Deck 18: A: Profit Maximization

Question 1

In Problem 11, the production function is f(x₁, x₂) . If the price of factor 1 is $8 and the price of factor 2 is $4, in what proportions should the firm use factors 1 and 2 if it wants to maximize profits?

A) We can't tell without knowing the price of output.
B) x₁ = x₂.
C) x₁ = 0.50x₂.
D) x₁ = 2x₂.
E) x₁ = 4x₂.

Answer 1

C

Question 2

In Problem 2, the production function is given by f(x) . If the price of the commodity produced is $50 per unit and the cost of the input is $25 per unit, how much profit will the firm make if it maximize profits?

A) $804
B) $385
C) $400
D) $198
E) $203

Answer 2

C

Question 3

In Problem 11, the production function is f(x₁, x₂) . If the price of factor 1 is $8 and the price of factor 2 is $16, in what proportions should the firm use factors 1 and 2 if it wants to maximize profits?

A) x₁ = x₂.
B) x₁ = 0.50x₂.
C) x₁ = 2x₂.
D) We can't tell without knowing the price of output.
E) x₁ = 16x₂.

Answer 3

C

Question 4

In Problem 9, when Farmer Hoglund applies N pounds of fertilizer per acre, the marginal product of fertilizer is bushels of corn. If the price of corn is $1 per bushel and the price of fertilizer is $.20 per pound, then how many pounds of fertilizer per acre should Farmer Hoglund use in order to maximize his profits?

A) 320
B) 328
C) 160
D) 84
E) 200

Question 5

In Problem 1, the production function is given by F(L) . Suppose that the cost per unit of labor is $12 and the price of output is 9, how many units of labor will the firm hire?

A) 54
B) 81
C) 13.50
D) 27
E) None of the above.

Question 6

In Problem 11, the production function is f(x₁, x₂) . If the price of factor 1 is $14 and the price of factor 2 is $7, in what proportions should the firm use factors 1 and 2 if it wants to maximize profits?

A) x₁ = 0.50x₂.
B) x₁ = x₂.
C) We can't tell without knowing the price of output.
D) x₁ = 2x₂.
E) x₁ = 7x₂.

Question 7

In Problem 9, when Farmer Hoglund applies N pounds of fertilizer per acre, the marginal product of fertilizer is bushels of corn. If the price of corn is $3 per bushel and the price of fertilizer is $.30 per pound, then how many pounds of fertilizer per acre should Farmer Hoglund use in order to maximize his profits?

A) 180
B) 360
C) 94
D) 368
E) 200

Question 8

In Problem 1, the production function is given by F(L) . Suppose that the cost per unit of labor is $16 and the price of output is 16, how many units of labor will the firm hire?

A) 32
B) 64
C) 192
D) 128
E) None of the above.

Question 9

In Problem 11, the production function is f(x₁, x₂) . If the price of factor 1 is $10 and the price of factor 2 is $20, in what proportions should the firm use factors 1 and 2 if it wants to maximize profits?

A) We can't tell without knowing the price of output.
B) x₁ = 2x₂.
C) x₁ = 0.50x₂.
D) x₁ = x₂.
E) x₁ = 20x₂.

Question 10

In Problem 9, when Farmer Hoglund applies N pounds of fertilizer per acre, the marginal product of fertilizer is bushels of corn. If the price of corn is $4 per bushel and the price of fertilizer is $.40 per pound, then how many pounds of fertilizer per acre should Farmer Hoglund use in order to maximize his profits?

A) 360
B) 94
C) 180
D) 368
E) 200

Question 11

In Problem 1, the production function is given by F(L) . Suppose that the cost per unit of labor is $8 and the price of output is 4, how many units of labor will the firm hire?

A) 16
B) 8
C) 4
D) 24
E) None of the above.

Question 12

In Problem 11, the production function is f(x₁, x₂) . If the price of factor 1 is $4 and the price of factor 2 is $6, in what proportions should the firm use factors 1 and 2 if it wants to maximize profits?

A) x₁ = x₂.
B) x₁ = 0.67x₂.
C) x₁ = 1.50x₂.
D) We can't tell without knowing the price of output.
E) x₁ = 6x₂.

Question 13

In Problem 2, the production function is given by f(x) . If the price of the commodity produced is $50 per unit and the cost of the input is $40 per unit, how much profit will the firm make if it maximize profits?

A) $235
B) $123
C) $250
D) $504
E) $128

Question 14

In Problem 2, the production function is given by f(x) . If the price of the commodity produced is $90 per unit and the cost of the input is $45 per unit, how much profit will the firm make if it maximize profits?

A) $720
B) $1,444
C) $705
D) $358
E) $363

Question 15

In Problem 2, the production function is given by f(x) . If the price of the commodity produced is $100 per unit and the cost of the input is $45 per unit, how much profit will the firm make if it maximize profits?

A) $1,781.78
B) $873.89
C) $888.89
D) $442.44
E) $447.44

Question 16

In Problem 2, the production function is given by f(x) . If the price of the commodity produced is $100 per unit and the cost of the input is $15 per unit, how much profit will the firm make if it maximize profits?

A) $2,666.67
B) $1,331.33
C) $5,337.33
D) $2,651.67
E) $1,336.33

Question 17

In Problem 1, the production function is given by F(L) . Suppose that the cost per unit of labor is $12 and the price of output is 12, how many units of labor will the firm hire?

A) 32
B) 192
C) 64
D) 128
E) None of the above.

Question 18

In Problem 9, when Farmer Hoglund applies N pounds of fertilizer per acre, the marginal product of fertilizer is bushels of corn. If the price of corn is $4 per bushel and the price of fertilizer is $.40 per pound, then how many pounds of fertilizer per acre should Farmer Hoglund use in order to maximize his profits?

A) 368
B) 94
C) 360
D) 180
E) 200

Question 19

In Problem 1, the production function is given by F(L) . Suppose that the cost per unit of labor is $16 and the price of output is 16, how many units of labor will the firm hire?

A) 64
B) 192
C) 32
D) 128
E) None of the above.

Question 20

In Problem 9, when Farmer Hoglund applies N pounds of fertilizer per acre, the marginal product of fertilizer is bushels of corn. If the price of corn is $1 per bushel and the price of fertilizer is $.40 per pound, then how many pounds of fertilizer per acre should Farmer Hoglund use in order to maximize his profits?

A) 64
B) 120
C) 248
D) 240
E) 200

Question 21

In Problem 12, if the price of the output good is $4, the price of factor 1 is $1, and the price of factor 2 is $3, what is the profit-maximizing amount of factor 1?

A) 8
B) 2
C) 1
D) 0
E) There is not enough information to tell.