Question 1 - Do 10 out of 12 True/False and explain. (40 minutes) (a) If my total utility increases at an increasing rate, I must be addicted to the product. TU Qty True or false (b) Given the diagram below, good X is an economic bad. Y 100 120 X True or false (c) Consumers are more health conscious today than they were 20 years ago. Therefore the 2021 indifference curve is flatter now than twenty years ago. Junk food 2000 Healthy food True or false(d) The long run average cost curve is U shaped because up to a certain point you have excess K/ L and thereafter excess L/ K. C Quantity True or false (e) The long run expansion path for a firm must be horizontal. K L True or false (f) With a typical production function, diminishing returns before the diminishing average product is reached. TP Qty. of input Qty. of input True or false (3) At the current levels of employment of factors K and L, WK = 30 and MPL = 15. Given that the price of K is $20 and the price of L is $ 5, the firm should use more capital even though capital is more expensive. L True or false (h) If there are increasing returns to scale and pecuniary diseconornien, then the slope of the long rm average cost curve can be upward or downward sloping. AC Qty. True or false (1} The greater the extent to which two factors are substitutable, the lesser the convexity of the isoquant. K L True or false (j) If an American and Canadian firm use the same technology to produce 10 cars but the Canadian firm uses a higher capital to Wrao, capital must be more expensive in the US. cars L True or false (k) If the total product of Wis givenbyTPL = 48L + 9L2 -L3 and the price of the product produced is $ 10, the maximum wage I would be willing to pay for 4 WWould be $ 260. L True or false ( l } With cartels the greater the difference between price and average cost the greater the incentive to cheat. '02 Qty. True or false