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1 Econ300 Spring 2014 Second Midterm Eam version T Answers This eam consists of 25 multiple choice questions. The maimum duration of the eam is 50 minutes. 1. In the spaces provided on the scantron, write your last name, then your first name, and also be sure to include university identification number. 2. Also fill in the bubbles below your name and id number. 3. In the special codes section of the scrantron under K write the letter T 4. DO NOT OPEN this eam booklet until you are told to do so and STOP writing when you are told that the eam is over. Failure to comply will result in a 10% loss in the grade. 5. You MUST return this eam booklet with the scantron; otherwise no credit will be awarded. 6. Only the answers you provide on the scantron will be counted towards your grade. 7. Please make sure you have use dark pencil marks to indicate your answer; the scantron reader may not give you credit for an answer if it can t detect it. 8. Choose the single best possible answer for each question. You are responsible for upholding the University of Maryland Honor Code while taking this eam. ECON300 second midterm Page 1 of 6
2 1. f (, ) Then f f 6 6 f D. f For the net three questions, 2. Then f f f D. f f (, ) 10. and 1 and 1 and 1 and 1 3. Then f has a stationary point at 1 and and and D. 1 2 and What can we conclude about the stationary point in the prior question? It is a local minimum It is a local maimum It is a global minimum D. We cannot conclude it is a ma or min 5. A local maimum of f (, ) is and and and 1 D. 1 1 and 0 ECON300 second midterm Page 2 of 6
3 6. A consumer s utility is U( c) 4c 4c 1/3 1 2/3 3 c 4 1/3 3 c 4 2/3 D. 3 c 7. Suppose f ( ) 0 for all. Then f is strictly concave the slope of f is strictly increasing f has a unique maimum 1/3. The consumer s marginal utility is 8. 4 y log 10. Then 3 y 4 log y 4 log10 ln y 4 log D. y 4 log10 ln10 9. y 2 6 ( 4 8). Then y 6(2 4) y ( 4 8) 2 4 y 2 7 6( 4 8) (2 4) 2 5 D. y 6( 4 8) (2 4) 10. Suppose f ( ) 0 for all. Then f is strictly conve a stationary point of f is a global minimum the slope of f is strictly increasing ECON300 second midterm Page 3 of 6
4 11. Demand is given by q 10 2p. What is the price elasticity of demand at p = 2? 2/3 1/2 3/2 D A monopolist selects output to maimize profits. Then output will minimize total cost output will be on the elastic portion of the demand curve output will be on the inelastic portion of the demand curve D. output will be such that profit is locally conve 13. f (, ) ( 4 3)( 3 7). Then f (2 4)( 3 7) f ( 4 3)(2 3) f12 (21 4)(2 3) 14. Q 3K L 1/3 2/3. Then 2/3 2/3 MPK K L 1/3 1/3 MPL 2K L Q is homogeneous of degree Q 3K L 1/3 2/3. Then dk K dl L dk L dl K dk L dl 2K dk 2K D. dl L ECON300 second midterm Page 4 of 6
5 16. Suppose total cost is strictly conve. Then marginal cost is decreasing average cost is greater than marginal cost marginal cost is greater than average cost D. profits are concave 1/4 1/2 17. Q 4 K L. Then 18. Q is homogenous of degree 1/4 Q has decreasing returns to scale Q has constant returns to scale D. Q has increasing returns to scale y w w z w z ; 4 9; 5. What is dy/dz? (14 3 )4 (3w 4 w)5 (14 3 w)4 (4 3 w)5 (14 3 w)5 (3 4 w)4 D. (14 3 w)4 (3 4 w)5 19. f is a differentiable univariate function. Then a stationary point is necessary for a maimum a stationary point is sufficient for an etreme value a stationary point is a local ma or local min 20. f is a differentiable univariate function. Then f ( *) 0 & f ( *) 0 is necessary and sufficient for a local ma at * If f ( *) 0 & f ( *) 0 then * is a local ma If * is a local ma, then f ( *) 0 & f ( *) 0 ECON300 second midterm Page 5 of 6
6 21. A monopolist has inverse demand P 10 Q and total cost profits, the monopolist sets Q to D. 4 2 TC Q Q 2 4. To maimize 22. f 3 ( ) ( 3). Then at * = 3, f has a global min at * = 3, f has a local min * = 3 is a stationary point of f D. at * = 3, f has a local ma For the net three questions, f ( ) Then f has stationary points at 1 and 3 0 and 2 1 and 2 D. 0 and Then f has a local ma at D Then f has a local min at D. 3 ECON300 second midterm Page 6 of 6
You are responsible for upholding the University of Maryland Honor Code while taking this exam.
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