12. When P X = $100, MP X = 20 and MR Q = $5, the marginal revenue product of X
ID: 1156120 • Letter: 1
Question
12. When PX= $100, MPX= 20 and MRQ= $5, the marginal revenue product of X equals:
a. $100.
b. $50.
c. $10.
d. $5.
13. If total product for each of five units of labor is 10, 16, 20, 30, and 34, respectively, the marginal product of the third unit is
a.
20
b.
10
c.
4
d.
0
14. If P = $8 and MC = $5 + Q, the competitive firm's profit-maximizing level of output is:
a.
3
b.
0.2
c.
8
d.
15
15. If fixed cost at Q = 100 is $130, then
a.
fixed cost at Q = 0 is $0
b.
fixed cost at Q = 0 is less than $130
c.
fixed cost at Q = 200 is $260
d.
fixed cost at Q = 200 is $130
16. If variable cost rises from $60 to $100 as output increases from 15 to 20 units, the marginal cost of the twentieth unit
a.
is $100
b.
is $5
c.
is $40
d.
is $8
17. Suppose Guild produces 5,000 guitars per year. Its average total cost is $90, and its fixed cost is $250,000. What is its variable cost?
a.
$250,000
b.
$450,000
c.
$25,000
d.
$200,000
18. If an increase in the price of a product from $1 to $2 per unit leads to a decrease in the quantity demanded from 100 to 80 units, then the value of price elasticity of demand is
a.
-1/3
b.
-2 1/3
c.
-1/4
d.
-3
19. So long as P > AVC, the competitive firm's short-run supply curve is equal to:
a.
AVC
b.
MC
c.
P
d.
none of these.
20. At the profit maximizing level of output for a monopolist:
a.
P = AR and AR = AC
b.
P > MC and MR = MC
c.
P = MC and MR > MC
d.
P = MR and AC = MC
21. Holding supply conditions constant, the costs of regulation fall wholly on producers when:
a.
EP = 1
b.
EP => 1
c.
EP =
d.
EP = 0
22. A 100% markup on cost is equivalent to a markup on price of:
a.
25%
b.
33%
c.
50%
d.
100%
23. A 25% markup on price is equivalent to a markup on cost of:
a.
25%
b.
33%
c.
50%
d.
100%
24. When EP= -3, the optimal markup on cost is:
a.
100%
b.
67%
c.
50%
d.
33%
25. When EP= -2, the optimal markup on price is:
a.
100%
b.
67%
c.
50%
d.
33%
Explanation / Answer
12. The correct answer is A.
13. The correct answer is C.
14. The correct answer is A.
15. The correct answer is B.
16. The correct answer is D.
17. The correct answer is D.
18. The correct answer is C.
19. The correct answer is B.
20. The correct answer is B.
21. The correct answer is B.
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