable cost, the firms marginal cost is less than its average variable cost. 5. Assume the supply curve for a good shifts in (less supplied at every price) and the demand curve does not change. If the total revenue of suppliers falls as a result of this shift, the demand for the good is inelastic. Multiple Choice Questions 6. A firm can hire any number of workers between 1 and 6. The value of the firms output is $13 if it hires one worker, $20 if it hires 2 workers, $27 if it hires 3 workers, $33 if it hires 4 workers, $38 if it hires 5 workers, and $42 if it hires 6 workers. If the firm must pay the same wage to every worker it hires, the highest wage at which it would be willing to hire 5 workers is (a) $5 (b) $33 (c) $38 (d) $6 (e) $20 Economics 1 2 7. The Bergstrom Box Company (BBC) makes cute Swedish boxes to sell to gullible American tourists. If it employs one worker, it can make and sell 6 boxes per day. If it employs two workers, it can make and sell 10 boxes per day; and if it employs 3 workers, it can make and sell 12 boxes per day. Each box sells for $10. If BBC must pay each worker it hires a wage of $30 per day, how many workers should BBC hire?...
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This note was uploaded on 03/20/2010 for the course ECON 1 taught by Professor Bergstrom during the Spring '07 term at UCSB.
- Spring '07