Econ 306 S10 Practice exam wo ans

Econ 306 S10 Practice exam wo ans - Econ 306 Spring 2010...

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Econ 306 Charles Hulten Spring 2010 PRACTICE EXAM The following group of questions all refer to the Figures 1A, 1B, and 1C below. These figures show the production and cost functions of a single firm which produces output (Q) using one input, labor (L). There is no capital and thus no fixed cost. Total cost is therefore just the cost of hiring labor. 1. If production is efficient, how much labor is needed to produce 80 units of output? a. 30 c. 100 b. 60 d. NOTA ("None of the Above") 2. The marginal product of labor (MPL) is at a maximum at which point on the production function Figure 1A? a. A c. C b. B d. NOTA 3. The point B in Figure 1A is equivalent to which point in Figure 1C? a. I c. M b. J d. NOTA 4. The average cost (AC) of producing 80 units of output is how large (i.e. what is its numerical value)? a. 10 c. 12.5 b. 25 d. NOTA 5. Marginal cost equals average cost at what level of labor input? a. 30 c. 100 b. 60 d. NOTA 6. When the price of output is $25.00 per unit, how much output would be produced by a profit maximizing firm? a. 24 c. 80 b. 60 d. NOTA 9. When the price of output is $25.00 per unit, how much profit would a profit maximizing firm earn by operating at the optimal level of output? a. $0 c. $2000 b. $900 d. NOTA
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10. The firm's supply curve of output is determined by which of the following curve segments? a. the marginal cost curve above the point J b. the marginal cost curve above the point I c. the average cost curve above the point J d. NOTA 11. If the price were to fall from $25.00 to $10.00 per unit, how much profit would the profit maximizing firm earn? a. $0 c. $600 b. $150 d. NOTA 12. If a technological innovation were to shift the production function in Figure 1A upward, the cost functions in Figure 1C would shift a. upward c. become flat b. downward d. NOTA
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0 X Y L 30 60 100 Z MPL APL APL,MPL 0.8 2.0 V 1.0 0.4 Figure 1A Figure 1B 0Q I J K M AC,MC MC AC 25 12.5 10 5 24 60 80 N Figure 1C 0 A B C Q L 24 30 a F(L) 60 100 60 80
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Question Group II The following set of questions refer to the figure and table below.
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Econ 306 S10 Practice exam wo ans - Econ 306 Spring 2010...

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