Econ 101 prelim2 2004 - Economics 101 Introductory...

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Economics 101 Introductory Microeconomics Prelim 2 READ THIS FIRST. NAME : fill in your name LAST NAME FIRST . IDENTIFICATION NUMBER spaces A to F: fill in your 6-digit CU identity number . USE THE ANSWER SHEET PROVIDED. NO BOOKS, NOTES OR PROGRAMMABLE CALCULATORS, PERSONAL DIGITAL ASSISTANTS, CELL PHONES OR OTHER ELECTRONIC DEVICES ARE ALLOWED. ALL VIOLATIONS OF THIS RULE WILL RESULT IN IMMEDIATE CONFISCATION OF THE EXAM AND INITIATION OF A HEARING UNDER THE CORNELL CODE OF ACADEMIC INTEGRITY. ONLY A $1.00 CALCULATOR THAT ADDS, SUBTRACTS, MULTIPLIES AND DIVIDES AND A STRAIGHTEDGE (RULER) ARE PERMITTED. USE A NUMBER 2 PENCIL. THERE ARE 25 QUESTIONS . ALL QUESTIONS HAVE THE SAME WEIGHT (4 POINTS). NEITHER THE INSTRUCTOR NOR THE PROCTORS WILL ANSWER ANY QUESTIONS DURING THE EXAM. CHOOSE THE BEST POSSIBLE ANSWER FOR EACH QUESTION. THERE IS A 90 MINUTE TIME LIMIT. Glossary of abbreviations: MC: marginal cost MB: marginal benefit MR: marginal revenue P: price Q: quantity S: supply D: demand CS: consumer surplus PS: producer surplus TC: total costs VC: variable costs FC: fixed costs ATC: average total cost AVC: average variable cost AFC: average fixed cost 1. A firm’s average total cost is $80/unit, its average variable cost is $75/unit, and its output is 50 units. Its total fixed costs are A. less than $10. B. between $10 and $100. C. between $100 and $200. D. between $200 and $300. E. more than $300. 2. In a double-auction market A. buyers make bids and sellers ask prices. B. buyers and sellers know each others’ costs and benefits. C. two auctioneers officiate. D. twice as many bids as asks are required. E. two separate auctions are held at the same time to sell the same goods. 3. Free entry and exit means that A. it costs nothing to start a firm. B. banks charge no interest on a loan to start a firm. C. no investment is necessary in order to enter an industry. D. there are no artificial impediments to entering and exiting an industry. E. a firm is free to enter and exit a nation without having to pay high tax levies. 4. Marginal cost is equal to average total cost when A. average total cost is at a minimum. B. average total cost is at a maximum. C. average total cost is negative. D. marginal cost is at a minimum. E. marginal cost is at a maximum. 5. For a competitive firm, profit maximization occurs when A. price equals marginal revenue. B. price equals marginal cost. C. marginal revenue equals total cost. D. marginal cost equals total cost. E. total revenue equals total cost. 6. The following statements relate to the standard cost curves of a firm. Which one is true ? A. If MC > ATC, then ATC must be decreasing. B. If MC is increasing, then ATC must be increasing. C. If MC > AFC, then AFC must be increasing. D. At the minimum ATC, MC must equal 0. E. If MC = ATC, then ATC must be at a minimum.
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Trophies (Q/month) Total Variable Costs Total Fixed Costs Total Costs Marginal Cost Average Variable Cost Average Total Cost 0 0 4,000 4,000 100 1,100 4,000 5,100 11.00 11.00 51.00 200 2,200 4,000 6,200 14.50 11.00 31.00 300 4,000 4,000 8,000 19.00 13.33 26.67 400 6,000 4,000 10,000 25.00 15.00 25.00 500 9,000 4,000 13,000 45.00 18.00 26.00 600 15,000 4,000 19,000 75.00 25.00 31.67 700 24,000 4,000 28,000 Ace Trophy Company Cost Functions 7.
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This note was uploaded on 02/11/2008 for the course ECON 1110 taught by Professor Wissink during the Fall '06 term at Cornell University (Engineering School).

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Econ 101 prelim2 2004 - Economics 101 Introductory...

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