Spring 2010 - Exam II - Blue

Spring 2010 - Exam II - Blue - Short run costs for a firm...

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Short run costs for a firm are given as: This firm employs two inputs for production: Capital and Labor. Capital is fixed. The rental rate of capital is $1750 per unit of capital, and the wage rate is $224 per unit of labor. 1) This firm is employing _____ units of capital. a) 60 b) 80 c) 100 d) 120 e) None of the above are correct. 2) This firm is employing _____units of labor at an output level equal to 2100. a) 500 b) 650 c) 800 d) 950 e) None of the above are correct. 3) At an output level of 2100, the marginal product of capital equals 10. In the long run, at this level of output, this firm a) can decrease its per unit costs of production by employing more capital and less labor. b) cannot lower its per unit costs of production by changing employment of capital and labor. c) can decrease its per unit costs of production by employing more labor and less capital. d) will exit the industry if its accounting profits are greater than its economic profits. 415 Exam II – BLUE 1 of 7 Spring 2010 2100 1400 80 160 180 AVC ATC MC $ Q
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Market A and Market B. Demand for the firm’s product in market A is Q A = 600 – 5P A . Demand in market B is Q B = 600 – 3P B . The firm’s costs of production, for any output Q, are C(Q) = 9,400 + 80Q. 4) If this firm is able to practice 3 rd degree price discrimination it will sell _____ units of output in market A. a) 60 b) 100 c) 140 d) 180 e) None of the above are correct. 5) If this firm is able to practice 3 rd degree price discrimination it will set a price equal to _____ in Market B. a) 100 b) 120 c) 140 d) 160 e) None of the above are correct. 6) If this firm is able to practice 3 rd degree price discrimination it will earn an economic profit equal to a) 0 b) 400 c) 1,200 d) 3,400 e) None of the above are correct. 7) If this firm is unable to price discriminate, it will set its price equal to a) 115 b) 120 c) 130 d) 140 e) None of the above are correct. 8) If this firm is unable to price discriminate, it will earn economic profits equal to a) 0 b) 400 c) 1,200 d) 3,400 e) None of the above are correct. 415 Exam II – BLUE
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Spring 2010 - Exam II - Blue - Short run costs for a firm...

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