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ECO - Multiple Choice Questions

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Question;1. A producer of fixed proportion goods Beef and Leather (goods that are complements in production such that QB=QL - each cattle raised and slaughtered for beef yields its skin/leather as well) has marginal costs and marginal revenues of MC = 12Q, MRB=54-6QB, MRL=126-12QL. How many units of cows should be raised and slaughtered?;a.8.25;b.6;c.5.25;d.3;2.The maker of Complete Gym 1000 is coming out with a slightly different model, the Complete Gym 1100. How should the introduction of the Complete Gym 1100 affect the price charged for the Complete Gym 1000?;a.The price of the Complete Gym 1000 should rise.;b.The price of the Complete Gym 1000 should fall.;c.The price of the Complete Gym 1000 should rise or fall depending upon the demand for the two models.;d.The price of the Complete Gym 1000 should stay the same.;3. An aluminum company can produce Q units of a bauxite, a mineral used to produce aluminum, with marginal costs of MC = 9 + Q, and can create and market aluminum at a marginal cost of MC = 5 (excluding the cost of the bauxite necessary). The demand for aluminum is given by P = 30 ? 1.5Q. If an external market exists where bauxite can be bought or sold for \$13, how much aluminum should the firm produce?;a.5 units;b.7 units;c.4 units;d.0 units;4.A vertically integrated firm produces both rubber and automobile tires. The demand for tires is given by PT = 110 ? 0.001Q and the marginal cost of producing the rubber necessary for each tire is given by MCR = 20 + 0.002Q. It costs the firm \$10 to make the rubber into a tire. If there is no external market for the rubber, what transfer price should management set for the rubber?;a.\$40;b.\$30;c.\$10;d.\$60;5.Mililani Farms has 1000 acres of land it uses to grow pineapples and sugarcane on. At presents it uses 750 acres for growing pineapple and 250 acres for sugarcane. If a medical test indicated that artificial sweeteners were unhealthy and that natural pure cane sugar (sugar from sugarcane) should be used instead, Mililani Farms should;a. make no changes as this report will not affect prices.l;b.grow more sugarcane and more pineapple as the price of sugar will rise.;c.grow more sugarcane and less pineapple as the price of sugar will rise.;d.grow more pineapple and less sugarcane as the price of sugar will fall.

Paper#57753 | Written in 18-Jul-2015

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