EC270: Microeconomic Theory I Chapters 20: Profit-Maximization Practice Questions & Answers | 2025 (The Ultimate Guide for 2026/2027) ©L. McLeod Fall 2025 Wilfrid Laurier University

EC270: Microeconomic Theory I Chapters
20: Profit-Maximization Practice Questions
& Answers | 2025 (The Ultimate Guide for
2026/2027)
©L. McLeod

Fall 2025



Wilfrid Laurier University




1 Multiple Choice Questions
1. (b)
2. (c)
3. (d)
4. (b)
5. (d)
6. (d)
7. (a)
8. (a)



11. (c)




14. (b)
15. (c)
1.1 Economic Concepts to Remember
Short-Run Profit Maximizing Input Choice (i.e,. one input): in the short-run, at least one input is fixed.
The firm’s profit maximizing choice is to choose the amount of the variable input (e.g., x1) such that
the Value of the Marginal Product for input 1 p·MP1 is equal to the marginal cost of input 1 w1:




1

, Answers Practice Questions (Chapters 20: Profit-Maximization) EC270: Microeconomic Theory I



Long-Run Profit Maximizing Input Choice (i.e., two inputs): in the long-run all inputs are variable. Thus,
the firm’s profit maximizing choice is to choose the amount of each input such that the Value of the
Marginal Product for input i p · MPi is equal to its marginal cost wi:




Alternatively, the firm will choose the profit-maximizing quantity of input 1 and input 2 by:




2 ©L. McLeod, Fall 2025