CS Old MC

If the prices charged by the many firms in perfect competition are not public knowledge to consumers,

Apple is well-known for its relatively streamlined product line. The company offers a small number of products, labels the products with names that make it easier for consumers to differentiate models, and provides quality technical support. What assumption regarding tastes and preferences does the success of Apple violate?

If you use the Lagrangian method to determine the cost-minimizing combination of inputs capable of producing a given output, the Lagrangian multiplier is interpreted as the

Diminishing MRS implies that consumers are willing to

Sarah owns a candy store. At the end of the year she reviewed her income statement where she found her accounting profit to be $250,000. She incurred the following costs of production:
o $66,000 for purchase of inventory
o $90,000 for rental income which she forgoes by using her store for business
o $85,000 for employee’s wages
o $72,000 salary which Sarah forgoes by working at the candy store rather than as an accountant
o $4,000 for interest payment on machinery

Using the above information, what is Sarah’s economic profit?

You work at an auto-shop repairing and redesigning new cars. You are currently redoing a new car. What is a way to ensure that consumers of this car are less responsive to changes in the price according to own-price elasticity?

Which of the following does NOT occur during stage I of production?

The estimated demand function for umbrellas in New York City is given as the following:
QD = a + b1P + b2I + b3F ,
where QD is the number of umbrellas purchased on a particular day, P is the price of an umbrella, I is the number of inches it has rained, and F is the forecasted amount of inches of rain for the following day.
Now suppose after running a regression on the relevant data, this is the resulting output:
Coefficients: intercept =56, b1 = 1.5, b2 = 4, and b3 = -0.5
Adj. R2: 0.76
T-stats: intercept=7.5, P = 3.4, I = 5.75, and F = -2.2
What is the most likely problem in this model?

If the market demand curve is P=10 - 0.2Qd and the market supply curve is P=3 + 0.5Qs , then what is the consumer surplus experienced in this market?

Suppose the demand for a good produced by MKH, Inc. can be represented as:
QD = 60*P^-3.5
where QD is quantity demanded and P is price.

Assume the firm has correctly determined that profit is maximized when it charges $80/product. What is the value of the firm’s marginal revenue at this price? Round your answer to two places after the decimal.

Brian Kelly Inc. (BKI) produces luxury football jerseys. BKI has always only considered short run production of these jerseys. However, with increased competition from Steve Sarkisian Inc. BKI has decided to consider long run production and create a long run production function. What is not an implication of this decision?

Noah’s budget constraint is 20=0.5D+2S, where D represents doughnuts and S represents strawberries. If his income increases by $6, his opportunity set will change by:

In the case of minimizing a cost function with the constraint being production, why is lambda always positive?

Based on calculations that can be derived from this table,

If a firm produces at an output level where marginal revenue (MR) is less than marginal cost (MC), it

Suppose MPL = (1.5Q)/L and MPK = (1.5Q)/5. In the long run, equal amounts of capital and labor will maximize output subject to a cost constraint

In 2011, BP announced that it was suspending preparations for a drilling project in Libya’s western desert as antigovernment protests intensified. Suppose consumers pay attention to the media, are aware of BP’s preparations, form an expectation about future changes in the price of oil and related products because of the preparations, and act on it. What is the likely impact of this phenomenon on the price of gasoline?

The chart below shows the levels of output resulting from different levels of inputs in the long run. Which of the following conclusions can be drawn from this information?

Which is NOT a reason for a firm’s long-run average total cost curve to decline?

At the Fightin’ Irish Landscaping Service, a snow blower cannot remove snow without a laborer. A laborer cannot remove snow without a snow blower. Which graph best represents the isoquants for Fightin’ Irish Landscaping Service, when capital per day is on the vertical axis and labor per day is on the horizontal axis?

Max has allocated $100 towards meats for his barbecue. Based on his budget constraint and indifference map in the figure above, what is the price of chicken (PC)? What is the price of burgers (PB)? What is Max’s optimal consumption bundle?

The figure shows the cost curves for a perfectly competitive firm. If the firm is to stay in business despite a negative profit, price must exceed _____ but be less than _______.

Firms that exhibit price-taking behavior

Suppose the CEO of Nike estimates the following supply and demand functions for their running shorts:

Quantity Demand= 12P^-0.8 I^-1.2
Quantity Supplied= 12P^0.8 I^1.2

Which of the following solutions best characterizes the demand for running shorts?

Owner-supplied labor is a cost that is usually

If λ*=0 at the values of output at which the profit function (constrained by output) is maximized,

Patty’s Pizza Parlor bakes pizzas according to Q(L) = 3L-0.3L^2 in the short run. Assume that both the labor and pizza markets are perfectly competitive. If labor costs $6/unit and pizza sells for $10/unit, the optimal amount of labor to employ is

Consider the following short-run production function, where Q represents the quantity of output produced per week and L is the number of laborers hired:
Q(L) = 14L^2 - 0.35L^3
What is the range of values for L over which Stage II occurs? For simplicity, consider the end of Stage I/start of stage II to occur at the same value of L and the end of stage II/start of stage III to occur at the same value of L.

In April of 2009, Apple increased the price of hit songs on iTunes by 30%. In the first week of the new pricing policy, fewer songs on the iTunes Top 100 chart were sold than had been sold in the week prior to the price increase. However, iTunes total revenue for that set of songs was higher that week than it had been the week before. How would you categorize the demand for iTunes Top 100 songs?

The following are the supply and demand functions for bushels of apples:
Qd = 11.2 – 1.3P
Qs = 7.6 + 0.5P
(Price is in dollars and quantity is in thousands of bushels)

The government has placed a $1 (per bushel) tax on the CONSUMERS of apples. What are the new equilibrium price and quantity, taking the tax into account? Round your answer to two places after the decimal.