2021 SP1 Final Exam --- MSF W2
Last Name:___________________ First Name:___________________
"I pledge that the work I am submitting is of my own ideas. It adheres to the Carey
Business School’s Academic Ethics Policy. I will strive for excellence, honesty, integrity
and originality in the work I submit."
Signature: ___ Date:
.
Be sure to sign on the honor code statement above. Answers submitted without
your signature will not be graded or subject to a significant score reduction.
Be sure to clearly explain your answer to receive full credit. Whether right or
wrong, answers without explanations will receive no credit. These rules are
applied to each and every question including the multiple-choice type.
Every question carries the same weight of 4 points; therefore, the maximum credit
possible from this quiz is 60 points.
1. (3 questions) A firm in a perfectly competitive industry has the following total cost
function:
TC = 8,000 + 300Q − 25Q2 + Q3
The market demand and supply functions are respectively given by
QD = −600P + 460,000
QS = 700P −60,000
a. Determine the market equilibrium price and quantity.
b. Determine the profit-maximizing output level for the firm.
c. Suppose there was a decrease in demand and the demand function became
QD = −600P + 120,000
Should the firm produce at the new equilibrium price in the short run? Or shut
down? Why?
Page 1 of 12
, Page 2 of 12
Last Name:___________________ First Name:___________________
"I pledge that the work I am submitting is of my own ideas. It adheres to the Carey
Business School’s Academic Ethics Policy. I will strive for excellence, honesty, integrity
and originality in the work I submit."
Signature: ___ Date:
.
Be sure to sign on the honor code statement above. Answers submitted without
your signature will not be graded or subject to a significant score reduction.
Be sure to clearly explain your answer to receive full credit. Whether right or
wrong, answers without explanations will receive no credit. These rules are
applied to each and every question including the multiple-choice type.
Every question carries the same weight of 4 points; therefore, the maximum credit
possible from this quiz is 60 points.
1. (3 questions) A firm in a perfectly competitive industry has the following total cost
function:
TC = 8,000 + 300Q − 25Q2 + Q3
The market demand and supply functions are respectively given by
QD = −600P + 460,000
QS = 700P −60,000
a. Determine the market equilibrium price and quantity.
b. Determine the profit-maximizing output level for the firm.
c. Suppose there was a decrease in demand and the demand function became
QD = −600P + 120,000
Should the firm produce at the new equilibrium price in the short run? Or shut
down? Why?
Page 1 of 12
, Page 2 of 12
