Pastel 2 (1) - 1 Economics 304k Pastel Midterm 2 November 2...

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Economics 304k: Pastel Midterm 2 November 2, 2011 Professor Sibley Directions: 1. Observe the Honor Code 2. Do not open the test until told to do so. 3. Do any 5 questions. YOU MUST DO QUESTION 3!!! 1
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1. Definitions and short answer questions. Use a diagram if it helps and explain your answers. Marginal revenue Price-taking behavior implies MR = price. True or False: even if the LRAC curve is flat, SMC and AVC curves need not be flat. . True or False: a profit- maximizing firm should pick the output at which Average Total Cost is minimized. If fixed cost rises, then a profit-maximizing firm should increase output so as to lower AFC. 2
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Consider the TPL curve given on the screen. a. What is the marginal product of the 5 th unit of labor? Of the 13 th unit of labor? b. Draw the MPL and APL curves below. c. Assuming that the wage rate is $1 per unit of labor, draw the SMC and AVC curves corresponding to this TPL curve. 3
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Pastel 2 (1) - 1 Economics 304k Pastel Midterm 2 November 2...

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