# Exam_2.1 - NAME _ TEST FORM: 1 Exam #2 DO NOT OPEN UNTIL...

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Page 1 NAME ________________________ TEST FORM: 1 Exam #2 DO NOT OPEN UNTIL INSTRUCTED TO DO SO - Fill in your name at the top of this page and on your bubble sheet - Fill in your student ID, section and test form 1 on your bubble sheet

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Page 2 Exam 2 Directions: Please choose the best answer for each question. There is no penalty for wrong answers. Thus, if you do not know the answer, it will not hurt you to guess. Use the following to answer questions 1-2: Q= output, FC = fixed cost, VC= variable cost, TC= total cost, MC= marginal cost, ATC= average total cost, AFC= average fixed cost, AVC= average variable cost 1. (Table: Output and Costs) Using the information in the table, when quantity equals three, average total cost equals: A) 17 B) 8 C) 13 D) 10 2. (Table: Output and Costs) What is the variable cost when producing 4 units? A) 68 B) 27 C) 48 D) 37
Page 3 Use the following to answer question 3: Labor Total Product 1 10 2 20 3 27 4 32 5 35 3. (Table: Total Product) Consider the table above. What is the marginal product of the 4th worker? A) 5 B) 32 C) 3 D) 8 4. Suppose that the income elasticity of demand for good A is -0.5. We would say that good A is A) a substitute good. B) an inelastic good. C) an inferior good. D) a normal good. Use the following to answer question 5: 5. (Table: Market for Fried Twinkies) The government decides to tax fried Twinkies at a rate of \$0.30 per Twinkie and collect that tax from the producers. Using the table, the producers will keep ________ per Twinkie and sell ________ Twinkies after the tax. A) \$1.50; 5,000 B) \$1.10; 3,000 C) \$1.20; 5,000 D) \$1.30; 7,000

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Page 4 6. The marginal product of labor is A) the increase in costs that would result from hiring one more worker. B) the increase in output that would result from adding one more worker. C) the increase in labor needed to produce one more unit of output. D) the increase in costs that would result from producing one more unit of output. Use the following to answer question 7: 7. (Table: Utility) The marginal utility for the second unit is: A) 5 B) 10 C) 35 D) 15 8. Suppose you own a company that producers paper airplanes. When you hire 1 worker you are able to produce 2 airplanes. When you hire 2 workers you are able to produce 3 airplanes. What is the marginal product of your 2nd worker? A) 1 airplane B) 3 airplanes C) 1.5 airplanes D) 2 airplanes
Page 5 Use the following to answer question 9: 9. (Figure: US and Mexico) Suppose that the diagram represents the production possibilities frontier for a typical worker in the US and Mexico. Which of the following is true? A) Mexico has a comparative advantage in the production of good A.

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## This note was uploaded on 12/05/2011 for the course ISP 209 taught by Professor Sherrill during the Fall '07 term at Michigan State University.

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Exam_2.1 - NAME _ TEST FORM: 1 Exam #2 DO NOT OPEN UNTIL...

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