Chapter 6

Producer Theory (theory of the firm): an explanation of how a firm makes important
operation decisions like profit maximization
o
3 steps
Cost Constraints (Ch. 7)

Production Technology (Ch. 6)
Output Choice (Ch. 8)
6.1 Firms Production Deci
Microeconomics, 8e (Pindyck/Rubinfeld)
Chapter 1 Preliminaries
1.1 The Themes of Microeconomics
1) Microeconomics is the branch of economics that deals with which of the following topics?
A) The behavior of individual consumers
B) Unemployment and interes
Chapter 6 Production
1) A production function defines the output that can be produced
A) at the lowest cost, given the inputs available.
B) for the average firm.
C) if the firm is technically efficient.
D) in a given time period if no additional inputs ar
Chapter 7: The Cost of Production
1. 7.1Measuring Costs
a. 7.1.1 Fixed Costs and Variable Costs
a.i. Total Cost (TC or C): the total cost of production, including fixed and
variable costs
a.ii. Fixed Cost (FC): a cost that does not vary with the level o
Answer Key
Econ 4351_Practice Exam_Midterm I
1) C
Section: 1.4
2) D
Section: 2.1
3) D
Section: 2.1
4) B
Section: 2.2
5) B
Section: 2.3
6) B
Section: 2.4
7) A
Section: 2.4
8) A
Section: 3.1
9) D
Section: 3.1
10) B
Section: 3.2
11) A
Section: 4.1
12) B
Sect
Chapter 10: Market Power, Monopoly
1. 10.1 Monopoly
a. Monopoly a market with only one seller (but many buyers)
a.i. Examples (Approximations): railroad, local public utility, Apple, Microsoft,
cable television, book publisher
b. Monopolist: the only fi
Econ 4351: Lecture 2
Fall, 2015
Solution: HW 1 (20pts, Due: 9:30am on Thursday, 9/24)
NAME:
STUDENT NUMBER:
Dr. Myoung Lee
University of Missouri
.
The HW will be graded based on what you write in the space provided. Your handwriting must be legible, and
Econ 4351
Practice Exam 1
Name:
Dr. Myoung Lee
University of Missouri
Student Number:
Total Points earned:
.
.
ECON 4351: PRACTICE EXAM 1
FALL 2015
You have 75 minutes to answer the following questions.
Directions:
You should have nothing on your desk at
Econ 4351: Lecture 2
Fall, 2015
HW 2 (20pt, Due: 9:30am on Thursday, 10/22)
Name:
Dr. Myoung Lee
University of Missouri
Student Number:
.
The HW will be graded based on what you write in the space provided. Your handwriting must be legible, and you
must m
Econ 4351: Lecture 2
Name:
Dr. Myoung Lee
University of Missouri
Student Number:
SOLUTION
Total Points earned:
110pts
.
.
ECON 4351: EXAM 1
You have 75 minutes to answer the following questions.
Directions:
You should have nothing on your desk at this tim
Econ 4351: Lecture 3
Spring, 2013
Exam 1
Name:
Dr. Myoung Lee
University of Missouri
Student Number:
Total Points earned:
.
.
ECON 4351: EXAM 1
SPRING, 2013
You have 75 minutes to answer the following questions.
Directions:
You should have nothing on your
Practice Exam 1
Econ 4351
Name:
Dr. Myoung Lee
University of Missouri
Student Number:
SOLUTION
Total Points earned:
110pts
.
.
ECON 4351: PRACTICE EXAM 1
FALL 2015
You have 75 minutes to answer the following questions.
Directions:
You should have nothing
Name:
Student Number:
Total Points earned:
.
.
ECON 4351: EXAM 1
You have 75 minutes to answer the following questions.
Directions:
You should have nothing on your desk at this time other than the
exam, pencils and an eraser.
Do not expect me to read you
Econ 4351 Section 3 Problem Set #3:
Uncertainty and Consumer Behavior
Due: Beginning of class, Thursday, September 25, 2014
1. Richard is deciding whether to buy a state lottery ticket. The probability of winning payoffs
is given as follows:
Probability
P
Econ 4351 Section 3 Problem Set #2:
Consumer Behavior, Individual and Market Demand
Due: Beginning of class, Thursday, September 18, 2014
1. Suppose Ben has a weekly income of $80 which can be spent on food ( F ) and clothing ( C ).
The price of food is $
Chapter 8: Profit Maximization and Competitive Supply
1. 8.2 Profit Maximization
a. Do firms maximize profit?
a.i. Assumption of profit maximization is frequently used in microeconomics
a.i.1.
works well for prediction and simplicities analysis
a.ii. For
Chapter 9: The Analysis of Competitive Markets
1. 9.1 Consumer and Producer Surplus
a. Individual Consumer Surplus: the difference between the price that a consumer
is willing to pay and the amount actually paid
b. Aggregate Consumer Surplus (CS): total
Answer Key
Econ 4351_ Midterm II
1) B
Section: 6.1
2) D
Section: 6.3
3) D
Section: 7.1
4) E
Section: 7.1
5) A
Section: 8.3
6) D
Section: 8.3
7) B
Section: 9.2
8) E
Section: 9.4
9) A
Section: 10.1
10) D
Section: 10.1
11) C
Section: 10.2
12) A
Section: 6.2
Midterm II
Econ 4351, Sec 3 Intermediate Microeconomics
Fall 2014
Name:
Student #:
Directions:
You have 75 minutes to answer the following questions.
You should have nothing on your desk at this time except for the exam,
pencils, an eraser, a ruler, and
Econ 4351 Section 3 Problem Set #5:
The Cost of Production and Profit Maximization
Due: Beginning of class, Thursday, October 16, 2014
1. (a) Fill in the blanks in the table below.
Units of
Output
Fixed
Cost
Variable
Cost
Total
Cost
0
157
4
177
5
202
6
23
Chapter 3 Consumer Behavior

Consumer Theory: description of how consumers allocate incomes among different
goods and services to maximize their wellbeing
o
It is best understood in 3 distinct steps
Budget Constraints

Consumer Preferences
Utility Max
Chapter 2 The Basics of Supply and Demand

2.1 Supply and Demand
o
Supply curve: Relationship between the quantity of a good that producers are
willing to sell and the price of the good.
o
Other Factors Affecting Supply:
Production costs: wages, interes
Chapter 1 Preliminaries

2 Main Branches
o
o

Microeconomics: deals with the behavior of individual economic units
consumers, firms, workers, and investorsas well as the markets that these
units comprise
Macroeconomics: deals with aggregate economic va
Chapter 4 Individual and Market Demand

4.1 Individual Demand Curves
o
Two goods: food and clothing
o
4.1.1 Price Changes
Priceconsumption curve: Curve tracing the utilitymaximizing
combinations of two goods as the price of one changes.
Individual d
Chapter 5 Uncertainty and Consumer Behavior

5.1 Describing Risks
o
5.1.1 Probability
Probability: likelihood that a given outcome will occur; probabilities for all
possible events must add up to 1
o
Objective probability relies on the frequency with
Econ 4351 Section 3 Problem Set #1:
Preliminaries, Supply and Demand, and Consumer Behavior
Due: Beginning of class, Thursday, September 11, 2014
1. The following table shows the average retail price of butter and the Consumer Price Index
from 1980 to 201
Midterm I
Econ 4351, Sec 3 Intermediate Microeconomics
Fall 2014
Name:
Student #:
Directions:
You have 75 minutes to answer the following questions.
You should have nothing on your desk at this time except for the exam,
pencils, an eraser, a ruler, and
Name:
Student Number:
Total Points earned:
.
.
ECON 4351: EXAM 1
You have 75 minutes to answer the following questions.
Directions:
You should have nothing on your desk at this time other than the
exam, pencils and an eraser.
Do not expect me to read you