1			A linear specification, Q = aK + bL, is not appropriate for estimating a production function because…
			A)	it does not allow the firm to substitute capital for labor.
			B)	the marginal products of the inputs are constant.
			C)	the firm could produce positive levels of output at zero cost.
			D)	both b and c
			E)	all of the above
2			When estimating a short-run production function of the form Q = AL3 + BL2, it is necessary to specify in the computer routine that…
			A)	the intercept term is forced to equal zero.
			B)	A < 0.
			C)	B > 0.
			D)	b and c
			E)	all of the above
3			When estimating a short-run average variable cost function,
			A)	the cost data must be adjusted for the effects of inflation or deflation.
			B)	the intercept must be forced to equal zero.
			C)	at least one input must have been fixed during the period in which the data were collected.
			D)	both a and c
			E)	both b and c
4			Theoretical restrictions on the parameters of the short-run cubic cost equation, TVC = aQ + bQ2 + cQ3, are:
			A)	a > 0, b > 0, c > 0
			B)	a > 0, b > 0, c < 0
			C)	a > 0, b < 0, c > 0
			D)	a > 0, b <' 0, c < 0

The next 6 questions refer to the following:

A short-run production function was estimated as

Q = -0.003L³ + 0.18L²

5			At what level of labor usage does the maximum average product occur?
			A)	20
			B)	30
			C)	40
			D)	50
			E)	60
6			What is average product when it is at its maximum level?
			A)	2.4
			B)	4.7
			C)	5.4
			D)	8.1
			E)	18.9
7			What is total product when average product is at its maximum level?
			A)	30
			B)	72
			C)	81
			D)	162
			E)	243
8			At 10 units of labor, what is average product?
			A)	1.25
			B)	1.5
			C)	2.1
			D)	4.8
			E)	17.75
9			At 10 units of labor, what is marginal product?
			A)	1.5
			B)	2.7
			C)	3.5
			D)	4.5
			E)	12.6
10			At 10 units of labor, what is total product?
			A)	21
			B)	48
			C)	27
			D)	15
			E)	45

The next 6 questions refer to the following:

A firm estimated its short-run costs using an average variable cost function of the form

AVC = a + bQ + cQ²

and obtained the following results. Total fixed cost is $1,500.

DEPENDENT VARIABLE:	AVC	R-SQUARE	F-RATIO	P-VALUE ON F
OBSERVATIONS:	40	0.8273	88.65	0.0001
VARIABLE		PARAMETER ESTIMATE	STANDARD ERROR	T-RATIO	P-VALUE
INTERCEPT		38.05	11.87	3.21	0.0028
Q		-4.20	1.56	-2.69	0.106
Q2		0.30	0.09	3.33	0.0020

11			The estimated marginal cost function is:
			A)	MC = 38.05 – 8.4Q + 0.9Q2
			B)	MC = 38.05 – 2.1Q + 0.6Q2
			C)	MC = 38.05Q – 8.4Q2 + 0.9Q3
			D)	MC = 38.05Q – 2.1Q2 + 0.1Q3
12			If the firm produces 20 units of output, what is estimated AVC?
			A)	$48.05
			B)	$74.05
			C)	$230.05
			D)	$242.05
13			If the firm produces 20 units of output, what is estimated total cost?
			A)	$1,500
			B)	$6,101
			C)	$6,341
			D)	$2,981
14			If the firm produces 10 units of output, what is estimated MC?
			A)	$44.05
			B)	$26.05
			C)	$77.05
			D)	$270.05
15			At what level of output is AVC minimum?
			A)	0.14
			B)	4.7
			C)	7
			D)	28
16			What is the minimum value of AVC?
			A)	$ 23.35
			B)	$ 52.75
			C)	$ 10.25
			D)	$111.55
17			A cubic specification for a short-run production function is appropriate when the scatter diagram indicates
			A)	total product is decreasing throughout the range of labor usage.
			B)	marginal product of labor falls throughout the range of labor usage.
			C)	an S-shaped total product curve.
			D)	an S-shaped marginal product of labor curve.
			E)	a U-shaped marginal product of labor curve.

The next 3 questions refer to the following:
A firm estimates its long-run production function to be

Q = -0.0050 K³L³ + 15 K²L²

Suppose the firm employs 10 units of capital.

18			The product curve(s) in the short-run are:
			A)	TP = -5 L3 + 1,500L2.
			B)	AP = -5 L2 + 1,500L.
			C)	MP = 15 L2 + 3,000L.
			D)	both a and b
			E)	both a and c
19			At _______ units of labor, marginal product of labor begins to diminish.
			A)	600
			B)	1000
			C)	200
			D)	66.67
			E)	100
20			At ________ units of labor, average product of labor begins to diminish.
			A)	350
			B)	150
			C)	66.67
			D)	100
			E)	200