Econ1101 Past Exam Essay

ECON 2301 Principles of Macroeconomics Time: Th 7:05 pm – 9:45 pm Synonym: 40512 Section: 023 Room: NRG2 2120

Note to students: This is a closed-book exam, containing 3 questions, worth 30 marks in total. Apart from sundry writing materials (pens, pencils and the like), no examination aids are permitted

21) Refer to the graph on the left. To maximize profits, this firm would produce:

2. The productivity of making product decreased; however, the price of the product increased thus they are increasing profit. Thus,

(Key Question) In each of the following four cases, MRPL and MRPC refer to the marginal revenue products of labor and capital, respectively, and PL and PC refer to their prices. Indicate in each case whether the conditions are consistent with maximum profits for the firm. If not, state which resource(s) should be used in larger amounts and which resource(s) should be used in smaller amounts.

2. In my opinion about this article, it is a good idea to always be at the margin, in this article producers are trying to improve by lowering expenses and increasing in production. As a result of that they are experiencing smaller losses which it is a good example of how many would it cost to produce an output.

Number of pages (including cover page): 11 Instructions to Candidates: Please do the following as NO examination booklet is provided: 1. Mark your answers to Section 1 on the provided mark sensing sheet. 2. Write your answers to Sections 2, 3 and 4 on this paper. 3. Write your student number clearly on the front cover of this examination paper (see below). There are 4 Sections to this examination paper. i. Section 1 consists of 25 multiple

1) For each of the following graphs, identify the firm’s profit-maximizing (or loss minimizing) output. Is each firm making a profit? If not, should the firm continue to produce in the short run?

These levels are unacceptable; the high levels of contamination are caused by the crowded conditions in which conventional food animals are raised, as well as the high speed at which meat is processed. In order to lower profits, meat processors have continually increased the speed of their production lines. Twenty years ago, meatpacking plants slaughtered about 175 cattle an hour, but due to increased line speeds, today plants can slaughter as many as 400 cattle per hour.

___________________________________________________________________________ 1. A Ch3 Student: firm will maximize profit by producing that level of output at which A. the additional revenue from the last unit sold exceeds the additional cost of the last unit by the largest amount. B. the additional revenue from the last unit sold equals the additional cost of the last unit. C. total revenue exceeds total cost by the largest amount. D. total revenue equals total cost. E. both b

Time Allowed: Reading Time: Total Number of Questions: Answer ALL questions. The questions are NOT of equal value. • Answers to Questions 1 to 6 must be written in ink on the lines or in spaces provided in this Booklet. • Question 7 must be answered on the separate Generalised Answer Sheet provided using a 2B pencil. This paper is NOT to be retained by the candidate. DO NOT OPEN THIS PAPER UNTIL INSTRUCTED BY THE EXAM SUPERVISOR 3 Hours 10 minutes 7

Eurasia developed an integrated network of economic activity by the year 1200 C.E.. Between 1000 BCE and 1200 CE, it expanded greatly. The principle relied heavily on changes in trade networks, governmental alliances, religion and the continuity of warfare and social hierarchies.

c) The marginal costing profits in P3 & P6 reports greater profits than the absorption costing profits.

Consider the following production functions: ? Y = 10K1/2L1/2 ? Y = 2K + 3L a. Fixing labor employment (L) at 16 units, what is the marginal product of capital when capital employment is 25, 35, and 45 for each production function? Do these production functions exhibit diminishing returns to capital employment? Explain. b. Are labor and capital complements under these production functions? Explain. c. Do these production functions have the property of constant returns to scale? Explain. d. Is either production function a “Cobb-Douglas” function? Explain.

(b) Explain the economic theory of profit maximisation for a firm and consider whether firms are