1. A firm uses only two inputs, L and K to produce its output according to f(L,K) = 2L + 3K. Assume that w = 1 and r = 2. In order to produce 12 units of output the firm will choose
2. L=3, K=2
3. L=2, K=3
4. L=0, K=4
5. L=6, K=0
6. None of these are correct.

2. A firm uses only two inputs, L and K to produce its output according to f(L,K) = 2L + 3K. Assume that w = 1 and r = 2. In order to produce 12 units of output the firm will choose

1. L=3, K=2
2. L=2, K=3
3. L=0, K=4
4. L=6, K=0
5. None of these are correct.

3. Suppose the total cost of producing T-Shirts can be represented as C(Q) = 40 +(2/3)Q. Which of the following statements is TRUE at all levels of production?

1. MC > AFC
2. MC= AVC
3. MC=AC
4. All of these.
5. None of these.

4. If the demand elasticity for a product is -2, and a profit-maximizing firm with market power sells the product for $10, its marginal cost must be

1. 5
2. 8
3. 10
4. 15
5. None of these.

5. Assume a perfectly competitive firm's short-run cost is C(Q)=100+160Q+3Q^2. If the market price is $196, what should it do?

1. produce zero units (i.e. shut down)
2. produce 5 units and continue operating
3. produce 6 units and continue operating
4. cannot be determined from the above information.
5. None of these are correct.