Microeconomics I
Mid-term Exam B
Fall, 2003
一、 單選題 (45 points)
1.
Downward-sloping demand curves can be attributed to all of the following
factors except:
a. marginal costs.
b. Diminishing marginal utility.
c. Income effects.
d. Substitution effects.
2.
3.
If the price of X falls, the budget constraint
a.
shifts outward in a parallel fashion.
b.
shifts inward in a parallel fashion.
c.
rotates outward about the X-intercept.
d.
rotates outward about the Y-intercept.
Whenever we observe a consumer purchasing a particular product, we
know that:
a. the price is greater than the marginal utility.
b. The marginal utility is greater than or equal to the price.
c. The marginal utility is greater than the total utility.
d. The total utility is greater than the price.
4.
The marginal physical productivity of labor is defined as
a.
a firm’s total output divided by total labor input.
b.
the extra output produced by employing one more unit of labor
while allowing other inputs to vary.
c.
the extra output produced by employing one more unit of labor
while holding other inputs constant.
d.
the extra output produced by employing one more unit of capital
while holding labor input constant.
5.
If the prevailing price of shirts is $10 and at this price demanders
demand 100 shirts while suppliers are willing to supply 110 shirts, there
is a(n)
a.
b.
c.
d.
shortage at the $10 price.
surplus at the $10 price.
equilibrium in this market.
shortage if price were to rise above $10.
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6.
Graphically, the average productivity of labor would be illustrated by
a.
the slope of the total product curve at the relevant point.
b.
the slope of the marginal productivity curve at the relevant point.
c.
the negative of the slope of the marginal productivity curve at the
relevant point.
d.
the slope of the chord connecting the origin with the relevant point
on the total output curve.
7.
A decrease in demand is represented by
a.
a shift outward of the entire demand curve.
b.
c.
d.
a shift inward of the entire demand curve.
a movement along the demand curve in a southeasterly direction.
a movement along the demand curve in a northwesterly direction.
8.
Suppose the production function for good q is given by q = 3  K + 2  L
where K and L are capital and labor inputs. Consider three statements
about this function:
I.
The function exhibits constant returns to scale.
II. The function exhibits diminishing marginal productivities to all
inputs.
III. The function has a constant rate of technical substitution.
Which of these statements is true?
a.
All of them.
b.
None of them.
c.
I and II but not III.
d.
I and III but not II.
9.
A technical innovation in the production of automobiles by Ford Motor
Company’s for 1 million cars per year would necessarily
a.
b.
c.
d.
10.
shift the “1 million car” isoquant away from the origin.
shift the “1 million car” isoquant toward the origin.
cause 1 million cars to be produced with more capital and less
labor.
cause 1 million cars to be produced with more labor and less
capital.
As the number of workers increases, the marginal rate of technical
substitution:
a. diminishes.
b. Remains constant.
c. Increase and then decreases.
d. Decreases and then increases.
11.
The shape of a firm’s expansion path depends upon
a.
the cost of labor input.
b.
the cost of capital input.
c.
the shape of the firm’s production function.
d.
all of the above factors.
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12.
Two goods, X and Y, are called substitutes if
a.
an increase in PX causes more Y to be bought.
b.
an increase in PX causes less Y to be bought.
c.
an increase in PY causes less Y to be bought.
d.
an increase in income causes more of both X and Y to be bought.
13.
The accountant’s cost of producing a bicycle refers to
a.
the out-of-pocket payments made to produce the bicycle.
b.
the value of the goods that were given up to produce the bicycle.
c.
the bicycle’s retail price.
d.
the marginal cost of the last bicycle produced.
14.
One of the more important implications of the downward-sloping demand
curve is that the:
a. last units purchased are more valuable than the first units.
b. Marginal units are more valuable than the total units.
c. First units purchased are more valuable than the marginal unit.
d. Value of the first unit purchased equals the value of the last unit.
15. Costs will be minimized when:
a. the firm used the smallest amount of the variable factors.
b. The firm has eliminated fixed costs.
c. The marginal rate of technical substitution equals the relative prices
d. The difference between fixed and variable costs is equal zero.
二、 是非題 (30 points)
Response to each statement true, false, or uncertain and then justify your response.
The justification of your response is the most important part of your answer.
1.
All inferior goods produce Giffen’s paradox.
2.
In a world of two goods, both cannot be inferior; both cannot be luxury goods.
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3.
When marginal product rises, average product rises.
4.
On two parallel, downward-sloping demand curves, the own-price elasticity of
demand is the same at any given price.
5.
In the presence of decreasing returns to scale, a firm can do nothing to increase
the average product of its inputs.
6.
The existence of increasing returns to scale refutes the law of diminishing
returns.
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三、 計算/畫圖/分析題 (45 points)
1. Capital and labor are used in fixed proportions to produce airline flights－it takes
two operators (pilots) and one plane for each trip made. Technical and safety
problems make it impossible for a single pilot to fly a plane.
a. What is the output of this production process and what do the isoquants look
like?
b. Suppose an airline hired 30 pilots and 10 planes during a particular period.
Explain both graphically and in words why this might be a foolish thing to do.
c. Suppose progress in avionic equipment made it possible for a single pilot to
handle each plane. How would that shift the isoquant map described in part a?
Would this raise the average productivity of labor in this industry? Would it
raise the average productivity of capital (planes)? Explain.
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2. A family of indifference curves depicts a person’s tastes, but surely, these tastes are
not determined by genes and fixed forever. People are born with few tastes (a liking
for warmth and mother’s milk, a dislike of falling, loud noises, and being wet).
Thereafter, tastes are learned (from parents and peers, teachers and preachers,
business advertising and government propaganda). Tastes, therefore, change with age
and also with the cycles of fashion－whether in art, cars, dress, food, or even
scientific doctrines.
a. How might one depict a change in a person’s tastes?
b. How would one account for interdependencies in people’s tastes, such as the
desire to be like others, to be unlike others, to see others well off, or to see them
in misery?
c. Can a person’s tastes ever be wrong? If your answer is yes, ask yourself who
can be trusted to have the correct tastes and how these tastes could be made
effective in people’s choices.
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3. Assume consumers are choosing between housing services (H) measured in square
feet and consumption of all other goods (C) measured in dollars.
a. Show the equilibrium position in a diagram.
b. Now suppose the government agrees to subsidize consumers by paying 50
percent of their housing cost. How will their budget line change? Show the
new equilibrium.
c. Show in a diagram the minimum amount of income supplement the government
would have to give individuals instead of a housing subsidy to make them as
well-off as they were in part b.
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