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# midterm2practiceanswers - Midterm 2 Key Version#2 Assume...

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Midterm 2 Key Version #2 Assume that Dusty has \$30 in income, the price of a loaf of bread is \$1.50, and the price of a jar of peanut butter is \$3. Frank - Chapter 005 1. Dusty can buy a maximum of _____ loaves of bread or a maximum of _____ jars of peanut butter. A. 10; 5 B. 10; 20 C. 15; 15 D. 20; 10 AACSB: Analytical Skills Bloom's: Application Frank - Chapter 005 #58 Learning Objective: 5-3 Section: Applying the Rational Spending Rule 2. Which of the following factors of production is likely to be fixed in the short run? A. The amount of electricity consumed. B. The number of employee-hours. C. The amount of paper used. D. The location of the firm. AACSB: Analytical Skills Bloom's: Understanding Frank - Chapter 006 #49 Learning Objective: 6-3 Section: Profit-Maximizing Firms in Perfectly Competitive Markets

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3. You are trying to decide how to spend your last lunch dollar. You should use that dollar to buy more of AACSB: Analytical Skills Bloom's: Understanding Frank - Chapter 005 #87 Learning Objective: 5-3 Section: Applying the Rational Spending Rule 4. Suppose 30 employee-hours can produce 50 units of output. Assuming the law of diminishing marginal returns is present, to produce 100 units of output will require AACSB: Analytical Skills Bloom's: Application Frank - Chapter 006 #56 Learning Objective: 6-3 Section: Profit-Maximizing Firms in Perfectly Competitive Markets This phone center uses only equipment and workers to provide service. Frank - Chapter 006
5. Assuming equipment costs \$10 per unit and each worker earns \$5, Average Variable Costs are minimized when output is approximately AACSB: Analytical Skills Bloom's: Application Frank - Chapter 006 #62 Learning Objective: 6-3 Section: Profit-Maximizing Firms in Perfectly Competitive Markets 6. Suppose that one unit of equipment costs \$10 and each worker earns \$5. What is the total cost of producing 3 units of output? A. \$35 B. \$40 C. \$30 D. \$25 AACSB: Analytical Skills Bloom's: Application Frank - Chapter 006 #61 Learning Objective: 6-3 Section: Profit-Maximizing Firms in Perfectly Competitive Markets Frank - Chapter 005

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