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Milner Brewing Company experienced the following monthly sales (in thousands of barrels) during 2010: Jan. Feb. Mar. Apr. May June 100 92 112 108 116 116 What is your “4-month moving average” forecasts for July? a. 118,500 barrels b. 113,000 barrels c. 105,300 barrels d. 98,200 barrels The table below shows the forecasted and actual potting soil sales by ABC Company for May in three different years. What is the seasonal adjustment factor to be used in making a May 2010 sales forecast?. year 2009 2008 2007 Actual Forecast 324 360 456 480 240 240 a. 2.9% b. -5% c. 3.2% d. 2.5% Given a Cobb-Douglas production function estimate of Q = 1.19L .72K .18 for a given industry, this industry would have: Answer: Decreasing returns to scale The marginal rate of technical substitution may be defined as all of the following except: a. the rate at which one input may be substituted for another input in the production process, while total output remains constant b. equal to the negative slope of the isoquant at any point on the isoquant c. the rate at which all combinations of inputs have equal total costs d. equal to the ratio of the marginal products of X and Y e. b and c An industry can be characterized by the following production function: Q = 2.5L.60 C.40 What is the algebraic expression for the marginal productivity of labor? a. 2.5L3 - 4.6C4 b. 5.0L2 - 2.5C3 c. 1.50L-0.40 C0.40 d. 2.5L - .24C What's true about both the short-run and long-run in terms of production and cost analysis? In the short-run, one or more of the resources are fixed In the long-run, all the factors are variable The time horizon determines whether or not an input variable is fixed or not The law of diminishing returns is based in part on some factors of production being fixed, as they are in the short run. All of the above The isoquants for inputs that are perfect substitutes for one another consist of a series of: a. right angles b. parallel lines c. concentric circles d. right triangles e. none of the above An industry can be characterized by the following production function: Q = 2.5L.60 C.40 What is the algebraic expression for the average productivity of labor? a. 2L + C0.8 b. 2.5L-0.40 C0.40 c. 0.6L - 0.16C d. None of the Above A certain production process employs two inputs ¾labor (L) and raw materials (R). Output (Q) is a function of these two inputs and is given by the following relationship: Q = 6L2 R2 - .10L3 R3 Assuming that raw materials (input R) are fixed at 10 units, what is the total product function (TPL) for input L? a. 6L4 - 0.10L9 b. 24L - 0.90L c. 12L - 0.3L d. 600L2 -100L3 Fred’s Furniture Store expects its sales to increase at a constant rate of 10 percent per year over the next two years. The Store’s earning this year is $150,000. What would its earnings forecast be for the second year (i.e., for year 2)? a. 120,689 b. 181,500 c. 175,390 d. $156,375 Suppose you have a Cobb-Douglas function with a capital elasticity of output ( a) of 0.28 and a labor elasticity of output ( b) of 0.84. What statement is correct? a. There are increasing returns to scale b. If the amount of labor input (L) is increased by 1%, the output will increase by 0.84% c. If the amount of capital input (K) is decreased by 1%, the output will decrease by 0.28% d. The sum of the exponents in the Cobb-Douglas function is 1.12. e. All of the above An industry can be characterized by the following production function: Q = 2.5L.60 C.40 How would you characterize the returns-to- scale in the industry? a. Increasing Returns to Scale b. Decreasing Returns to Scale c. Constant Returns to Scale d. None of the Above A certain production process employs two inputs ¾labor (L) and raw materials (R). Output (Q) is a function of these two inputs and is given by the following relationship: Q = 6L2 R2 - .10L3 R3 Assuming that raw materials (input R) are fixed at 10 units, what is the average product function for input L? a. 1200L 4 - 1000L 5 b. 600L 3 - 100L 4 c. None of the above d. 600L - 100L 2 . Mr. Fred uses exponential smoothing to predict revenue in his wood carving business. He uses exponential weight of 0.4 for his forecast. What revenue did he predict for March using the data below: Month Revenue Forecast November 100 100 December 90 100 January 115 96 February 110 103.6 March a. ? 106.16 b. 98.24 c. 114.65 d. 110.39 ? The marginal product is defined as: a. The ratio of total output to the amount of the variable input used in producing the output b. The incremental change in total output that can be produced by the use of one more unit of the variable input in the production process c. The percentage change in output resulting from a given percentage change in the amount d. The amount of fixed cost involved. e. None of the above The combinations of inputs costing a constant C dollars is called: a. an isocost line b. an isoquant curve c. the MRTS d. an isorevenue line e. none of the above In a relationship among total, average and marginal products, where TP is maximized: a. AP is maximized b. AP is equal to zero c. MP is maximized d. MP is equal to zero e. none of the above In the Cobb-Douglas production function (Q = aL b1 K b2): a. the marginal product of labor (L) is equal to b1 b. the average product of labor (L) is equal to b2 c. if the amount of labor input (L) is increased by 1 percent, the output will increase by b1 percent d. a and b e. a and c The isoquants for inputs that are perfect complements for one another consist of a series of: a. right angles b. parallel lines c. concentric circles d. right triangles e. none of the above Marginal revenue product is defined as the amount that an additional unit of the variable input adds to ____. a. marginal revenue b. total output c. total revenue d. marginal product e. none of the above Which of the following is never negative? a. slope of the isocost lines b. production elasticity c. average product d. marginal rate of technical substitution e. marginal product A certain production process employs two inputs ¾labor (L) and raw materials (R). Output (Q) is a function of these two inputs and is given by the following relationship: Q = 6L2 R2 - .10L3 R3 Assuming that raw materials (input R) are fixed at 10 units, what is the marginal product function for input L? a. 1200 - 600L b. 24L - 0.9LR c. 1200L - 300L2 d. None of the above In production and cost analysis, the short run is the period of time in which one (or more) of the resources employed in the production process is fixed or incapable of being varied. a. true b. false Marginal factor cost is defined as the amount that an additional unit of the variable input adds to ____. a. marginal cost b. variable cost c. marginal rate of technical substitution d. total cost e. none of the above If the marginal product of labor is 100 and the price of labor is 10, while the marginal product of capital is 200 and the price of capital is $30, then what should the firm? a. The firm should use relatively more capital b. The firm should use relatively more labor c. The firm should not make any changes - they are currently efficient d. Using the Equimarginal Criterion, we can't determine the firm's efficiency level e. Both c and d .Janet uses a linear quarterly sales forecating model to forecast quarterly sales at the local garden center. Sales are seasonal with lower sales during the first quarter and higher sales the rest of the quarters. Janet developed the following quarterly saless forecasting model for her garden center: Forecasting sales = 2800 + 200T - 350D 1t + 132D 2t + 446D 3t The first quarter of 2006 = 1, and the second quarter = 2, ..... et cetera. Using these information and the multiple regression linear sales forecasting model shown above, what would your sales estimate or forecast be for the first quarter of 2010? a. 5850 b. 7239 c. 6321 d. 4684 The Accuweather Corporation manufactures barometers and thermometers for weather forecasters. In an attempt to forecast its future needs for mercury, Accuweather's chief economist estimated average monthly mercury needs as: N = 500 + 10X where N = monthly mercury needs (units) and X = time period in months (January 2008= 0). The following monthly seasonal adjustment factors have been estimated using data from the past five years: Month January April July September December Adjustment Factor 15% 10% 20% 5% 10% What is the unadjusted and adjusted forecast for Accuweather's mercury needs for January of 2010? a. 740 and 851 respectively b. None of the above c. 950 and 1200 respectively d. 520 and 630 respectively