KEY952F - BUSINESS 702 SECOND EXAM KEY FALL 1995 MANAGERIAL...

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Sheet1 Page 1 BUSINESS 702 SECOND EXAM KEY FALL 1995 MANAGERIAL ECONOMICS MULTIPLE CHOICE QUESTIONS (50 pts, 2pt each) 1. A new production function results following: A. a new wage agreement following collective bargaining. B. a surge in product demand. C. a decrease in the availability of needed inputs. > D. the successful completion of a training program that enhances worker productivity. 2. The relation between output and the variation in all inputs taken together is the: A. factor productivity of a production system. B. law of diminishing returns. > C. returns to scale characteristic of a production system. D. returns to factor characteristic of a production system. 3. An irrational employment policy is indicated when the marginal product of X is: > A. negative. B. positive. C. decreasing. D. increasing. 4. When PX = $60, MPX = 5 and MPY = 2, relative employment levels are optimal provided: A. PY = 16.7i . > B. PY = $24. C. PY = $60. D. PY = $150. 5. When PX = $100, MPX = 10 and MRQ = $5, the marginal revenue product of X equals: A. $100. > B. $50. C. $10. D. $5. 6. The foregone value associated with the current rather than next-best use of a given asset is called: A. current cost. B. replacement cost. C. historical cost. > D. opportunity cost. 7. Unlike the marginal cost concept, the incremental cost concept: A. does not focus on individual managerial decisions. B. is not relevant for optimal output determination.
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Sheet1 Page 2 C. embodies sunk costs. > D. can involve multiple units of output. 8. In the long run, the: A. availability of at least one input is fixed. B. firm's operating decisions are typically constrained by prior capital expenditures. C. availability of all but one input is fixed. > D. firm has complete flexibility with respect to input use. 9. When îC < 1: A. decreasing returns to all factors are implied. > B. increasing returns to scale are implied. C. decreasing returns to scale are implied. D. constant returns to scale are implied. 10. Learning involves: A. movements along a single LRAC curve. B. movements along a single SRAC curve. C. shifts in SRAC curves over time. > D. shifts in LRAC curves over time. 11. When an LP objective function is to maximize profits: > A. resource constraints must be of the ó variety. B. resource constraints must be of the ò variety. C. all input costs must be variable. D. the total revenue function must not be linear. 12. If X > 0 in the primal solution: > A. the marginal value of inputs just equals the marginal value of output in X production. B. the marginal value of inputs exceeds the marginal value of output in X production. C. LX > 0 in the dual solution. D. LX < 0 in the dual solution. 13. When the primal LP problem is to maximize revenue subject to various input constraints, the shadow prices of inputs in th e > A. equal the marginal revenue product of each input. B. are positive for inputs with excess capacity.
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This note was uploaded on 07/31/2011 for the course ECON 1201 taught by Professor Smith during the Spring '11 term at Waseda University.

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KEY952F - BUSINESS 702 SECOND EXAM KEY FALL 1995 MANAGERIAL...

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