Fall 2009 - Exam II - BLUE

Fall 2009 - Exam II - BLUE - Mesa Manufacturing sells its...

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Mesa Manufacturing sells its product in two markets, Market A and Market B. In Market A demand for its product is Q A = 140 – 0.1P A . In Market B demand is Q B = 180 – 0.1P B . Mesa’s costs of production, for any level of output Q, is C(Q) = 120,000 + 20Q. Mesa is able to practice 3 rd degree price discrimination and is a profit maximizing firm. 1. Mesa’s marginal revenue function in market A is: a) MR(Q A ) = 1400 – 10Q A c) MR(Q A ) = 140 – 0.2Q A b) MR(Q A ) = 140 – 0.2Q A d) MR(Q A ) = 1400 – 20Q A 2. Mesa will sell _____ units of output in Market B. a) 69 b) 79 c) 89 d) 99 e) None of the above are correct. 3. Mesa will set a price equal to ______ dollars in Market A. a) 710 b) 810 c) 910 d) 1010 e) None of the above are correct. 4. Mesa’s total variable costs of production will equal ________ dollars. a) 3,160 b) 3,480 c) 4,040 d) 5,220 e) None of the above are correct. 5. If Mesa is unable to practice 3 rd degree price discrimination, it will set its price equal to ____dollars. a) 710 b) 810 c) 910 d) 1010 e) None of the above are correct. 6. If Mesa is unable to practice 3 rd degree price discrimination, its profit will equal ______ dollars. a) 4,820 b) 5,680 c) 6,820 d) 7,680 e) None of the above are correct. BLUE EXAM II Page 1 of 8 FALL 2009
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Corinthian Consolidated is the only employer of labor (L) in its region, confronting a supply of labor L = (1/3)W – 100. Here W is the wage paid per unit of labor. Labor is the only variable input into Corinthian’s production process, with total output Q = 200L – (1/4)L 2 . The marginal product of labor is MP L = dQ/dL = 200 – (1/2)L. In its product market, Corinthian faces perfect competition. The current market price for its output is P = $6. Corinthian is a profit maximizing firm. 7. Corinthian’s marginal labor costs are: a) MLC = 300 + 3L c) MLC = -100 + (2/3)W b) MLC = -100 + (1/3)W d) MLC = 300 + 6L 8. Corinthian will produce ______ units of output. a) 9,375 b) 17,500 c) 24,375 d) 30,000 e) None of the above are correct. 9. Corinthian will pay a wage equal to ______ dollars per unit of labor. a) 450 b) 600 c) 750 d) 900 e) None of the above are correct. 10. Workers in Corinthian’s labor market form a union, and demand a wage equal to $1,050 per unit of labor. Corinthian decides it will accept this wage demand if its economic profits will be greater than or equal to zero. The highest level of fixed costs of production for which Corinthian will accept the union’s wage demand is ______ dollars.
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Fall 2009 - Exam II - BLUE - Mesa Manufacturing sells its...

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