Econ 302 Exam 3 FA07

# Econ 302 Exam 3 FA07 - exam3 Ec302, secs 7 and 13. Rashid....

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exam3 Ec302, secs 7 and 13. Rashid. October 25, 2007 No calculators allowed Multiple Choice Identify the choice that best completes the statement or answers the question. ____ 1. Suppose that Dent Carr’s long-run total cost of repairing s cars per week is c ( s ) = 3 s 2 + 108. If the price he re- ceives for repairing a car is \$24, then in the long run, how many cars will he fix per week if he maximize profits? a. 0 b. 4 c. 6 d. 8 e. 12 ____ 2. The supply curve of any firm is S i ( p ) = . If a firm produces 2 units of output, what are its total variable costs? a. \$8 b. \$6 c. \$2 d. \$4 e. There is not enough information given to determine total variable costs. ____ 3. In East Icicle, Minnesota, on the northern edge of the corn belt, the growing season is short and the soil is poor. Corn yields are meager unless a great deal of expensive fertilizer is used. In Corncrib, Illinois, the land is fertile and flat and the growing season is 20 days longer. For any given expenditure per acre, corn yields are far greater than in East Icicle. Farmers in both places are profit maximizers who grow corn. a. Marginal costs are higher in East Icicle than in Corncrib. b. More fertilizer is used per acre in East Icicle than in Corncrib. c. Marginal costs are the same in both places. d. More fertilizer is used per acre in Corncrib than in East Icicle. e. More than one of the above is true. ____ 4. The bicycle industry is made up of 100 firms with the long-run cost curve c ( y ) = 2 + ( ) and 60 firms with the long-run cost curve c ( y ) = . No new firms can enter the industry. What is the long-run industry supply curve at prices greater than \$2? a. y = 420 p . b. y = 400 p . c. y = 200 p . d. y = 300 p . e. y = 435 p . ____ 5. If the demand schedule for Bong’s book is Q = 5,000 – 100 p , the cost of having the book typeset is \$6,000, and the marginal cost of printing an extra book is \$4, then he would maximize his profits by a. not having it typeset and not selling any copies. b. having it typeset and selling 4,600 copies. c. having it typeset and selling 2,500 copies. d. having it typeset and selling 2,300 copies. e. having it typeset and selling 1,150 copies. ____ 6. If the demand for pigeon pies is given by p ( y ) = 140 – , then the level of output that will maximize Peter’s profit is

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a. 56. b. 560. c. 284. d. 840. e. None of the above. ____ 7. A profit-maximizing monopoly faces an inverse demand function described by the equation p ( y ) = 60 – y and its total costs are c ( y ) = 10 y , where prices and costs are measured in dollars. In the past it was not taxed, but now it must pay a tax of 4 dollars per unit of output. After the tax, the monopoly will a. increase its price by 4 dollars. b.
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## Econ 302 Exam 3 FA07 - exam3 Ec302, secs 7 and 13. Rashid....

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