ECON 202 Study Guide - Summer 2018, Comprehensive Midterm Notes - Economic Surplus, Compact Cassette, Wheat
ECON 202
MIDTERM EXAM
STUDY GUIDE
Fall 2018
percent change in quantity demanded to the percent change in price
The price elasticity of demand is defined as the ratio of the _____ other factors held constant.
The short-run is best defined as the time period in which
one or more inputs to production are fixed
A production function represents the
maximum possible output the firm can produce for any combination of inputs
A firm employs capital and labor in its production process. The marginal revenue product of labor is
greater than the marginal cost of labor. In the short run the firm should:
Hire labor until the marginal revenue product of labor equals its marginal cost
optimal amount of an input occurs
when MRPL = MCL.
The marginal revenue product of labor [MRPL] is equal to the
marginal revenue per unit of output times the marginal product of labor
marginal product
Given a fixed amount of input, to maximize total output from multiple plants a firm should allocate the
input such that the _____ is equal across plants.
Q = cL0.2K0.5
Which of the following production functions displays decreasing returns to scale?
equal to average cost.
When average cost is minimum, marginal cost is
Given the demand function Q = 30 - 3P, if the current price is $3, what should a profit maximizing firm
do?
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raise price
response bias
When asked, 62% of people disagreed with allowing "public condemnation of democracy", but only 46%
of people agreed that it was right to "forbid public condemnation of democracy". This is an example of
Suppose that the "goodness of fit" of an equation is nearly perfect. What is the value of the R2 statistic
in this case?
very close to +1
For a parking garage of fixed capacity, the owner sets different parking rates for cars that are parked for
less than 24 hours (short-term) and for those that are parked for more than 24 hours (long-term). To
maximize revenue, the operator should set prices and target the number of places for each segment
such that
the marginal revenues from the segments are equal.
Which of the following is second-degree price discrimination?
A volume discount
When a firm practices price discrimination between two market segments, the firm:
must be able to identify market segments that have different price elasticities.
The price elasticity of demand for a product is -1.2. The firm can increase revenue by
lowering price
A gas station raises its price and its quantity sold drops to zero. That station faces demand that is
Perfectly elastic
Which of the following will cause a shift in the demand curve faced by a firm?
An increase in the price of a complement
Sometimes a move by a firm that increases revenue can decrease profit
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