Intermediate Microeconomic Analysis (Econ 173) Signature:
Drake University, Fall 2007
William M. Boal Printed name:
MIDTERM EXAMINATION #3 VERSION A
“Firms and Competition”
October 30, 2007
INSTRUCTIONS: This exam is closed-book, closed-notes. Simple calculators are permitted,
but not graphing calculators or calculators with alphabetical keyboards. Point values for each
question are noted in brackets. As usual in this course, “exp(x)” denotes the exponential
function (also written ex ) while “ln(x)” denotes the natural logarithm function (logarithm to
base e = 2.7182818…).
I. MULTIPLE CHOICE: Circle the one best answer to each question. Feel free to use
margins for scratch work. [2 pts each—64 pts total]
The next three questions refer to the
following information. Suppose leaf-raking
services are produced using only labor, with
the following production function:
q = 9 x2/3, where q = amount of leaves raked,
and x = number of workers.
(1) The formula for the marginal product of
workers is
a. 9 .
b. 2/3 .
c. 6 x−1/3 .
d. 9 x2/3 .
e. 6 x2/3 .
(2) The production function for raking
leaves exhibits
a. no diminishing returns to labor input.
b. diminishing returns to labor input only
for very high values of x.
c. diminishing returns to labor input only
for very low values of x.
d. diminishing returns to labor input for all
values of x greater than zero.
e. cannot be determined from information
given.
(3) The formula for the elasticity of leaf-
raking output with respect to workers is
a. 9 .
b. 2/3 .
c. 6 x−1/3 .
d. 9 x2/3 .
e. 6 x2/3 .
(4) The production function q = 2 x13/4 x21/2
shows
a. constant returns to scale.
b. decreasing returns to scale.
c. increasing returns to scale.
d. cannot be determined from the
information given.
