2008 FINALEXAM KEY

2008 FINALEXAM KEY - ARE 100A Name. Section FINAL EXAM...

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ARE 100A FINAL EXAM VERSION I Winter 2008 Name………………………. KEY Section………… (2 hours) Do all questions Multiple Choice - circle the correct answer (1) Firm profit is: (a) The difference between average total cost and average fixed cost period. (b) Always maximized at the end of the stage II of production. (c) Total revenue minus total costs. (d) Where average revenue minus fixed cost is at a maximum. (e) All of the above. (2) When the average product is at its maximum: (a) average product is equal to marginal product. (b) It marks the beginning of stage two of production. (c) It marks the beginning of decreasing average product. (d) None of the above. (e) All of the above. (3) Perloff defines perfect complements as: (a) Goods whose indifference curve slope is determined by the ratio of marginal utilities. (b) Goods whose indifference curves are a set of straight lines. (c) Goods that the consumer is interested in consuming only in fixed proportions. (d) Goods that have very flat almost horizontal indifference curves. (e) Goods whose indifference curves always have a right angle (f) Answers (c) and (e) (g) Answers (a) and (e) (4) Perloff shows that the long-run market supply curve is: (a) Always perfectly horizontal (b) Perfectly horizontal if the perfect competition assumptions hold. (c) Upward sloping if firms differ in their technology and production costs (d) Equal to the horizontal summation of the firm supply curves (e) Answers (a) , (b), (c) . (f) Answers (b), (c) and (d). 1
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(5) If utility maximizing consumers in Boston paid two dollars per loaf of bread and four dollars per pound of cheese, their marginal rate of substitution (MRS) would be: (a) one loaf of bread to two pounds of cheese. (b) Two loaves of bread for one pound of cheese (c) Half a loaf of bread to one pound of cheese (d) Answers (a) and (c). (e) None of the above answers (6) Indifference curves cannot cross because: (a) Crossing prevents them from having a convex (bowl) shape. (b) Crossing violates the assumption that indifference curves have a negative slope (c) Crossing implies that one indifference curve has a higher total utility for all consumption combinations on that curve. (d) All of the above (e) None of the above (7) The compensated demand curve: (a) Is always downward sloping (b) Is upward sloping only for a Giffin good (c) Is steeper than the ordinary demand curve for an inferior good.
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2008 FINALEXAM KEY - ARE 100A Name. Section FINAL EXAM...

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