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Test 1 Spring 2011 MC Questions 2X03.pdf

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McMaster University
Shintaro Yamaguchi

Page 1 of 5 McMaster University Department of Economics ECON 2G03/2X03 Summer 2011 Test 1 Tuesday May 17 2011 1:30 – 3:00 (90 minutes) in class Instructor: H Holmes MULTIPLE CHOICE Answer all questions on the scan sheet using HB pencil. Calculators are permitted. Hand in the scan and this sheet separately. TOTAL MC MARKS AVAILABLE: 25 NAME:_______________________________________________________________ STUDENT #:__________________________________________________________ Page 2 of 5 MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question. 1) A technically efficient technology is one that: A) maximizes a firm's profits. B) minimizes the cost of producing a particular level of outputs. C) maximizes the quantity of output produced from a bundle of inputs. D) none of the above 2) K and L are perfect substitutes in production in the following production function: A) min(K,L). B) K + L. C) KL/2. D) max(K,L). 3) Which of the following is a Cobb-Douglas production function? A) min(K,L) B) KL/2 C) max(K,L) D) K + L 4) The free-disposal assumption implies that: A) excess use on an input reduces output unless more of others are used. B) increases in the MP of an input cannot be negative. C) garbage disposal is costless. D) total product always increases as quantity of a variable input. 5) In order to maximize output from a technology that uses one variable input, one must employ the input in such a way that its: A) MP is equal to its per-unit price. B) AP is at a maximum. C) MP is zero. D) AP is zero. 6) If TC = 7q + 3q + 7, then AVC is: A) 7q + 3q + 7/q. B) 7q + 3q. C) 7q + 3. D) 7q + 3 + 7/q. 7) If TC = 7q + 3q + 7, then AFC is: A) 7. B) 7q + 3q. C) 3q + 7. D) 7/q. 8) If a firm has TC = 7q + 8q + 4, then SMC is: A) 7q + 8q 2. B) 7q + 8q + 4. 2 2 C) 7q + 8q + 4. D) 21q + 16q. 9) If a firm's Total Cost function is given by TC = 4 + q2, then: A) FC = 4 and AVC = q. B) AVC = q and MC = q. C) AFC = 4/q and MC = 4 + q. D) ATC = 4 + q and MC = 2q. Page 3 of 5 10) An isoquant represents combinations of: A) inputs with the same output. B) goods with the same cost. C) inputs with the same cost. D) goods with the same utility. 11) The Marginal Rate of Technical Substitution diminishes when: A) isoquants are linear. B) demand curves slope down. C) isoquants are convex. D) marginal utility diminishes. 12) If the MRTS is constant: A) we are dealing with a fixed-proportions production function. B) the inputs are perfect substitutes. C) the production function exhibits constant returns to scale. D) none of the above 13) If a firm's production function is 1 2 ,z )1= z 2 z , it exhibits: A) decreasing return
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