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ECN100 Final W09 Key Parman

ECN100 Final W09 Key Parman - Ecn 100 Intermediate...

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Ecn 100 - Intermediate Microeconomic Theory University of California - Davis March 19, 2009 Instructor: John Parman Final Exam You have until 5:30pm to complete the exam, be certain to use your time wisely. For multiple choice questions, mark your answer on your scantron sheet. Choose only one answer for each multiple choice question; if more than one letter is filled in for a question it will be marked wrong. For the short answer questions, write your answers directly on the exam. Show your work clearly, place a box around final answers and be certain to label any graphs you draw. Final answers may be left as fractions. Non-graphing calculators may be used but they should not be necessary. Good luck! Name: ID Number: Section: SECTION I: MULTIPLE CHOICE (60 points) 1. The short run costs of producing an amount of output y will be the long run costs of producing the same amount of output. (a) Greater than or equal to. (b) Strictly greater than (c) Less than or equal to. (d) Strictly less than. (a) In the long run, the producer can still use the same combination of inputs it did in the short run, meaning it’s long run costs should be no more than the short run costs. However, the producer has more flexibility in the long run in terms of inputs, so it may be able to achieve lower costs than in the short run. 2. When the marginal cost curve lies above the average cost curve, average costs will be: (a) If the marginal costs are greater than the average costs, it means that the next unit of output will cost more than the previous average. Each additional unit produced will pull up the average cost. 3. On a graph with good x on the horizontal axis and good y on the vertical axis, the larger the price of good x is relative to the price of good y : (a) The slope of the budget line is just - p x p y . If the price of x gets larger, then the magnitude of the budget line slope will get larger.
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2 Final Exam 4. A firm’s production function is given by f ( K, L ) = KL where K is capital and L is labor. The marginal product of labor for this firm is: (a) Decreasing as L gets larger. (b) Increasing as L gets larger. (c) Decreasing as K gets larger. (d) Increasing as K gets larger. (d) The marginal product of labor in this case is MPL = K . A change in L will have no effect on the marginal product of labor. However, a change in K will. If K increases, MPL increases. 5. Which of the following is not a difference between monopolies and perfectly competitive firms?
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