Exam_2_Blue_Econ_251_Spring_2010

# Exam_2_Blue_Econ_251_Spring_2010 - Purdue ECON251 Exam 2...

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ECON 251 Final Exam Blue Spring 2010 0001 Liu, An-Hsiang Monday / Wednesday / Friday 8:30 – 9:20 a.m. 0002 Liu, An-Hsiang Monday / Wednesday / Friday 9:30 – 10:20 a.m. 0003 Winegar, Ross Monday / Wednesday / Friday 10:30 – 11:20 a.m. 0004 Winegar, Ross Monday / Wednesday / Friday 11:30 a.m. – 12:20 p.m. 0005 Blanchard, Kelly Tuesday / Thursday 12:00 – 1:15 p.m. 0006 Blanchard, Kelly Tuesday / Thursday 1:30 – 2:45 p.m. Page 1 of 19

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1. There are 14 firms in an industry, and each of the four largest firms has 20% of the market. The other 10 firms each have a total market share of 2%. The Herfindahl-Hirschman Index (HHI) for this industry is a. 1200 b. 1640 c. 1800 d. 2020 2. If the Herfindahl-Hirschman Index (HHI) is 10,000, what can we say about the industry? a. It is perfectly competitive b. It is a monopoly c. It is an duopoly d. It is an oligopoly Use the below table to answer the following two questions. Output TC ATC MC 0 1 20 10 2 15 3 55 4 21.25 3. What is the marginal cost of the 4 th unit produced? a. \$30 b. \$21.25 c. \$20 d. \$15 4. What is the average variable cost of producing 3 units of output? a. \$11.67 b. \$13 Page 2 of 19
c. \$15 d. \$18.33 5. If the marginal cost curve is above the average total cost curve, average total cost is _____________. a. Increasing b. Decreasing c. Constant d. None of the above 6. The table shows the production schedule of Terry’s T-Shirts. Terry’s pay \$100 a day for each sewing machine it rents and \$50 a day for each worker it hires. In the long run, Terry’s can rent 1, 2 or 3 sewing machines. What is the long-run average cost if Terry’s produces 160 T- shirts a day? a. \$400/160 = \$2.50 b. \$300/160 = \$1.88 c. \$250/160 = \$1.56 d. \$350/160 = \$2.19 Workers per day Output (T-shirts per day) 1 machine 2 machines 3 machines 1 60 100 130 2 100 160 160 3 130 180 190 4 150 190 200 5 155 195 210 7. Which of the following is true at the long run equilibrium in a perfectly competitive market? a. The equilibrium price is equal to the average cost b. Firms make revenue equal to \$0 c. Firms make accounting profit equal to \$0 d. There is excess capacity Use the table below to answer the following 4 questions. The firm operates in a perfectly competitive industry. Page 3 of 19

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Quantity of Surfboards Total Cost 0 100 1 120 2 160 3 220 4 300 5 400 8. What are the fixed costs of production for the firm, if any? a. \$50 b. \$100 c. \$150 d. There are not fixed costs of production because this firm is operating in the long run. Page 4 of 19
9. If the market for surfboards is perfectly competitive, and the market price for surfboards is \$60, what is marginal revenue from producing the 5 th surfboard? a.

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## This note was uploaded on 05/04/2010 for the course ECON 251 taught by Professor Blanchard during the Spring '08 term at Purdue University-West Lafayette.

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Exam_2_Blue_Econ_251_Spring_2010 - Purdue ECON251 Exam 2...

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