Practice%20Exam%202 - Name _ Practice Exam 2 ECON 3550 /...

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1 Name _________________________________________________ Practice Exam 2 ECON 3550 / 5030 Please show all your work and explain your answers. Without an explanation for your answer, you will not receive credit. Clearly label all graphs for full credit and please write legibly. A. True / False _____ 1. If a firm’s marginal cost is rising as more output is produced, then average total cost is also rising. Explain your answer both graphically and in words. _____ 2. If a firm is experiencing diminishing marginal returns, then its marginal cost must be rising. B. Essay and Problem Solving 3. Briefly describe the 2 methods a firm can use to decide how much output to produce in order to maximize its profit.
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2 4. Suppose that the hourly production of Economics Textbooks (Q) at Economics’R’Us depends on the number of printing presses (K) and workers (L) hired each hour, according to the following production function: Q = 2K 0.5 L 0.5 . They currently have a fixed amount of capital at K = 9. The price of capital is $8
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Practice%20Exam%202 - Name _ Practice Exam 2 ECON 3550 /...

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