Samp_Exam2_Sol

Samp_Exam2_Sol - SAMPLE EXAM 2 (This sample exam has a lot...

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SAMPLE EXAM 2 (This sample exam has a lot of choices to give you practice – however the actual exam will have limited choice) ECON 80A Professor: Paroma Sanyal Microeconomic Theory Sachar 126 Brandeis University (781) 736-2268 Srping 2009 psanyal@brandeis.edu NAME : Total 100 points Time : 2hrs Section 1: Multiple Choice Questions (2 points each) (10 Points) Please answer all questions in this section. Write your name and ID number clearly on Page 1 and on your blue books. Circle your answers (in pen) on the question paper (pg. 1 & 2) and put hand these two pages along with your blue book. NO CALCULATORS ALLOWED. 1.If the variable cost curve is a straight line then A) the marginal cost curve will be U-shaped. C) the marginal cost curve will be horizontal. B) the marginal cost curve may be U-shaped. D)none of the above. 2. Output for a simple production process is given by Q = 2KL, where K denotes capital, and L denotes labor. The price of capital is $25 per unit and capital is fixed at 8 units in the short run. The price of labor is $5 per unit. What is the total cost of producing 80 units of output? A) $525 B) $200 C) $233 D) $185 E) none of the above 3. A production function for which proportional changes in all inputs leads to a more-than-proportional change in output is said to exhibit A) diminishing returns. C) constant returns to scale. B) decreasing returns to scale. D) increasing returns to scale . 4. In a short-run production function before diminishing returns set in, A) both MP L and AP L will have positive slopes and MP L will lie above AP L . B) both MP L and AP L will have positive slopes and AP L will lie above MP L . C) both MP L and AP L will have negative slopes and MP L will lie above AP L . D) both MP L and AP L will have negative slopes and AP L will lie above MP L . 5. In conceptual production functions, technological change is A) treated like an addition to the labor stock. B) treated as a movement upward along a given production function. C) a factor that eliminates diminishing returns to a production function. D) treated as an upward shift of the production function 1
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Section 2: TRUE OR FALSE (10 points each) (You will have three T/F questions on the actual exam, you will answer all of them) When answering the True or False questions please give an explanation why you think the statement is either True of False. Use graphs whenever possible . But graphs are not substitutes for explanations. Please write down the explanation even when you use graphs. For a correct T/F answer you will receive 2 point and the other 8 points are for your explanation) 1. Long run average cost curves are always U-shaped. FALSE LAC are U-shaped only when returns to scale vary in the different ranges of output. Usually in low levels of output, there is increasing returns to scale and LAC slopes downwards. Then it may reach an output level when decreasing returns set in – at this point the Lac starts sloping upwards and hence we get the U-shape. But if the production process is characterized by
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This note was uploaded on 10/15/2011 for the course ECON 82 taught by Professor Demsetz during the Spring '09 term at Brandeis.

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Samp_Exam2_Sol - SAMPLE EXAM 2 (This sample exam has a lot...

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