# Intermediate Microeconomics

ECON 2020 A

Mid-Term Examination I - ALTERNATIVES

Instructor: Derek Olmstead

Note: Non-programmable calculators permitted

Summer time 2012

Period: 105 mins

Total marks: 20 items

Part A: Short-answer inquiries [3 points each]

Be aware: Use blueprints and/or equations to explain the answer.

We.

Explain the between reducing total returns to work and reducing marginal results to work.

Diminishing returns to time means that a rise in the number of labour units is going to decrease the volume of output. Diminishing minor returns signifies that additional units of work increase end result at a decreasing level.

II.

Imagine the production function for Tee shirts can be displayed as q = L0. 25 K0. 75. When ever K = 1 and q sama dengan 2, precisely what is the slope of the isoquant? If there is not enough information to answer the question, explain what data is lacking.

In the growing process, MPL sama dengan 0. 25 * (q/L). The enhancements made on MP with respect to L means d(MPL)/dL sama dengan -0. twenty-five * q/L2. Thus, for a lot of levels of time hired, MPL falls since L raises.

III.

Consider the following short-run production function: q = 5L2 вЂ“ (1/3)L3. In what amount of L perform diminishing marginal returns get started? At what level of D do reducing total earnings begin? MEGAPIXEL = 10L - L2. Marginal item peaks when L sama dengan 5 and equals absolutely no when L = twelve. Thus, diminishing marginal earnings begin once L = 5, and diminishing returns begin when ever L sama dengan 10.

Part B: True-false questions [3 details each]

Note: Use diagrams and equations to describe your response. ALL solution points to get explanation. IV.

A firm working with reducing total results cannot be income maximizing. The case. This organization could produce more output with fewer inputs. This cannot be income maximizing. A graph from the production function would be beneficial. In the vicinity of decreasing total comes back, the production function is downward-sloped indicating that additional inputs reduce output and, equivalently, fewer inputs enhance output.

V.

If raising returns to scale are present, the long-run average price increases because more outcome is made.

False. Elevating returns to scale mean that with a duplicity of advices, output more than doubles. Since average cost is the ratio of total cost divided by end result, this embrace inputs will cause the numerator to be merely double this value even though the new denominator is more than double the value. Consequently, long-run typical cost comes as more output is produced.

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ECON 2020 A

Mid-Term Examination I - ALTERNATIVES

Summer 2012

Part C: Multiple-choice questions [0. 5 items each]

Note: Backup each solution to the exam booklet. The buy of answers varies throughout exams. NI.

Average efficiency will fall season as long as

i actually. marginal production is falling.

ii. this exceeds minor productivity.

iii. it is less than marginal output.

iv. the number of workers is definitely increasing.

VII.

Joey reductions lawns through the summer. Permit q equivalent the number of massive areas mowed per day, and let M equal the number of hours proved helpful per day. Joey never performs more than 8 hours every day, and during that point his short-run production function is q = 0. 2 2. L. Which of the following statements can be FALSE?

we. Joey's limited productivity equates to his common productivity. ii. Joey's limited productivity reduces by 0. 2 for every additional hour worked. 3. Joey's common productivity can be constant.

4. Joey's marginal productivity is constant.

VIII.

Jennifer is definitely the only worker of her sole proprietorship. She is enjoyable the idea of selecting an additional staff. She knows that on her own she can produce 100 devices per day. Jennifer figures that Applicant A will help her produce a hundred seventy five units every day whereas Candidate B may help her produce 155 products per day. Which will of the following statements is quite accurate? my spouse and i. Applicant W has a minor product of 75 products.

ii. Applicant B comes with an average product of seventy seven. 5 products.

iii. Applicant A has a...