8/17/2019 ECON 315 Practice for Final (Key)

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KEY Practice Final Spring 2015:

1. A2. C3. D

4. C5. B or D6. D. E!. E". B10. D11. A12. A13. C14. E

15. B16. C1. D1!. D1". A20. B21. E22. C23. A24. C25. A

26. B2. B2!. A2". C30. B31. D32. A33. D34. A35. D

8/17/2019 ECON 315 Practice for Final (Key)

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1.The following table contains information for a price-taking competitive firm. Complete the table

and determine the profit maximizing output when price (=!" is #1$.

#$tp$t %otal Co&t 'arginal Co&t Fi(e) Co&t A*erage Co&t

0 10 10

1 15 5 10 15

2 20 5 10 10

3 50 30 10 16.66

4 6! 1! 10 1

5 100 32 10 20

6 150 50 10 25

2. %ou own a hot dog stand at a universit& where there are few other food options forstudents. %ou notice that when &ou charge #'.$$ &ou sell 1$$ hotdogs. hen &ou raise the

price to #).$$ &ou onl& sell *$ hotdogs. ' +uestions,

a. hat t&pe of demand elasticit& conditions are present (int, &ou do not have to compute

the precise own price elasticit& of demand." +otice t,at a& t,e price ri&e&- $antit/ )ean)e) all& e(pecte) ,oe*er- t,e total re*en$e ri&e&.%,$& /o$ are operating in range o +E7AS%C )ean).b. /hould &ou raise or lower &our hotdog price to achieve &our highest total revenue

8,en inela&tic )ean) con)ition& are pre&ent- t,e ir &,o$l) rai&e price& to rai&e total re*en$e.E(tra ,ere: ta9ing t,e to point& /o$ co$l) )eterine t,e line e$ation to eP;