T3sol - LAST/FAMILY NAME: STUDENT ID: FIRST NAME: Econ 1b03...

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LAST/FAMILY NAME: FIRST NAME: STUDENT ID: Page 1 Econ 1b03 Test 3, Nov 17, 2005 Instructions: Please print your name (last name, first name, middle initial) and student number in the space provided at the top of each page. The test consists of 25 multiple choice (MC) questions and 1 short answer question. There is a total of 15 marks on the test. You have 50 minutes to complete the test. Answer all questions. Only one answer is correct for the MC questions. Points are awarded if only the correct answer is circled. Answer the short answer question in the space provided below. No material, other than University approved calculators, is allowed. Multiple choice questions (1/2 marks each, total 12.5 marks): 1. The ______ is the increase in output obtained by hiring an additional worker. A) average product B) total product C) marginal product D) marginal cost 2. A consumer maximizes utility when, given her income, she chooses a consumption bundle where: A) the marginal utility of each good is equal. B) the highest indifference curve is tangent to the budget line. C) the marginal rate of substitution is highest. D) the marginal utility of each good is highest.
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LAST/FAMILY NAME: FIRST NAME: STUDENT ID: Page 2 3. Austin's total fixed cost is $3,600. Austin employs 20 workers and pays each worker $60. The average product of labour is 30, the marginal product of the 20th worker is 12. What is the marginal cost of the last unit produced by the last worker who Austin hired? A) $0.20 B) $5 C) $240 D) $720 4. Figure: Cost Curves If a firm faced a long-run average cost curve as shown in the accompanying figure and it expected to produce 100-thousand units of the good in the long run, the firm should build: A) the plant associated with ATC 1 . B) the plant associated with ATC 2 . C) the plant associated with ATC 3 . D) either the plant associated with ATC 1 or with ATC 2 . 5. Rhonda spends all her income on two goods: clothes and CDs. Place clothes on the vertical axis and CDs on the horizontal axis. Rhonda is currently consuming a bundle of the two goods, where the indifference curve is flatter than the budget line. To increase total utility, Rhonda, given her income, should: A) increase her consumption of clothes and decrease her consumption of CDs. B)
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This note was uploaded on 03/13/2011 for the course ECON 1B03 taught by Professor Hannahholmes during the Spring '08 term at McMaster University.

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T3sol - LAST/FAMILY NAME: STUDENT ID: FIRST NAME: Econ 1b03...

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