Question 1

Refer to the following:
A short-run production function was estimated as

$Q = - 0.002 L ^ { 3 } + 0.16 L ^ { 2 }$
-At 20 units of labor, what is total product?

Accepted Answer

A)  48 
B)  96 
C)  20 
D)  62 
E)  41 
A)  48 
B)  96 
C)  20 
D)  62 
E)  41 A

Question 2

Refer to the following:
A short-run production function was estimated as

$Q = - 0.002 L ^ { 3 } + 0.16 L ^ { 2 }$
-What is total product when average product is at its maximum level?

Accepted Answer

A)  94 
B)  86 
C)  100 
D)  128 
E)  150 
A)  94 
B)  86 
C)  100 
D)  128 
E)  150 D

Question 3

A short-run marginal cost function is estimated as $S M C = 96 - 4 Q + 0.15 Q ^ { 2 }$ . Which of the following cost functions is associated with this estimated SMC equation?

Accepted Answer

A)  TVC = 96Q - 2Q2 + 0.05Q3 
B)  SMC = 96 - 4Q + 0.1Q2 
C)  TVC = 96Q + 4Q2 + 0.15Q3 
D)  AVC = 96 - 2Q + 0.05Q2 
E)  a and d 
A)  TVC = 96Q - 2Q2 + 0.05Q3 
B)  SMC = 96 - 4Q + 0.1Q2 
C)  TVC = 96Q + 4Q2 + 0.15Q3 
D)  AVC = 96 - 2Q + 0.05Q2 
E)  a and d E

Question 4

Refer to the cost regression for Straker Industries shown below.
Straker Industries estimated its short-run costs using a U-shaped average variable cost function of the form

$$A V C = a + b Q + c Q ^ { 2 }$$ 
and obtained the following results. Total fixed cost (TFC) at Straker Industries is $1,000.
 $$\begin{array} { r l l l l l } 
\text { DEPENDENTVARIAELE: } & \text { AVC } & \text { R-SQUARE } & \text { F-RATIO } & \text { P-VALUE ON F } \
\text { OESERVATIONS: } & \text { 35 } & \mathbf { 0 . 8 7 1 3 } & 108.3 & \mathbf { 0 . 0 0 0 1 } & \
& & \begin{array} { l } 
\text { PARAMETER }
\end{array} & \text { STANDARD } & & \
\text { VARIAELE } & & \text { ESTIMATE } & \text { ERROR } & \text { T-RATIO } & \text { P-VALUE } \
\text { INTERCEPT } & & 43.40 & 13.80 & \mathbf { 3 . 1 4 } & \mathbf { 0 . 0 0 3 6 } \
\text { Q } & & - \mathbf { 2 . 8 0 } & \mathbf { 0 . 9 0 } & - \mathbf { 3 . 1 1 } & \mathbf { 0 . 0 0 3 9 } \
\text { Q2 } & & \mathbf { 0 . 2 0 } & \mathbf { 0 . 0 5 } & 4.00 & \mathbf { 0 . 0 0 0 4 }
\end{array}$$
-If Straker Industries produces 20 units of output, what is estimated average variable cost (AVC)?

Accepted Answer

A)  $19.40 
B)  $67.40 
C)  $171.40 
D)  $179.40 
A)  $19.40 
B)  $67.40 
C)  $171.40 
D)  $179.40

Question 5

Refer to the cost regression for Straker Industries shown below.
Straker Industries estimated its short-run costs using a U-shaped average variable cost function of the form

$$A V C = a + b Q + c Q ^ { 2 }$$ 
and obtained the following results. Total fixed cost (TFC) at Straker Industries is $1,000.
 $$\begin{array} { r l l l l l } 
\text { DEPENDENTVARIAELE: } & \text { AVC } & \text { R-SQUARE } & \text { F-RATIO } & \text { P-VALUE ON F } \
\text { OESERVATIONS: } & \text { 35 } & \mathbf { 0 . 8 7 1 3 } & 108.3 & \mathbf { 0 . 0 0 0 1 } & \
& & \begin{array} { l } 
\text { PARAMETER }
\end{array} & \text { STANDARD } & & \
\text { VARIAELE } & & \text { ESTIMATE } & \text { ERROR } & \text { T-RATIO } & \text { P-VALUE } \
\text { INTERCEPT } & & 43.40 & 13.80 & \mathbf { 3 . 1 4 } & \mathbf { 0 . 0 0 3 6 } \
\text { Q } & & - \mathbf { 2 . 8 0 } & \mathbf { 0 . 9 0 } & - \mathbf { 3 . 1 1 } & \mathbf { 0 . 0 0 3 9 } \
\text { Q2 } & & \mathbf { 0 . 2 0 } & \mathbf { 0 . 0 5 } & 4.00 & \mathbf { 0 . 0 0 0 4 }
\end{array}$$
-If Straker Industries produces 20 units of output, what is estimated average total cost (ATC)?

Accepted Answer

A)  $19.40 
B)  $67.40 
C)  $117.40 
D)  $1,348 
A)  $19.40 
B)  $67.40 
C)  $117.40 
D)  $1,348

Question 6

Refer to the cost regression for Straker Industries shown below.
Straker Industries estimated its short-run costs using a U-shaped average variable cost function of the form

$$A V C = a + b Q + c Q ^ { 2 }$$ 
and obtained the following results. Total fixed cost (TFC) at Straker Industries is $1,000.
 $$\begin{array} { r l l l l l } 
\text { DEPENDENTVARIAELE: } & \text { AVC } & \text { R-SQUARE } & \text { F-RATIO } & \text { P-VALUE ON F } \
\text { OESERVATIONS: } & \text { 35 } & \mathbf { 0 . 8 7 1 3 } & 108.3 & \mathbf { 0 . 0 0 0 1 } & \
& & \begin{array} { l } 
\text { PARAMETER }
\end{array} & \text { STANDARD } & & \
\text { VARIAELE } & & \text { ESTIMATE } & \text { ERROR } & \text { T-RATIO } & \text { P-VALUE } \
\text { INTERCEPT } & & 43.40 & 13.80 & \mathbf { 3 . 1 4 } & \mathbf { 0 . 0 0 3 6 } \
\text { Q } & & - \mathbf { 2 . 8 0 } & \mathbf { 0 . 9 0 } & - \mathbf { 3 . 1 1 } & \mathbf { 0 . 0 0 3 9 } \
\text { Q2 } & & \mathbf { 0 . 2 0 } & \mathbf { 0 . 0 5 } & 4.00 & \mathbf { 0 . 0 0 0 4 }
\end{array}$$
-If Straker Industries produces 20 units of output, what is estimated total cost (TC)?

Accepted Answer

A)  $1,348 
B)  $1,498 
C)  $2,348 
D)  $4,428 
A)  $1,348 
B)  $1,498 
C)  $2,348 
D)  $4,428

Question 7

Refer to Greene Enterprises, Inc., whose manager recently estimated its average variable cost (AVC) function to be

$$A V C = 88 - 0.026 Q + 0.000003 Q ^ { 2 }$$ 
Greene Enterprises faces total fixed costs (TFC) of $300,000.
-When Greene's output is 2,000 units, what is total cost (TC)?

Accepted Answer

A)  $144,000 
B)  $396,000 
C)  $444,000 
D)  $642,000 
E)  $846,000 
A)  $144,000 
B)  $396,000 
C)  $444,000 
D)  $642,000 
E)  $846,000

Question 8

Refer to Greene Enterprises, Inc., whose manager recently estimated its average variable cost (AVC) function to be

$$A V C = 88 - 0.026 Q + 0.000003 Q ^ { 2 }$$ 
Greene Enterprises faces total fixed costs (TFC) of $300,000.
-If Greene Enterprises produces 6,000 units of output, what is estimated average total cost (ATC)?

Accepted Answer

A)  $40 
B)  $75.25 
C)  $80 
D)  $90 
E)  $168.42 
A)  $40 
B)  $75.25 
C)  $80 
D)  $90 
E)  $168.42

Question 9

Refer to the cost regression for Straker Industries shown below.
Straker Industries estimated its short-run costs using a U-shaped average variable cost function of the form

$$A V C = a + b Q + c Q ^ { 2 }$$ 
and obtained the following results. Total fixed cost (TFC) at Straker Industries is $1,000.
 $$\begin{array} { r l l l l l } 
\text { DEPENDENTVARIAELE: } & \text { AVC } & \text { R-SQUARE } & \text { F-RATIO } & \text { P-VALUE ON F } \
\text { OESERVATIONS: } & \text { 35 } & \mathbf { 0 . 8 7 1 3 } & 108.3 & \mathbf { 0 . 0 0 0 1 } & \
& & \begin{array} { l } 
\text { PARAMETER }
\end{array} & \text { STANDARD } & & \
\text { VARIAELE } & & \text { ESTIMATE } & \text { ERROR } & \text { T-RATIO } & \text { P-VALUE } \
\text { INTERCEPT } & & 43.40 & 13.80 & \mathbf { 3 . 1 4 } & \mathbf { 0 . 0 0 3 6 } \
\text { Q } & & - \mathbf { 2 . 8 0 } & \mathbf { 0 . 9 0 } & - \mathbf { 3 . 1 1 } & \mathbf { 0 . 0 0 3 9 } \
\text { Q2 } & & \mathbf { 0 . 2 0 } & \mathbf { 0 . 0 5 } & 4.00 & \mathbf { 0 . 0 0 0 4 }
\end{array}$$
-If Straker Industries produces 12 units of output, what is estimated short-run marginal cost (SMC)?

Accepted Answer

A)  $28.04 
B)  $32.40 
C)  $33.33 
D)  $62.60 
A)  $28.04 
B)  $32.40 
C)  $33.33 
D)  $62.60

Question 10

When estimating a cubic short-run production function $Q = A I ^ { 3 } + B L ^ { 2 }$ using linear regression analysis, you must

Accepted Answer

A)  transform the equation into linear form by defining L3 and L2 as L3 and L2, respectively. 
B)  suppress the intercept term (regress through the origin). 
C)  convert to logarithms. 
D)  both a and b 
E)  both b and c 
A)  transform the equation into linear form by defining L3 and L2 as L3 and L2, respectively. 
B)  suppress the intercept term (regress through the origin). 
C)  convert to logarithms. 
D)  both a and b 
E)  both b and c

Question 11

Which of the following represents a short-run cubic production function?

Accepted Answer

A)  $Q = a K ^ { 3 } L ^ { 3 } + b K ^ { 2 } L ^ { 2 }$ 
B)  $Q = 3 A L ^ { 2 } + 2 B L \left( \text { where } A = a \bar { K } ^ { 3 } , B = b \bar { K } ^ { 2 } \right)$ 
C)  $Q = A L ^ { 3 } + B L ^ { 2 } \left( \text { where } A = a \bar { K } ^ { 3 } , B = b \bar { K } ^ { 2 } \right)$ 
D)  $Q = A L ^ { 2 } + B L \left( \text { where } A = a \bar { K } ^ { 3 } , B = b \bar { K } ^ { 2 } \right)$ 
E)  all of the above 
A)  $Q = a K ^ { 3 } L ^ { 3 } + b K ^ { 2 } L ^ { 2 }$ 
B)  $Q = 3 A L ^ { 2 } + 2 B L \left( \text { where } A = a \bar { K } ^ { 3 } , B = b \bar { K } ^ { 2 } \right)$ 
C)  $Q = A L ^ { 3 } + B L ^ { 2 } \left( \text { where } A = a \bar { K } ^ { 3 } , B = b \bar { K } ^ { 2 } \right)$ 
D)  $Q = A L ^ { 2 } + B L \left( \text { where } A = a \bar { K } ^ { 3 } , B = b \bar { K } ^ { 2 } \right)$ 
E)  all of the above

Question 12

Refer to Greene Enterprises, Inc., whose manager recently estimated its average variable cost (AVC) function to be

$$A V C = 88 - 0.026 Q + 0.000003 Q ^ { 2 }$$ 
Greene Enterprises faces total fixed costs (TFC) of $300,000.
-At what level of output does average variable cost (AVC) reach its minimum value for Greene Enterprises?

Accepted Answer

A)  800 
B)  3,144 
C)  3,800 
D)  4,333 
E)  51,672 
A)  800 
B)  3,144 
C)  3,800 
D)  4,333 
E)  51,672

Question 13

Refer to the following:
A firm estimates its long-run production function to be

$$Q = - 0.0075 K ^ { - 3 } L ^ { 3 } + 12 K ^ { 2 } L ^ { 2 }$$ 
Suppose the firm employs 12 units of capital.
-At _______ units of labor, marginal product of labor begins to diminish.

Accepted Answer

A)  32.21 
B)  44.44 
C)  66.67 
D)  76.66 
E)  82.27 
A)  32.21 
B)  44.44 
C)  66.67 
D)  76.66 
E)  82.27

Question 14

A cubic specification for a short-run production function is appropriate when the scatter diagram indicates

Accepted Answer

A)  an S-shaped total product curve. 
B)  marginal product of labor falls throughout the range of labor usage. 
C)  total product is decreasing throughout the range of labor usage. 
D)  an S-shaped marginal product of labor curve. 
E)  a   -shaped marginal product of labor curve (MP first falls and then rises as labor usage increases. 
A)  an S-shaped total product curve. 
B)  marginal product of labor falls throughout the range of labor usage. 
C)  total product is decreasing throughout the range of labor usage. 
D)  an S-shaped marginal product of labor curve. 
E)  a   -shaped marginal product of labor curve (MP first falls and then rises as labor usage increases.

Question 15

A potential problem with cross-section cost data is that

Accepted Answer

A)  nominal cost data include the effect of inflation. 
B)  different firms face different input prices. 
C)  at least one input is fixed over time. 
D)  both a and b 
E)  none of the above 
A)  nominal cost data include the effect of inflation. 
B)  different firms face different input prices. 
C)  at least one input is fixed over time. 
D)  both a and b 
E)  none of the above

Question 16

Refer to the following:
A short-run production function was estimated as

$Q = - 0.002 L ^ { 3 } + 0.16 L ^ { 2 }$
-At 60 units of labor, what is average product?

Accepted Answer

A)  9.4 
B)  8.6 
C)  3.7 
D)  2.4 
E)  6.4 
A)  9.4 
B)  8.6 
C)  3.7 
D)  2.4 
E)  6.4

Question 17

Refer to Greene Enterprises, Inc., whose manager recently estimated its average variable cost (AVC) function to be

$$A V C = 88 - 0.026 Q + 0.000003 Q ^ { 2 }$$ 
Greene Enterprises faces total fixed costs (TFC) of $300,000.
-What is total variable cost (TVC) at Greene Enterprises when average variable cost (AVC) is at its minimum?

Accepted Answer

A)  $48,000 
B)  $101,101 
C)  $137,222 
D)  $190,476 
E)  $437,212 
A)  $48,000 
B)  $101,101 
C)  $137,222 
D)  $190,476 
E)  $437,212

Question 18

Refer to the cost regression for Straker Industries shown below.
Straker Industries estimated its short-run costs using a U-shaped average variable cost function of the form

$$A V C = a + b Q + c Q ^ { 2 }$$ 
and obtained the following results. Total fixed cost (TFC) at Straker Industries is $1,000.
 $$\begin{array} { r l l l l l } 
\text { DEPENDENTVARIAELE: } & \text { AVC } & \text { R-SQUARE } & \text { F-RATIO } & \text { P-VALUE ON F } \
\text { OESERVATIONS: } & \text { 35 } & \mathbf { 0 . 8 7 1 3 } & 108.3 & \mathbf { 0 . 0 0 0 1 } & \
& & \begin{array} { l } 
\text { PARAMETER }
\end{array} & \text { STANDARD } & & \
\text { VARIAELE } & & \text { ESTIMATE } & \text { ERROR } & \text { T-RATIO } & \text { P-VALUE } \
\text { INTERCEPT } & & 43.40 & 13.80 & \mathbf { 3 . 1 4 } & \mathbf { 0 . 0 0 3 6 } \
\text { Q } & & - \mathbf { 2 . 8 0 } & \mathbf { 0 . 9 0 } & - \mathbf { 3 . 1 1 } & \mathbf { 0 . 0 0 3 9 } \
\text { Q2 } & & \mathbf { 0 . 2 0 } & \mathbf { 0 . 0 5 } & 4.00 & \mathbf { 0 . 0 0 0 4 }
\end{array}$$
-If Straker Industries produces 12 units of output, what is estimated total cost (TC)?

Accepted Answer

A)  $1,000 
B)  $1,463.20 
C)  $2,348 
D)  $4,428 
A)  $1,000 
B)  $1,463.20 
C)  $2,348 
D)  $4,428

Question 19

Refer to the cost regression for Straker Industries shown below.
Straker Industries estimated its short-run costs using a U-shaped average variable cost function of the form

$$A V C = a + b Q + c Q ^ { 2 }$$ 
and obtained the following results. Total fixed cost (TFC) at Straker Industries is $1,000.
 $$\begin{array} { r l l l l l } 
\text { DEPENDENTVARIAELE: } & \text { AVC } & \text { R-SQUARE } & \text { F-RATIO } & \text { P-VALUE ON F } \
\text { OESERVATIONS: } & \text { 35 } & \mathbf { 0 . 8 7 1 3 } & 108.3 & \mathbf { 0 . 0 0 0 1 } & \
& & \begin{array} { l } 
\text { PARAMETER }
\end{array} & \text { STANDARD } & & \
\text { VARIAELE } & & \text { ESTIMATE } & \text { ERROR } & \text { T-RATIO } & \text { P-VALUE } \
\text { INTERCEPT } & & 43.40 & 13.80 & \mathbf { 3 . 1 4 } & \mathbf { 0 . 0 0 3 6 } \
\text { Q } & & - \mathbf { 2 . 8 0 } & \mathbf { 0 . 9 0 } & - \mathbf { 3 . 1 1 } & \mathbf { 0 . 0 0 3 9 } \
\text { Q2 } & & \mathbf { 0 . 2 0 } & \mathbf { 0 . 0 5 } & 4.00 & \mathbf { 0 . 0 0 0 4 }
\end{array}$$
-At what level of output is average variable cost (AVC) at its minimum point for Straker Industries?

Accepted Answer

A)  0.14 
B)  4.7 
C)  7 
D)  14 
E)  28 
A)  0.14 
B)  4.7 
C)  7 
D)  14 
E)  28

Question 20

The empirical specification $Q = A I ^ { 3 } + B L ^ { 2 }$ can be used to estimate

Accepted Answer

A)  a short-run cubic production function. 
B)  short-run cubic cost function. 
C)  a family of U-shaped product curves. 
D)  both a and c 
E)  none of the above 
A)  a short-run cubic production function. 
B)  short-run cubic cost function. 
C)  a family of U-shaped product curves. 
D)  both a and c 
E)  none of the above

Refer to the following: A short-run production function was estimated as $Q = - 0.002 L ^ { 3 } + 0.16 L ^ { 2 }$ -At 20 units of labor, what is total product?

Refer to the following: A short-run production function was estimated as $Q = - 0.002 L ^ { 3 } + 0.16 L ^ { 2 }$ -What is total product when average product is at its maximum level?

A short-run marginal cost function is estimated as $S M C = 96 - 4 Q + 0.15 Q ^ { 2 }$ . Which of the following cost functions is associated with this estimated SMC equation?

Refer to Greene Enterprises, Inc., whose manager recently estimated its average variable cost (AVC) function to be $A V C = 88 - 0.026 Q + 0.000003 Q ^ { 2 }$ Greene Enterprises faces total fixed costs (TFC) of $300,000. -When Greene's output is 2,000 units, what is total cost (TC)?

When estimating a cubic short-run production function $Q = A I ^ { 3 } + B L ^ { 2 }$ using linear regression analysis, you must

Which of the following represents a short-run cubic production function?

Refer to the following: A firm estimates its long-run production function to be $Q = - 0.0075 K ^ { - 3 } L ^ { 3 } + 12 K ^ { 2 } L ^ { 2 }$ Suppose the firm employs 12 units of capital. -At _______ units of labor, marginal product of labor begins to diminish.

A cubic specification for a short-run production function is appropriate when the scatter diagram indicates

A potential problem with cross-section cost data is that

Refer to the following: A short-run production function was estimated as $Q = - 0.002 L ^ { 3 } + 0.16 L ^ { 2 }$ -At 60 units of labor, what is average product?

The empirical specification $Q = A I ^ { 3 } + B L ^ { 2 }$ can be used to estimate

Managers, Profits, and Markets

Demand, Supply, and Market Equilibrium

Marginal Analysis for Optimal Decisions

Basic Estimation Techniques

Theory of Consumer Behavior

Elasticity and Demand

Demand Estimation and Forecasting

Production and Cost in the Short Run

Production and Cost in the Long Run

Managerial Decisions in Competitive Markets

Managerial Decisions for Firms With Market Power

Strategic Decision Making in Oligopoly Markets

Advanced Pricing Techniques

Decisions Under Risk and Uncertainty

Government Regulation of Business

Filters

Exam 10: Production and Cost Estimation

Refer to the following: A short-run production function was estimated as Q=−0.002L3+0.16L2Q = - 0.002 L ^ { 3 } + 0.16 L ^ { 2 }Q=−0.002L3+0.16L2 -At 20 units of labor, what is total product?

Refer to the following: A short-run production function was estimated as Q=−0.002L3+0.16L2Q = - 0.002 L ^ { 3 } + 0.16 L ^ { 2 }Q=−0.002L3+0.16L2 -What is total product when average product is at its maximum level?

A short-run marginal cost function is estimated as SMC=96−4Q+0.15Q2S M C = 96 - 4 Q + 0.15 Q ^ { 2 }SMC=96−4Q+0.15Q2 . Which of the following cost functions is associated with this estimated SMC equation?

When estimating a cubic short-run production function Q=AI3+BL2Q = A I ^ { 3 } + B L ^ { 2 }Q=AI3+BL2 using linear regression analysis, you must

Which of the following represents a short-run cubic production function?

A cubic specification for a short-run production function is appropriate when the scatter diagram indicates

A potential problem with cross-section cost data is that

Refer to the following: A short-run production function was estimated as Q=−0.002L3+0.16L2Q = - 0.002 L ^ { 3 } + 0.16 L ^ { 2 }Q=−0.002L3+0.16L2 -At 60 units of labor, what is average product?

The empirical specification Q=AI3+BL2Q = A I ^ { 3 } + B L ^ { 2 }Q=AI3+BL2 can be used to estimate

Managers, Profits, and Markets

Demand, Supply, and Market Equilibrium

Marginal Analysis for Optimal Decisions

Basic Estimation Techniques

Theory of Consumer Behavior

Elasticity and Demand

Demand Estimation and Forecasting

Production and Cost in the Short Run

Production and Cost in the Long Run

Managerial Decisions in Competitive Markets

Managerial Decisions for Firms With Market Power

Strategic Decision Making in Oligopoly Markets

Advanced Pricing Techniques

Decisions Under Risk and Uncertainty

Government Regulation of Business

Filters

Refer to the following: A short-run production function was estimated as $Q = - 0.002 L ^ { 3 } + 0.16 L ^ { 2 }$ -At 20 units of labor, what is total product?

Refer to the following: A short-run production function was estimated as $Q = - 0.002 L ^ { 3 } + 0.16 L ^ { 2 }$ -What is total product when average product is at its maximum level?

A short-run marginal cost function is estimated as $S M C = 96 - 4 Q + 0.15 Q ^ { 2 }$ . Which of the following cost functions is associated with this estimated SMC equation?

When estimating a cubic short-run production function $Q = A I ^ { 3 } + B L ^ { 2 }$ using linear regression analysis, you must

Refer to the following: A short-run production function was estimated as $Q = - 0.002 L ^ { 3 } + 0.16 L ^ { 2 }$ -At 60 units of labor, what is average product?

The empirical specification $Q = A I ^ { 3 } + B L ^ { 2 }$ can be used to estimate