01 Jun Econ 306 Spring 2010 EXAM The following group of questions all refer to the Figures 1A, 1B, and 1C be
uestion
Econ 306
Spring 2010
EXAM
The following group of questions all refer to the Figures 1A, 1B, and 1C below. These figures show the production and cost functions of a single firm which produces output (Q) using one input, labor (L). There is no capital and thus no fixed cost. Total cost is therefore just the cost of hiring labor.
1. If production is efficient, how much labor is needed to produce 80 units
of output?
a. 30 c. 100
b. 60 d. NOTA (“None of the Above”)
2. The marginal product of labor (MPL) is at a maximum at which point on
the production function Figure 1A?
a. A c. C
b. B d. NOTA
3. The point B in Figure 1A is equivalent to which point in Figure 1C?
a. I c. M
b. J d. NOTA
4. The average cost (AC) of producing 80 units of output is how large (i.e.
what is its numerical value)?
a. 10 c. 12.5
b. 25 d. NOTA
5. Marginal cost equals average cost at what level of labor input?
a. 30 c. 100
b. 60 d. NOTA
6. When the price of output is $25.00 per unit, how much output would be
produced by a profit maximizing firm?
a. 24 c. 80
b. 60 d. NOTA
9. When the price of output is $25.00 per unit, how much profit would a
profit maximizing firm earn by operating at the optimal level of output?
a. $0 c. $2000
b. $900 d. NOTA (1000)
10. The firm’s supply curve of output is determined by which of the
following curve segments?
a. the marginal cost curve above the point J
b. the marginal cost curve above the point I
c. the average cost curve above the point J
d. NOTA
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