Question 1

If marginal revenue exceeds marginal costs,to increase profits a firm should:

Accepted Answer

A)  reduce output. 
B)  increase output. 
C)  hold output constant. 
D)  increase marginal revenue. 
E)  reduce marginal cost. 
A)  reduce output. 
B)  increase output. 
C)  hold output constant. 
D)  increase marginal revenue. 
E)  reduce marginal cost.

Question 2

The quotient rule of differentiation is:

Accepted Answer

A)  Y = U(X) / W(X)$\rarr$ dY/dX = (W dU/dX - U dW/dX) / W 2. 
B)  Y = U(X) / W(X)$\rarr$ dY/dX = (W dU/dX - U dW/dX) / W. 
C)  Y = U(X) / W(X) $\rarr$dY/dX = [(W dU/dX) / (U dW/dX)] / W 2. 
D)  Y = U(X) / W(X) $\rarr$ dY/dX = [(W dU/dX)(U dW/dX)] / W 2. 
E)  Y = U(X) / W(X) $\rarr$dY/dX = [(W dU/dX)(U dW/dX)] / W. 
A)  Y = U(X) / W(X)$\rarr$ dY/dX = (W dU/dX - U dW/dX) / W 2. 
B)  Y = U(X) / W(X)$\rarr$ dY/dX = (W dU/dX - U dW/dX) / W. 
C)  Y = U(X) / W(X) $\rarr$dY/dX = [(W dU/dX) / (U dW/dX)] / W 2. 
D)  Y = U(X) / W(X) $\rarr$ dY/dX = [(W dU/dX)(U dW/dX)] / W 2. 
E)  Y = U(X) / W(X) $\rarr$dY/dX = [(W dU/dX)(U dW/dX)] / W.

Question 3

Bolan's Fabric Shop sells discount material.Its demand and cost functions are QD = 40 - 2P and TC = 0.5Q2.Its profit-maximizing price is:

Accepted Answer

A)  P = $5. 
B)  P = $10. 
C)  P = $15. 
D)  P = $20. 
E)  P = $0. 
A)  P = $5. 
B)  P = $10. 
C)  P = $15. 
D)  P = $20. 
E)  P = $0.

Question 4

Kenny's Cartage hauls crushed stone for $15 a ton and has total costs given by TC = 100 + 5X + X2.The profit-maximizing level of output is:

Accepted Answer

A)  5 tons. 
B)  2.1 tons. 
C)  10 tons. 
D)  20 tons. 
E)  0 tons. 
A)  5 tons. 
B)  2.1 tons. 
C)  10 tons. 
D)  20 tons. 
E)  0 tons.

Question 5

Incremental revenues and incremental costs are used when:

Accepted Answer

A)  derivatives are too complicated. 
B)  revenues and costs are unknown. 
C)  managerial decisions involve substantial changes. 
D)  a decision is to be presented to a nontechnical audience. 
E)  managerial decisions involve infinitesimal changes. 
A)  derivatives are too complicated. 
B)  revenues and costs are unknown. 
C)  managerial decisions involve substantial changes. 
D)  a decision is to be presented to a nontechnical audience. 
E)  managerial decisions involve infinitesimal changes.

Question 6

Average profit is maximized when:

Accepted Answer

A)  average profit is equal to marginal profit. 
B)  total profit is maximized. 
C)  marginal profit is increasing. 
D)  marginal profit is maximized. 
E)  marginal profit is minimized. 
A)  average profit is equal to marginal profit. 
B)  total profit is maximized. 
C)  marginal profit is increasing. 
D)  marginal profit is maximized. 
E)  marginal profit is minimized.

Question 7

If Y = a + bX + cXd,then dY/dX is:

Accepted Answer

A)  a + bX + cXd. 
B)  b - 1 + (c - 1)Xd - 1. 
C)  b + (d - 1)(c - 1)Xd - 1. 
D)  b + cdXd - 1. 
E)  bX + cXd. 
A)  a + bX + cXd. 
B)  b - 1 + (c - 1)Xd - 1. 
C)  b + (d - 1)(c - 1)Xd - 1. 
D)  b + cdXd - 1. 
E)  bX + cXd.

Question 8

If marginal revenue is less than marginal cost at every level of output,a profit-maximizing firm should:

Accepted Answer

A)  produce when the difference between marginal revenue and marginal cost is greatest. 
B)  produce when total revenue is maximized. 
C)  produce when the difference between total revenue and marginal cost is maximized. 
D)  produce when the difference between average revenue and average cost is equal to 1. 
E)  not produce any output. 
A)  produce when the difference between marginal revenue and marginal cost is greatest. 
B)  produce when total revenue is maximized. 
C)  produce when the difference between total revenue and marginal cost is maximized. 
D)  produce when the difference between average revenue and average cost is equal to 1. 
E)  not produce any output.

Question 9

Maximum profit occurs wherever:

Accepted Answer

A)  the slope of the total revenue function equals marginal revenue. 
B)  the slope of the total revenue function equals marginal cost. 
C)  the slope of the total revenue function is maximized. 
D)  the total revenue is maximized. 
E)  none of the above. 
A)  the slope of the total revenue function equals marginal revenue. 
B)  the slope of the total revenue function equals marginal cost. 
C)  the slope of the total revenue function is maximized. 
D)  the total revenue is maximized. 
E)  none of the above.

Question 10

Sally can advertise on radio,A1,or on television,A2,as long as she spends no more than $10.Profits depend on her advertising according to p = 100 + 10A1 + 20A2 - A21 - A22 + 0.5A1A2.The constrained profit-maximizing levels of radio and television advertising are:

Accepted Answer

A)  A1 = $3 and A2 = $7. 
B)  A1 = $7 and A2 = $3. 
C)  A1 = $10 and A2 = $0. 
D)  A1 = $0 and A2 = $10. 
E)  A1 = $5 and A2 = $5. 
A)  A1 = $3 and A2 = $7. 
B)  A1 = $7 and A2 = $3. 
C)  A1 = $10 and A2 = $0. 
D)  A1 = $0 and A2 = $10. 
E)  A1 = $5 and A2 = $5.

Question 11

Sally sells sandals.She can advertise on radio,A1,or on television,A2.Profits depend on advertising according to p = 100 + 10A1 + 20A2 - A21 - A22 + 0.5A1A2.The profit-maximizing levels of radio and television advertising are:

Accepted Answer

A)  A1 = $8 and A2 = $12. 
B)  A1 = $12 and A2 = $12. 
C)  A1 = $8 and A2 = $8. 
D)  A1 = $12 and A2 = $8. 
E)  A1 = $10 and A2 = $10. 
A)  A1 = $8 and A2 = $12. 
B)  A1 = $12 and A2 = $12. 
C)  A1 = $8 and A2 = $8. 
D)  A1 = $12 and A2 = $8. 
E)  A1 = $10 and A2 = $10.

Question 12

If Y = aX / (b + Xc),then dY/dX is:

Accepted Answer

A)  [a(b + Xc) - acXc] / (b + Xc)2. 
B)  a(b + Xc) + acXc - 1. 
C)  [a(b + Xc) - acXc - 1] / (b + Xc). 
D)  [a(b + Xc) + acXc - 1] / (b + Xc)2. 
E)  a(b + Xc) / (b + Xc)2. 
A)  [a(b + Xc) - acXc] / (b + Xc)2. 
B)  a(b + Xc) + acXc - 1. 
C)  [a(b + Xc) - acXc - 1] / (b + Xc). 
D)  [a(b + Xc) + acXc - 1] / (b + Xc)2. 
E)  a(b + Xc) / (b + Xc)2.

Question 13

Using the Lagrangian multiplier technique,you allocate your $1,000,000 advertising budget between four media markets so as to maximize your profits.Your assistant informs you that the Lagrangian multiplier is equal to -$0.50.From this you conclude that:

Accepted Answer

A)  you are allocating your budget across markets optimally. 
B)  advertising is worthless. 
C)  another dollar of advertising would increase profits $0.50. 
D)  another dollar of advertising would decrease profits $0.50. 
E)  you could earn more profit with a larger advertising budget. 
A)  you are allocating your budget across markets optimally. 
B)  advertising is worthless. 
C)  another dollar of advertising would increase profits $0.50. 
D)  another dollar of advertising would decrease profits $0.50. 
E)  you could earn more profit with a larger advertising budget.

Question 14

When average profit is increasing with increases in output,marginal profit must be:

Accepted Answer

A)  increasing. 
B)  less than average profit. 
C)  greater than average profit. 
D)  decreasing. 
E)  constant. 
A)  increasing. 
B)  less than average profit. 
C)  greater than average profit. 
D)  decreasing. 
E)  constant.

Question 15

If Y = 12 - 6X + 3X3,then d2Y/dX2 is:

Accepted Answer

A)  -6 + 9X 2. 
B)  9X. 
C)  -6 + 18X 2. 
D)  18X. 
E)  none of the above. 
A)  -6 + 9X 2. 
B)  9X. 
C)  -6 + 18X 2. 
D)  18X. 
E)  none of the above.

If marginal revenue exceeds marginal costs,to increase profits a firm should:

The quotient rule of differentiation is:

Bolan's Fabric Shop sells discount material.Its demand and cost functions are Q_D = 40 - 2P and TC = 0.5Q².Its profit-maximizing price is:

Kenny's Cartage hauls crushed stone for $15 a ton and has total costs given by TC = 100 + 5X + X².The profit-maximizing level of output is:

Incremental revenues and incremental costs are used when:

Average profit is maximized when:

If Y = a + bX + cX^d,then dY/dX is:

If marginal revenue is less than marginal cost at every level of output,a profit-maximizing firm should:

Maximum profit occurs wherever:

Sally can advertise on radio,A₁,or on television,A₂,as long as she spends no more than $10.Profits depend on her advertising according to p = 100 + 10A₁ + 20A₂ - A²₁ - A²₂ + 0.5A₁A₂.The constrained profit-maximizing levels of radio and television advertising are:

Sally sells sandals.She can advertise on radio,A₁,or on television,A₂.Profits depend on advertising according to p = 100 + 10A₁ + 20A₂ - A²₁ - A²₂ + 0.5A₁A₂.The profit-maximizing levels of radio and television advertising are:

If Y = aX / (b + X^c),then dY/dX is:

Using the Lagrangian multiplier technique,you allocate your $1,000,000 advertising budget between four media markets so as to maximize your profits.Your assistant informs you that the Lagrangian multiplier is equal to -$0.50.From this you conclude that:

When average profit is increasing with increases in output,marginal profit must be:

If Y = 12 - 6X + 3X³,then d²Y/dX² is:

Introduction

Demand Theory

Consumer Behavior and Rational Choice

Estimating Demand Functions

Production Theory

The Analysis of Costs

Perfect Competition

Monopoly and Monopolistic Competition

Managerial Use of Price Discrimination

Bundling and Intrafirm Pricing

Oligopoly

Game Theory

Auctions

Risk Analysis

Principalagent Issues and Managerial Compensation

Adverse Selection

Government and Business

Appendix Problems

Filters

Exam 18: Optimization Techniques

If marginal revenue exceeds marginal costs,to increase profits a firm should:

The quotient rule of differentiation is:

Bolan's Fabric Shop sells discount material.Its demand and cost functions are QD = 40 - 2P and TC = 0.5Q2.Its profit-maximizing price is:

Kenny's Cartage hauls crushed stone for $15 a ton and has total costs given by TC = 100 + 5X + X2.The profit-maximizing level of output is:

Incremental revenues and incremental costs are used when:

Average profit is maximized when:

If Y = a + bX + cXd,then dY/dX is:

If marginal revenue is less than marginal cost at every level of output,a profit-maximizing firm should:

Maximum profit occurs wherever:

Sally can advertise on radio,A1,or on television,A2,as long as she spends no more than $10.Profits depend on her advertising according to p = 100 + 10A1 + 20A2 - A21 - A22 + 0.5A1A2.The constrained profit-maximizing levels of radio and television advertising are:

Sally sells sandals.She can advertise on radio,A1,or on television,A2.Profits depend on advertising according to p = 100 + 10A1 + 20A2 - A21 - A22 + 0.5A1A2.The profit-maximizing levels of radio and television advertising are:

If Y = aX / (b + Xc),then dY/dX is:

Using the Lagrangian multiplier technique,you allocate your $1,000,000 advertising budget between four media markets so as to maximize your profits.Your assistant informs you that the Lagrangian multiplier is equal to -$0.50.From this you conclude that:

When average profit is increasing with increases in output,marginal profit must be:

If Y = 12 - 6X + 3X3,then d2Y/dX2 is:

Introduction

Demand Theory

Consumer Behavior and Rational Choice

Estimating Demand Functions

Production Theory

The Analysis of Costs

Perfect Competition

Monopoly and Monopolistic Competition

Managerial Use of Price Discrimination

Bundling and Intrafirm Pricing

Oligopoly

Game Theory

Auctions

Risk Analysis

Principalagent Issues and Managerial Compensation

Adverse Selection

Government and Business

Appendix Problems

Filters

Bolan's Fabric Shop sells discount material.Its demand and cost functions are Q_D = 40 - 2P and TC = 0.5Q².Its profit-maximizing price is:

Kenny's Cartage hauls crushed stone for $15 a ton and has total costs given by TC = 100 + 5X + X².The profit-maximizing level of output is:

If Y = a + bX + cX^d,then dY/dX is:

Sally can advertise on radio,A₁,or on television,A₂,as long as she spends no more than $10.Profits depend on her advertising according to p = 100 + 10A₁ + 20A₂ - A²₁ - A²₂ + 0.5A₁A₂.The constrained profit-maximizing levels of radio and television advertising are:

Sally sells sandals.She can advertise on radio,A₁,or on television,A₂.Profits depend on advertising according to p = 100 + 10A₁ + 20A₂ - A²₁ - A²₂ + 0.5A₁A₂.The profit-maximizing levels of radio and television advertising are:

If Y = aX / (b + X^c),then dY/dX is:

If Y = 12 - 6X + 3X³,then d²Y/dX² is: