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Final_sampl_problm

# Final_sampl_problm - Sample problems for final 1 Short run...

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Sample problems for final 1. Short run cost curve is given by the equation 2 2 100 TC Q Q = + + . The firm’s marginal cost is 2 2 MC Q = + . At what level of Q does the firm’s average cost curve reach a minimum? a) 100 b) 2 c) 10 d) 20 Ans: C 2. For a particular perfectly competitive firm 2 100 20 STC Q Q = + + and 20 2 SMC Q = + . If the market price is equal to 40, at what level of output should the firm operate to maximize profit? a) 10 b) 20 c) 30 d) 40 Ans: A 3. For a particular perfectly competitive firm 2 100 20 STC Q Q = + + . If the market price is equal to 40, what is the maximum profit the firm can earn? a) 400 b) 200 c) 100 d) 0 Ans: D 4. If 2 10 4 100 STC Q Q = + + and all fixed costs are sunk, the firm’s short-run supply curve is a) 0 2 ( ) 2 8 2 P s P Q P < = + . b) 0 2 ( ) 0.125 0.25 2 P s P P P < = - . c) 0 0 ( ) 2 8 0 P s P Q P < = + . d) 4 4 ( ) 20 0 0 4 P P s P P - = < . Ans: D

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(Also, learn how to find out the firm’s supply curve when some of the fixed cost is non-sunk) 5. In an increasing cost industry, the long-run supply curve is a) Downward sloping. b) Horizontal. c) Upward sloping. d) Vertical. Ans: C 6. . The long-run is a) A time period in which all input levels are fixed. b) A time period in which at least one input level is fixed. c) One year. d) A time period in which no input levels are fixed. Ans: D 7. The short-run is a) A time period in which all input levels are fixed. b)
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Final_sampl_problm - Sample problems for final 1 Short run...

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