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A competitive firm produces output using three fixed factors and one variable factor. The firm’s short-run production function is q ? 305x − 2x^{2}, where x is the amount of variable factor used. The price of the output is $2 per unit and the price of the variable factor is $10 per unit. In the short run, how many units of x should the firm use?
a.37
b.150
c.21
d.75
e.None of the above.
2.A competitive firm produces output using three fixed factors and one variable factor. The firm’s short-run production function is q ? 524x − 4x^{2}, where x is the amount of variable factor used. The price of the output is $3 per unit and the price of the variable factor is $12 per unit. In the short run, how many units of x should the firm use?
a.130
b.32
c.25
d.65
e.None of the above.
3.A competitive firm produces output using three fixed factors and one variable factor. The firm’s short-run production function is q ? 154x − 5x^{2}, where x is the amount of variable factor used. The price of the output is $2 per unit and the price of the variable factor is $8 per unit. In the short run, how many units of x should the firm use?
a.15
b.30
c.17
d.7
e.None of the above.
4.A competitive firm produces a single output using several inputs. The price of output rises by $4 per unit. The price of one of the inputs increases by $2 and the quantity of this input that the firm uses increases by 8 units. The prices of all other inputs stay unchanged. From the weak axiom of profit maximization we can tell that
a.the output of the good must have increased by at least 4 units.
b.the inputs of the other factors must have stayed constant.
c.the output of the good must have decreased by at least 2 units.
d.the inputs of at least one of the other factors must have decreased by at least 8 units.
e.the inputs of at least one of the other factors must have increased by at least 8 units.
5.A competitive firm produces a single output using several inputs. The price of output rises by $4 per unit. The price of one of the inputs increases by $4 and the quantity of this input that the firm uses increases by 16 units. The prices of all other inputs stay unchanged. From the weak axiom of profit maximization we can tell that
a.the inputs of the other factors must have stayed constant.
b.the inputs of at least one of the other factors must have decreased by at least 16 units.
c.the output of the good must have increased by at least 16 units.
d.the output of the good must have decreased by at least 8 units.
e.the inputs of at least one of the other factors must have increased by at least 16 units.
6.A competitive firm produces a single output using several inputs. The price of output rises by $3 per unit. The price of one of the inputs increases by $6 and the quantity of this input that the firm uses increases by 12 units. The prices of all other inputs stay unchanged. From the weak axiom of profit maximization we can tell that
a.the output of the good must have increased by at least 24 units.
b.the inputs of the other factors must have stayed constant.
c.the output of the good must have decreased by at least 12 units.
d.the inputs of at least one of the other factors must have decreased by at least 12 units.
e.the inputs of at least one of the other factors must have increased by at least 12 units.
7.If there is perfect certainty, a competitive firm will necessarily
a.seek to maximize its immediate profits rather than long-run returns because otherwise it will go broke.
b.maximize the ratio of the present value of its sales to the present value of its costs.
c.equalize its profits in all periods.
d.equalize its sales in all periods.
e.None of the above.
8.A firm produces one output using one input. When the cost of the input was $3 and the price of the output was $3, the firm used 6 units of input to produce 18 units of output. Later, when the cost of the input was $7 and the price of the output was $4, the firm used 5 units of input to produce 20 units of output. This behavior
a.is consistent with WAPM.
b.is not consistent with WAPM.
c.is impossible no matter what the firm is trying to do.
d.suggests the presence of increasing returns to scale.
e.suggests the presence of decreasing returns to scale.
9.A profit-maximizing competitive firm uses just one input, x. Its production function is q ? 4x^{1/2}. The price of output is $28 and the factor price is $7. The amount of the factor that the firm demands is
a.8.
b.16.
c.64.
d.60.
e.None of the above.
10.A profit-maximizing competitive firm uses just one input, x. Its production function is q ? 4x^{1/2}. The price of output is $12 and the factor price is $3. The amount of the factor that the firm demands is
a.64.
b.16.
c.60.
d.8.
e.None of the above.
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