1. Consider a procedure taking place in a laboratory. Chemists are mining for a given type of substance. With the mining technique being used, there are three possibilities for the amount that will be extracted. There is a 32% chance that 200 milligrams will be extracted, a 45% chance that 100 milligrams will be extracted, and a 23% chance that 400 milligrams of the substance will be extracted.

Calculate the expected amount of the substance that will be extracted - in other words, its expected value.

__________

2. Consider again the mining procedure considered in the previous question - but let's add some additional information. We'll say that the extracted substance will be used in a chemical reaction that will produce a different substance. The amount of the new substance that can produced is described by the following equation:

N = 5S2

In this equation, N is the amount of the new substance and S is the amount of the mined substance described in Question One.

Calculate the expected value of N.

__________

3.

Consider a graph with total cost on the vertical axis and quantity produced on the horizontal axis.  This graph depicts a firm that is experiencing increasing returns to scale.  We would expect the firm's total cost curve to have a ____________________ slope.

       A positive but decreasing

       B positive and increasing

        C negative and decreasing

        D negative but increasing

4. In fixed proportion production,

       A the inputs used are perfect substitutes

       B the inputs must be used in a one-to-one ratio

       C part of the isoquant will be vertical and part will be horizontal

       D all of given options are true

5 . In the short run, the firm _________ be able to minimize costs because __________ is often fixed.

       A will; labor

        B will; capital

        C may not; labor

       D may not; capital

6. A perfectly competitive, cost-minimizing firm sells its output for $20 each; this price is determined by the overall market, as the firm is a price taker.  The firm's total costs are $450,680 at its current level of production.

The firm is considering selling one additional unit of output; if it does so, its total costs will rise to $450,710.  The marginal revenue (MR) of this additional unit is therefore ___________ the marginal cost of producing it, so the firm ________ produce and sell this extra unit of output.

       A greater than; should not

        B less than; should not

       C greater than; should

       D less than; should

 7 As we use more labor to produce, we can use less capital.  But because the savings in terms of the capital we don't have to use gets smaller the more labor we employ, as we use more labor the isoquant gets _______ and the RTS gets _______.

       A steeper; larger

       B steeper; smaller

       C flatter; larger

       D flatter; smaller

8 .When a firm increases its price by 4% it sells 10% fewer units of its output.  For this firm, we can assume that its marginal revenue is ________ because demand for its output is _________.

       A negative; elastic

       B positive; elastic

       C negative; inelastic

       D positive; inelastic

9 . Which of the following could explain this change?

Consider a firm that used to have the following production function:

q = 2(KL)2

Now the firm has this production function:

q = 4(KL)2

Which of the following could explain this change?

       A more expensive inputs

       B more use of labor

       C more use of capital

       D better technology

 10 .Consider the following equation for a linear demand curve:

 q = 100 - 2P

The MR (marginal revenue) curve for this demand curve will have its vertical intercept at _______ and  a slope of _______.

       A 50; -1

       B 50; 0.5

       C 100; -2

       D 100; -4