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**Ananish Chaudhuri NAME: TOTAL POINTS: 60 TOTAL TIME: 75 minutes
**

The following exam contains 30 multiple choice questions - each worth 2 points, for a total of 60 points. Please pick the correct answer to your question. DO NOT FORGET TO WRITE THE ALPHABET CORRESPONDING TO YOUR ANSWER IN THE SPACE PROVIDED. AND DO NOT FORGET TO WRITE YOUR NAME ON THE EXAM. Relax, concentrate and think your answers through. All the best. Consider the following numbers for a demand equation and supply equation Demand P 28 24 20 Q 1 2 3 P Supply Q 5 6 7 3 4 5

1.

The equation for the demand curve is: a. P = 16 - 2Q b. P = 32 + 4Q c. P = 32 - 4Q d. P = 32 - 2Q

Answer: C

P=$12. Q=6 d. Q=8 Answer: A Use the information provided in the table below to answer questions 5. The equation for the supply curve is a. Q=4 d. The equilibrium price and quantity in this market is given by a. 4 c. Q=12 b. P=$5. P=$6. 6 and 7. P=$6. P = 2 + 2Q d.5 Answer: C 2 . Suppose a tax of $5 per unit of output is imposed on the sellers of this good.Q c. Output Total Cost 5. P=$8. The new equilibrium price and quantity will be a. Q=6 c. P = 2 + 4Q Answer: A 3. P=$6. Q=8 b. P=$8. 5 d.2. P = 2 . Q=6 Answer: B 4. 20 b. P = 2 + Q b. 0 10 1 11 2 13 3 16 4 20 5 25 6 31 7 38 8 48 The average total cost of producing 5 units of output is a. P=$8. Q=5 c. 2.

Decreasing 6 31 6/31 31/6 Answer: C 9. Marginal cost is constant d. b. c. Profit is at a maximum d. then a. If marginal cost (MC) is $12 and average variable cost (AVC) is $10 then AVC is a. The average fixed cost of producing 5 units of output is a. 6. then a. If average cost is at a minimum. 13 b. d. Marginal cost is zero b. Total cost is also at a minimum c.6. then a. It is equal to marginal cost b. The cross price elasticity of demand is negative b. At a maximum c. If two goods are complements. Increasing d. Average cost is zero c. The marginal cost of producing the 6th unit of output is a. The cross price elasticity of demand is zero 3 . 5 d. All of the above are true Answer: A 11. All of the above are true Answer: C 10. Answer: A 8. 2 Answer: D 7.5 c. If a firm’s total cost function is a straight line through the origin. At a minimum b.

Elastic in the rush hour. r=10 d. The slope with respect to X at any point on the isoquant is 10*(y/x)4/5 while that with respect to Y is 40*(x/y)1/5. NJ to New York is $ 15. Inelastic in the rush hour.67 b. w=20. but elastic later in the day. d. 0. Suppose the firm is producing its output efficiently at minimum cost at this point (10. Answer: C 15. Price falls on the elastic portion. The slope of the firm’s isoquant at the point (X. The cross price elasticity of demand is positive The cross price of elasticity of demand is infinity A firm has the production function f(x.Y) = (10. but drops to $11. Total revenue in the market will fall if : a. Answer: C 12. 1. Average revenue is zero c. Price rises on the elastic portion of the demand curve. w=25.25 c. If the marginal revenue is zero. Then a feasible ratio of input prices will be a. c. Unit elastic at all times of the day. 0.c. r=100 Answer: A 14. d. Price rises on the inelastic portion of the demand curve. but stops at the mid-point of the demand curve. d. b.50 during the morning rush hour from 6:00 am to 9:00 am. but inelastic later in the day. c. w=15. 4 d. Unit elastic in the rush hour.15 Answer: B 13. Total revenue is zero b. Answer: A 16. Total revenue is at a maximum or a minimum d. 10) is (in absolute value): a. This is because the demand for train rides from New Brunswick to New York is: a. Price falls on the elastic portion of the demand curve. The round-trip train fare charged by NJ Transit from New Brunswick. Consider the slope of the isoquant in the previous question.y) = 50*x1/5*y4/5. then a.50 after 9:00 am. b. Average revenue is at a maximum Answer: C 4 . r=80 b. 10). w=15. but inelastic later in the day. r=200 c.

twice as much as the slope of the demand curve. b. d. c. c. 50 c. Use the same information given in Question 19. b. What output should the firm sell in market A? a. 4 b. always equal to one. Consider a monopolist whose Marginal Revenue is $4 and the price elasticity of demand is 5 . 0 b. Answer: A 18.QB. unit elastic. if marginal revenue is positive then demand is: a. b. The inverse demand in market A is P A = 10 . Answer: D 19. half as much as the slope of the demand curve. could be either elastic or inelastic. Suppose a monopolist wished to MAXIMIZE REVENUE. Answer: C 21. 10 4 6 9 12 What output should the firm sell in Answer: C 22. As far as a monopoly is concerned. d. d. 25 d. A firm produces a product at a fixed marginal cost of $2 and sells the product on two different markets. c. inelastic. What quantity should he produce in that case? a. 6 c. 9 d. 12 Answer: A 20. market B? a. The slope of the marginal revenue curve for a monopolist is: a. Consider the demand curve P = 100 – 2Q. elastic.17.QA and the demand in market B is PB = 20 . the same as the slope of the demand curve.

$8 b. $4 d. Consider a monopolist who faces a demand curve of the form P = 100-2*Q.2 (in absolute value). 20 c. $8 b. $24 Answer: B 24. This monopolist must be charging a price of a. His marginal cost is constant and has the form MC=$20. $4 d. $16 c. 40 Answer: B 6 . then the price he must be charging is a. The price elasticity of demand is 2 (in absolute value). 30 d. $16 c. 10 b. Consider a monopolist whose Marginal Cost is $8. The profit maximizing output for this monopolist is a. IF THIS MONOPOLIST IS MAXIMIZING PROFIT at this level of output and at this MC. $24 Answer: A 23.

25. 200 d. Not enough information Answer: B 26. $1000 b. Use the information in Question 24. $400 c. Constant returns to scale if and only if bc = 1 c. What is average revenue equal to when the firm produces one unit of output? a. Continue to use the information in Questions 24 and 25. Constant returns to scale if and only if b+c = 1 d. $1200 c. $1200 Answer: A 27. firm A firm has the production function f(x1. In addition the monopolist’s Average Cost is also constant (in fact if marginal cost is constant then so is average Cost) and is equal to $20. Constant returns to scale if and only if 2b+c = 1 b. Suppose a firm’s total revenue function is TR = 200Q . 20 c. will have a. $1000 d. When the monopolist produces this level of output his total revenue is a. 180 b. 220 Answer: A 7 . x2) = (x1b + x2b)c where b > 0 and c > 0. $1500 d. Constant returns to scale if and only if c = 1 This Answer: B 28. $800 b. Then the total amount of PROFIT that the monopolist makes when producing the profit maximizing level of output is a.20Q2.

Marginal revenue is zero b. then a. Answer: C 8 . the lowest point on the AVC curve. b. c. the point at which the firm's long-run supply curve ends. Average revenue is zero c. Marginal revenue is equal to average revenue d. If a firm’s total revenue function is a straight line through the origin. The shut-down point for a perfectly competitive firm is : a. the lowest point on the MC curve. the lowest point on the ATC curve.29. d. All of the above are true Answer: C 30.

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