FALL 2010
AGEC 105
AQ #4
NAME: _________________________
Capps
October 27, 2010
UIN: _______________
Section #: _____________
(2 pts) 1. Consider the following table pertaining to wheat production on a particular farm in Kansas.
Assume conditions of perfect competition and that the price of wheat is $4/bushel.
Labor (Hours)
10
15
Wheat Production (Bushels)
80
95
What is the marginal value product of labor? Show all work.
2. Consider the following diagram.
P
S
$7
$5
$4
D
100
Q
(2 pts)
(a) Calculate the producer surplus.
(1 pt)
(b) True or False. The total economic surplus is the difference between the producer surplus and
the consumer surplus.
1
FALL 2010
AGEC 105
AQ #4
Capps
October 27, 2010
(2 pts) 3. Consider the following diagram. Circle all TRUE statements.
P
S
$2.00
$1.60
D
800 1100 1500
(a)
(b)
(c)
(d)
(3 pts)
(1 pt)
Q
The market clearing price is $2.
The market clearing quantity is 1500 units.
A surplus of 700 units exists when P = $1.60.
When P = $1.60, the market is said to be in disequilibrium.
4. Given the following diagram, what is the own-price elasticity of supply between point A and
B? Show all work.
5. The economic analysis of imperfect competition was originated by two economists. Name
ONE of them.
___________________________________
(1 pt)
6. Name the market structure in which there are many sellers and product differentiation.
_________________________________
2
FALL 2010
(1 pt)
AGEC 105
AQ #4
Capps
October 27, 2010
7. Give one example of the market structure described in question 6.
_________________________________
(1 pt)
8. The change in total cost due to a change in the level of input usage (that is ΔTC/ΔI) is known
as _________________________________.
(4 pts) 9. The following diagram represents a leftward shift in the supply of tomatoes. Fill in the blanks.
(a) Identify the producer surplus before the leftward shift in supply. ____________________
(b) Identify the producer surplus after the leftward shift in supply. ____________________
(c) Calculate the change in producer surplus. ____________________
(d) True or False. Producers are better off with the leftward shift in the supply of tomatoes.
Circle the correct answer.
(2 pts)
10. Using the graph in question 9, which of the following is likely to be the cause for a leftward
shift in the supply of tomatoes? Circle ALL that apply.
(a) the use of biotechnology, which lowers the marginal costs of production 10 percent.
(b) a successful promotion/advertising campaign for tomatoes
(c) the use of new pesticides for tomato production, which raises the marginal costs of
production 5 percent
(d) a freeze in the Rio Grande Valley where most tomatoes are produced
3
FALL 2010
AGEC 105
AQ #4
Capps
October 27, 2010
11. Consider the following graph pertaining to a monopolistic competitor.
D
(1 pt) (a) What is x? ________________________
(1 pt) (b) What is the profit-maximizing quantity for the monopolistic competitor?
_________________________
(1 pt) (c) What is the profit-maximizing price for the monopolistic competitor?
_________________________
(2 pts) (d) Calculate the maximum profit for this monopolistic competitor? Show all work.
Sign the Aggie Pledge:
“On my honor, as an Aggie, I have neither given nor received any unauthorized aid on this quiz.”
__________________________
Signature
_________________
Date
4