ECO 365T Best Tutorials Guide onlinehelp123.com by mkt--500

ECO/365T PRINCIPLES OF MICROECONOMICS The Latest Version A+ Study Guide

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ECO 365T Entire Course Link http://www.onlinehelp123.com/ECO-365 ********************************************** ECO 365T Wk 1 - Practice Knowledge Check (2021 New) In deciding whether to study for an economics quiz or go to a concert, one is confronted by the idea(s) of Multiple Choice • scarcity and opportunity costs. • money and real capital. • complementary economic goals. • full production.

Which of the following does not foster innovation and technological advance? Multiple Choice • competition in markets • freedom of choice and enterprise • self-interest and personal rewards • fear and avoidance of risk

• that microeconomics studies the behavior of individual consumers, workers, and firms, while macroeconomics studies the economy as a whole. • that microeconomics seeks to obtain an overview, while macroeconomics observes the details of individual components.

The following table illustrates alternative production techniques for producing 18 widgets that can be sold for $1 each for a total revenue of $18. Resource Price Per Unit of resource A B C D Labor $2 3 2 1 2 Land 1 2 1 3 1 Capital 4 1 2 2 3 Entrepreneurship 3 1 2 1

Techniques (# of Units of Each Resource Required)

If the price of labor increases from $2 to $3, then the results of using Technique C will change from an economic Multiple Choice • loss of $2 to a loss of $1. • profit of $2 to a profit of $1. • profit of $1 to a profit of $2. • loss of $1 to a loss of $2.

Microeconomics is concerned with Multiple Choice • the aggregate or total levels of income, employment, and output. • a detailed examination of specific economic units that make up the economic system. • positive economics, but not normative economics. • establishing an overall view of the operation of the economic system.

Multiple Choice • product markets. • resource markets. • money markets. • financial markets.

The slope of the typical production possibilities curve Multiple Choice • is positive. • becomes steeper as one moves southeast along the curve. • is constant as one moves down the curve. • becomes flatter as one moves southeast along the curve.

The simple circular flow model shows that Multiple Choice • households are on the buying side of both product and resource markets. • businesses are on the selling side of both product and resource markets. • households are on the selling side of the resource market and on the buying side of the product market. • businesses are on the buying side of the product market and on the selling side of the resource market.

A well-tested economic theory is often called Multiple Choice • a hypothesis. • a prototype. • a principle. • an anomaly.

The economic function of profits and losses is to Multiple Choice • bring about a more equal distribution of income. • signal that resources should be reallocated. • eliminate small firms and reduce competition. • tell government which industries need to be subsidized.

The major virtues of the market system include all of the following, except Multiple Choice • it promotes an efficient allocation of resources.

• • •

it leads to equality in the distribution of income. it provides incentives for greater production and higher incomes. it emphasizes the freedom to pursue self-interest.

Specialization and international trade allow a nation to Multiple Choice • produce a combination of goods that is beyond (or outside) its production possibilities. • consume a combination of goods that is beyond (or outside) its production possibilities. • have an upward-sloping production possibilities curve. • consume a lot of goods without having to produce any output.

Answer the question on the basis of the data given in the following production possibilities table. Production Possibilities (Alternatives) A B C D E F Capital Goods 5 4 3 2 1 0 Consumer Goods 0 5 9 12 14 15 Refer to the table. If the economy is producing at production alternative C, the opportunity cost of the tenth unit of consumer goods will be approximately Multiple Choice • 4 units of capital goods. • 2 units of capital goods. • 3 units of capital goods. • 1/3 of a unit of capital goods.

The distribution of income in a market system is a primary factor that resolves which of the following fundamental economic questions? Multiple Choice • What will be produced? • How will the output be produced? • How will the system accommodate change? • Who will get the output?

The scientific method is Multiple Choice • not applicable to economics because economics deals with human beings. • also known as the economic perspective. • employed to form hypotheses out of existing laws and theories. • used by economists and other social scientists, as well as by physical scientists and life

scientists, to formulate and test hypotheses.

Which of the following is not considered by economists to be an economic resource? Multiple Choice • money • factory workers • computers at a retail store. • a forest

A nation can produce two products: steel and wheat. The table below is the nation's production possibilities schedule. Production Possibilities Product A B C D E F Steel 0 1 2 3 4 5 Wheat 100 90 75 55 30 0 In moving stepwise from possibility A to B to C … to F, the marginal opportunity cost of a unit of steel in terms of wheat Multiple Choice • increases. • decreases. • remains constant. • increases at first, then decreases.

The development of the digital video camera, which replaced film video cameras, is an example of Multiple Choice • roundabout production. • derived demand. • creative destruction. • specialization.

The market system is an economic system that Multiple Choice • produces more consumer goods than capital goods. • produces more capital goods than consumer goods. • gives private individuals the right to own resources used in production. • emphasizes the government's power to control markets and direct economic activity. The simple circular flow model shows that workers and capital owners offer their services to firms

through the Multiple Choice • product markets. • resource markets. • money markets. • financial markets.

In deciding whether to study for an economics quiz or go to a concert, one is confronted by the idea(s) of Multiple Choice • scarcity and opportunity costs. • money and real capital. • complementary economic goals. • full production.

The purpose of the ceteris paribus assumption used in economic analysis is to Multiple Choice • avoid making normative statements. • distinguish macroeconomics from microeconomics. • make sure that all relevant factors are considered. • focus on the effect of a single factor on a certain variable.

Households and businesses are Multiple Choice • both buyers in the resource market. • both sellers in the product market. • sellers in the resource and product markets respectively. • sellers in the product and resource markets respectively.

The incentive problem under communist central planning refers to the idea that

Multiple Choice • planners had to direct required inputs to each enterprise. • workers, managers, and entrepreneurs could not personally gain by responding to shortages or surpluses or by introducing new and improved products. • the immediate effect of more investment was less consumption. • exports had to be equal to imports for a central plan to work.

Competition is more likely to exist when Multiple Choice • there is easy entry into and exit out of industries. • a government-issued license is required to set up a firm in an industry. • the government purchases most goods and services. • economic power is concentrated among a few large firms.

Techniques (# of Units of Each Resource Required)

Businesses seeking higher profits and resource suppliers seeking higher incomes lead to changes in the allocation of resources among different firms and end up with Multiple Choice • consumers at the losing end. • output that society wants. • unnecessary conflict and turmoil. • a need for government action.

Which of the following is not considered by economists to be an economic resource? Multiple Choice • money • factory workers • computers at a retail store. • a forest

Refer to the provided graph. Which curve shows a direct relationship between price and quantity? Multiple Choice • A • B • C

Multiple Choice • 4 units of capital goods. • 2 units of capital goods. • 3 units of capital goods. • 1/3 of a unit of capital goods. Which of the following does not foster innovation and technological advance? Multiple Choice • competition in markets • freedom of choice and enterprise • self-interest and personal rewards • fear and avoidance of risk

The invisible hand concept suggests that Multiple Choice • market failures imply the need for a national economic plan. • big businesses are inherently more efficient than small businesses. • the competitiveness of a capitalistic market economy invariably diminishes over time. • assuming competition, private and public interests will coincide.

The distinction between microeconomics and macroeconomics is Multiple Choice • that microeconomics examines the beach, while macroeconomics looks at the sand, individual rocks, and shells, so to speak. • so clear-cut that every topic can be readily labeled as either macro or micro. • that microeconomics studies the behavior of individual consumers, workers, and firms, while macroeconomics studies the economy as a whole. • that microeconomics seeks to obtain an overview, while macroeconomics observes the details of individual components.

Refer to the diagram. Flow 3 represents Multiple Choice

• • • •

wage, rent, interest, and profit income. land, labor, capital, and entrepreneurial ability. goods and services. consumer expenditures.

The production possibilities curve illustrates the basic principle that Multiple Choice • the production of more of any one good will in time require smaller and smaller sacrifices of other goods. • an economy will automatically obtain full employment of its resources. • if all the resources of an economy are in use, more of one good can be produced only if less of another good is produced. • an economy's capacity to produce increases in proportion to its population size.

ECO 365T Wk 1 - Apply Summative Assessment Quiz (2021 New) Camille is at the candy store with Grandma Mary, who offers to buy her $10 worth of candy. If lollipops are $2 each and candy bars are $3 each, what combination of candy can Camille's Grandma Mary buy her? Multiple Choice • five lollipops and three candy bars • two lollipops and two candy bars • two lollipops and three candy bars • four lollipop and one candy bars

Answer the question based on the following information: Suppose 30 units of product A can be produced by employing just labor and capital in the four ways shown below. Assume the prices of labor and capital are $2 and $3, respectively. Production Techniques 1 2 3 4 Labor 4 3 2 5 Capital 2 3 5 1 Which technique is economically most efficient in producing A? Multiple Choice • 2 • 4 • 1 • 3

Which of the following statements about self-interest in a market system is false?

Multiple Choice • In a market system, consumers are motivated by self-interest to seek the lowest prices for the products they want. • Self-interest applies to businesses as they attempt to maximize their production costs. • Self-interest of entrepreneurs implies seeking maximum profits or minimum losses. • Self-interest usually motivates an individual to deliver something of value to others.

Suppose that Julia receives a $20 gift card for the local coffee shop, where she only buys lattes and muffins. If the price of a latte is $2 and the price of a muffin is $1, then we can conclude that Julia Multiple Choice • should only buy muffins. • should only buy lattes. • can buy 10 lattes or 20 muffins if she chooses to buy only one of the two goods. • can buy 10 lattes and 20 muffins with her $20 gift card.

A nation can produce two products: tanks and autos. The table below is the nation's production possibilities schedule. Production Possibilities Product A B C D E F Tanks 0 1 2 3 4 5 Autos 1,000 950 850 650 350 0 The marginal opportunity cost of the fourth unit of tanks is Multiple Choice • 3 units of tanks. • 300 units of autos. • 350 units of autos. • 650 units of autos.

Assume that a consumer has a given budget or income of $12 and that she can buy only two goods, apples or bananas. The price of an apple is $1.50 and the price of a banana is $0.75. What is the slope of the budget line if the quantity of apples were measured on the horizontal axis and bananas on the vertical axis? Multiple Choice • −0.5 • −0.8 • −1.6 • −2

A nation can produce two products: tanks and autos. The table below is the nation's production possibilities schedule. Production Possibilities Product A B C D E F Tanks 0 1 2 3 4 5 Autos 1,000 950 850 650 350 0 The total opportunity cost of three unit(s) of tanks is Multiple Choice • 200 units of autos. • 350 units of autos. • 650 units of autos. • 1,000 units of autos.

Assume that a consumer has a given budget or income of $10 and that she can buy only two goods, apples or bananas. The price of an apple is $1.00 and the price of a banana is $0.50. If the consumer decides to buy 4 apples, how many bananas can she also buy with the remainder of her budget, assuming she exhausts her income? Multiple Choice • 12 bananas • 5 bananas • 8 bananas • 15 bananas

Refer to the diagram. If society is currently producing the combination of bicycles and computers shown by point D, the production of 2 more units of bicycles Multiple Choice • cannot be achieved because resources are fully employed. • will cost 1 unit of computers. • will cost 2 units of computers. • will cause some resources to become unemployed

The following graph is the production possibilities curve of a nation.

Which of the following combinations would be unattainable?

Multiple Choice • 4 drill presses and 2 bread • 7 drill presses and 2 bread • 4 drill presses and 4 bread • 6 drill presses and 2 bread

Which of the following is a characteristic of a sole proprietorship? Multiple Choice • It is owned and managed by two or more people. • It is owned and managed by one person. • It is an independent legal entity on its own. • The owner bears no personal responsibility for the debts of the business.

Answer the question on the basis of the following production possibilities table for two countries, North Cantina and South Cantina. North Cantina Production Possibilities A B C D E F Capital Goods 5 4 3 2 1 0 Consumer Goods 0 10 18 24 28 30 South Cantina Production Possibilities A B C D E F Capital Goods 5 4 3 2 1 0 Consumer Goods 0 8 15 21 25 27 Refer to the table. If South Cantina is producing at production alternative E, the opportunity cost of the second unit of capital goods will be Multiple Choice • 1/4 of a unit of consumer goods. • 1 unit of consumer goods. • 6 units of consumer goods. • 4 units of consumer goods.

The following graph is the production possibilities curve of a nation.

The total opportunity cost of 4 drill presses is Multiple Choice • 1/4 of a unit of bread.

• • •

6 units of drill presses. 1 unit of bread. 4 units of drill presses.

Refer to the diagram. An improvement in technology will Multiple Choice • shift the production possibilities curve from PP2 to PP3. • shift the production possibilities curve from PP3 to PP2. • move the economy from B to A along PP1. • move the economy from A, B, or C on PP1 to D.

Assume the price of product Y (the quantity of which is on the vertical axis) is $10 and the price of product X (the quantity of which is on the horizontal axis) is $5. Also assume that money income is $30. The absolute value of the slope of the resulting budget line is Multiple Choice • 2. • 1/2. • 3. • 6.

Which of the following is one of the Five Fundamental Questions? Multiple Choice • Which products should be taxed? • How will the goods and services be produced? • How much should society save? • Which products should be subsidized?

A nation can produce two products: steel and wheat. The table below is the nation's production possibilities schedule. Production Possibilities Product A B C D Steel 0 1 2 3

E 4

F 5

Wheat

100 90 75 55 30 0

The opportunity cost of producing the 1st unit of wheat is approximately Multiple Choice • 30 units of steel. • 0 units of steel. • 1 unit of steel. • 1/30 of a unit of steel.

Refer to the diagram. The concept of opportunity cost is best represented by the Multiple Choice • shift of the production possibilities curve from PP1 to PP2. • move from A on PP1 to E on PP2. • move from B on PP1 to A on PP1. • move from D inside PP1 to A on PP1.

If the total costs of producing 1,500 units of output is $15,000 and this output sold to consumers for a total of $16,500, then the firm would earn economic profits of Multiple Choice • $1,500. • $15,000. • $21,000. • $31,500. • $16,500.

Answer the question on the basis of the following production possibilities tables for two countries, North Cantina and South Cantina. North Cantina Production Possibilities A B C D E F Capital Goods 5 4 3 2 1 0 Consumer Goods 0 10 18 24 28 30 South Cantina Production Possibilities

A B C Capital Goods 5 Consumer Goods

D 4 0

E 3 8

F 2 1 0 15 21 25 27

Refer to the tables. If North Cantina is producing at production alternative B, the opportunity cost of the eleventh unit of consumer goods will be Multiple Choice • 10 units of capital goods. • 1/4 of a unit of capital goods. • 8 units of capital goods. • 1/8 of a unit of capital goods. A nation can produce two products: steel and wheat. The table below is the nation's production possibilities schedule. Production Possibilities Product A B C D E F Steel 0 1 2 3 4 5 Wheat 100 90 75 55 30 0 The opportunity cost of producing the 56th unit of wheat is approximately Multiple Choice • 20 units of steel. • 0 units of steel. • 1 unit of steel. • 1/20 of a unit of steel. The following graph is the production possibilities curve of a nation. Which of the following combinations would be unattainable? Multiple Choice • 8 drill presses and 1 bread • 7 drill presses and 2 bread • 10 drill presses and 4 bread • 2 drill presses and 3 bread Assume that a consumer has a given budget or income of $12 and that she can buy only two goods, apples or bananas. The price of an apple is $2.00 and the price of a banana is $1.00. This means that, in order to buy six bananas, this consumer must forgo Multiple Choice • 3 apples. • 0.8 apples. • 6 apples. • 2 apples.

Which of the following is one of the Five Fundamental Questions? Multiple Choice • How much should society save? • Which government agency should decide on output amounts? • Who will get the output? • Should these products be free to the public?

Which of the following is not a typical characteristic of a market system? Multiple Choice • private property • self-interested behavior in the markets • freedom of enterprise • competition in product and resource markets • government ownership of most property resources

Refer to the diagram. If society is currently producing 9 units of bicycles and 4 units of computers and it now decides to increase computer output to 5, the cost Multiple Choice • will be 2 units of bicycles. • will be 1 unit of bicycles. • will be zero because unemployed resources are available. • of doing so cannot be determined from the information given.

Refer to the diagram. An improvement in technology will Multiple Choice shift the production possibilities curve from PP1 to PP2. shift the production possibilities curve from PP2 to PP1. move the economy from A to C along PP1. move the economy from A, B, or C on PP1 to D. Private property Multiple Choice • encourages exchange which promotes market activity and thus economic growth. • encourages an equal distribution of income. • requires that we spend our time protecting our property rather than working. • does everything indicated in the other choices. Refer to the budget line shown in the diagram. If the consumer's money income is $100, the

Multiple Choice • prices of C and D cannot be determined. • price of C is $5 and the price of D is $10. • consumer can obtain a combination of 5 units of both C and D. • price of C is $20 and the price of D is $10. Answer the question on the basis of the following production possibilities tables for two countries, North Cantina and South Cantina. North Cantina Production Possibilities A B C D E F Capital Goods 5 4 3 2 1 0 Consumer Goods 0 10 18 24 28 30 South Cantina Production Possibilities A B C D E F Capital Goods 5 4 3 2 1 0 Consumer Goods 0 8 15 21 25 27 Refer to the tables. If North Cantina is producing at production alternative B, the opportunity cost of the eleventh unit of consumer goods will be Multiple Choice • 10 units of capital goods. • 1/4 of a unit of capital goods. • 8 units of capital goods. • 1/8 of a unit of capital goods. Refer to the diagram. Flow 3 represents Multiple Choice • consumer expenditures. • wage, rent, interest, and profit income. • land, labor, capital, and entrepreneurial ability. • goods and services.

A nation can produce two products: tanks and autos. The table below is the nation's production possibilities schedule. Production Possibilities Product A B C D E F Tanks 0 1 2 3 4 5 Autos 1,000 950 850 650 350 0 In moving from combination B to A, the opportunity cost of producing 50 more autos is Multiple Choice

• • • •

1 units of tanks. 1 unit of tanks. 950 units of autos. 1,950 units of autos.

If the total costs of producing 1,500 units of output is $12,000 and this output sold to consumers for a total of $15,000, then the firm would earn economic profits of Multiple Choice • $12,000. • $15,000. • $27,000. • $3,000. • $18,000.

Assume the price of product Y (the quantity of which is on the vertical axis) is $15 and the price of product X (the quantity of which is on the horizontal axis) is $3. Also assume that money income is $60. The absolute value of the slope of the resulting budget line is Multiple Choice • 5. • 1/5. • 4. • 20. Refer to the diagram. The concept of opportunity cost is best represented by the Multiple Choice • shift of the production possibilities curve from PP1 to PP2. • move from B on PP1 to E on PP2. • move from C on PP1 to A on PP1. • move from D inside PP1 to B on PP1. Assume that a consumer has a given budget or income of $24 and that she can buy only two goods, apples or bananas. The price of an apple is $3.00 and the price of a banana is $2.00. For this consumer, the opportunity cost of buying one more apple is Multiple Choice • 0.67 of a banana. • 0.5 of a banana. • 1 banana. • 1.5 bananas.

Camille is at the candy store with Grandma Mary, who offers to buy her $6 worth of candy. If lollipops are $1 each and candy bars are $2 each, what combination of candy can Camille's Grandma Mary buy her? Multiple Choice • six lollipops and three candy bars • two lollipops and two candy bars • three lollipops and two candy bars • one lollipop and three candy bars The following graph is the production possibilities curve of a nation. The total opportunity cost of 4 drill presses is Multiple Choice • 1/4 of a unit of bread. • 6 units of drill presses. • 1 unit of bread. • 4 units of drill presses.

The following graph is the production possibilities curve of a nation. The marginal opportunity cost of the first unit of bread is Multiple Choice • 7 units of drill presses. • 4 units of drill presses. • 9 units of drill presses. • 1 unit of drill presses. Which of the following is a characteristic of a partnership? Multiple Choice • It is owned and managed by two or more people. • The owners bear no personal responsibility for the debts of the business. • It is managed by a board of directors. • It is owned and managed by one person.

ECO 365T Wk 2 - Practice Knowledge Check (2021 New) 1.

If government set a minimum price of $50 in the market, a

2.When there is overproduction of a good, 3.Consumer surplus 4. If the market price of a product increases, then the total 5.

Which of the diagrams illustrate(s) the effect of a decrease in incomes on the market for second-hand clothing? 6. A fall in the price of milk, used in the production of ice cream, will 7.

Refer to the provided supply and demand graph of Product X. If there are positive externalities from the consumption of Product X, then the socially optimal demand curve would be 8.If there was initially a shortage in the market for a product, then 9. (Consider This) When you enter a congested roadway, 10. What would best explain why the equilibrium price of pink salmon decreased and the equilibrium quantity increased? 11.Which of the following conditions does not need to occur for a market to achieve allocative efficiency? 12.

Refer to the table. In relation to column (3), a change from column (1) to column (2) would mostly likely be caused by

13.Product reviews help to alleviate problems associated with 14.An increase in demand for oil along with a simultaneous increase in supply of oil will 15. In a free-market economy, a product which entails a positive externality will be 16. The idea of the Law of Demand, as applied to electric cars, assumes which of the following to be constant? 17. Which would be a likely cause of an increase in the demand for pizza? 18. Antipollution policies can be severe in their design and implementation, resulting 19.

Refer to the diagram. From society's perspective, if MB1 and MC2 are relevant, 20.Which of the following would be an example of a moral hazard problem?

An increase in demand for oil along with a simultaneous increase in supply of oil will

Multiple Choice • decrease price and increase quantity. • increase price and decrease quantity. • increase quantity, but whether it increases price depends on how much each curve shifts. • increase price, but whether it increases quantity depends on how much each curve shifts.

From an economist's perspective, an important consideration for policies to address global warming is Multiple Choice • the market for recyclable inputs. • the supply and demand for recycled products. • the marginal cost and marginal benefit of the policies. • a lawsuit that can arise from the enactment of the policies.

Quantity Demanded 52 $ 50 73 62 45 62 72 40 51 82 35 42 92 30 33

Price

Quantity Supplied

If government set a minimum price of $50 in the market, a Multiple Choice • shortage of 21 units would occur. • shortage of 125 units would occur. • surplus of 21 units would occur. • surplus of 125 units would occur.

Refer to the diagram. With MB1 and MC1, society's optimal amount of pollution abatement is Multiple Choice • Q1. • Q2. • Q3. Which of the following statements is ? (Assume demand is interacting with an upward sloping supply curve that does not shift.) Multiple Choice • If demand increases, then price will decrease. • If demand decreases, then price will decrease. • If price increases, then demand will decrease. • If price decreases, then demand will decrease.

Antipollution policies can be severe in their design and implementation, resulting in Multiple Choice • the social costs of pollution reduction becoming greater than the benefits. • the social benefits of pollution reduction becoming zero. • too few resources being devoted toward reducing pollution. • the social costs of pollution reduction becoming less than the benefits.

Which of the following conditions does not need to occur for a market to achieve allocative efficiency? Multiple Choice • Consumers' maximum willingness to pay equals producers' minimum acceptable price for the last unit of output. • The sum of producer and consumer surplus is maximized. • The total revenue received by producers equals the total cost of production. • The marginal benefit of the last unit produced equals the marginal cost of producing that unit.

If a legal ceiling price is set above the equilibrium price, Multiple Choice • a shortage of the product will occur. • a surplus of the product will occur. • a black market will evolve. • neither the equilibrium price nor the equilibrium quantity will be affected.

(Consider This) When you enter a congested roadway, rev: 10_12_2020_QC_CS-234305 Multiple Choice • you are the only driver that is experiencing a negative externality from the heavy traffic. • the opportunity cost of idling in slow traffic is the only additional cost. the increased use of gasoline is the only external cost incurred. • there are mutual external costs from the slow traffic that include increased gasoline costs and more time spent on the roadway.

If the price of a product decreases, we would expect Multiple Choice • demand to increase. • quantity supplied to decrease. • supply to decrease.

•

quantity supplied to increase.

If the market price of a product increases, then the total Multiple Choice • consumer surplus will decrease. • consumer surplus will increase. • revenues of sellers will definitely increase. • revenues of sellers will definitely decrease.

A fall in the price of milk, used in the production of ice cream, will Multiple Choice • decrease the supply of ice cream. • increase the supply of ice cream. • cause a movement along the supply curve of ice cream. • have no effect on the supply of ice cream.

There is an adverse selection problem in the market for used cars because Multiple Choice • owners of poor-quality cars have a strong incentive to sell their cars, while owners of highquality used cars have more incentive to keep their cars. • owners of high-quality cars will have a strong incentive to sell their cars to obtain the higher prices, while owners of poor-quality cars will have more incentive to keep theirs. • most people prefer new cars, but the high prices for new cars force most of them to buy used cars. • government actions to pass "lemon" laws have reduced information on used cars.

Refer to the diagram. A shortage of 160 units would be encountered if price was Multiple Choice • $1.10, that is, $1.60 minus $.50. • $1.60. • $1.00. • $0.50.

What would best explain why the equilibrium price of pink salmon decreased and the equilibrium quantity increased? Multiple Choice • The increase in demand was greater than the decrease in supply.

• • •

The decrease in demand was greater than the decrease in supply. The increase in supply was greater than the decrease in demand. The decrease in supply was greater than the increase in demand.

If the price of Pepsi decreases, other factors constant, then we'd expect to see a consequent shift of the demand curve for Multiple Choice • Coke to the left. • Coke to the right. • Pepsi to the left. • Pepsi to the right. Refer to the diagram. From society's perspective, if MB1 and MC2 are relevant, Multiple Choice • Q2 represents too little pollution abatement. • Q1 represents too much pollution abatement. • Q2 represents an optimal amount of pollution abatement. • Q4 represents too little pollution abatement. Refer to the diagram. If actual production and consumption occur at Q1, Multiple Choice • efficiency is achieved. • consumer surplus is maximized. • an efficiency loss (or deadweight loss) of b + d occurs. • an efficiency loss (or deadweight loss) of e + d occurs. Refer to the provided supply and demand graph of Product X. If there are positive externalities from the consumption of Product X, then the socially optimal demand curve would be Multiple Choice • to the left of the D curve on the graph. • to the right of the D curve on the graph. • at the position of the D curve on the graph. • an upward-sloping line.

The idea of the Law of Demand, as applied to electric cars, assumes which of the following to be constant? Multiple Choice • price of electric cars • price of gasoline cars • quantity of electric cars demanded by buyers • how much sellers are charging customers for electric cars

ECO 365T Wk 2 - Apply Quiz (2021 New) 1. Charlie is willing to pay $16 for a T-shirt that is priced at $12. If Charlie buys the T-shirt, then his consumer surplus is

2. Assume that there are four consumers A, B, C, and D, and the prices that each of them is willing to pay for a glass of lemonade is, respectively, $2.50, $2.25, $2.00, and $1.75. If the actual price of lemonade is $1.25 per glass, then consumer surplus in this market will be

3. In the following question you are asked to determine, other things equal, the effects of a given change in a determinant of demand or supply for product X upon (1) the demand (D) for, or supply (S) of, X; (2) the equilibrium price (P) of X; and (3) the equilibrium quantity (Q) of X. Consumer expectations that the price of X will fall soon will

4. Amanda buys a ruby for $330 for which she was willing to pay $340. The minimum acceptable price to the seller, Tony, was $190. Amanda experiences

5. In the market for a particular pair of shoes, Geri is willing to pay $75 for a pair, while Jane is willing to pay $85 for a pair. The actual price that each has to pay for a pair of these shoes is $65. What is the total amount of the two women’s combined consumer surplus?

Refer to the table. If demand is represented by columns (3) and (1) and supply is represented by columns (3) and (4), equilibrium price and quantity will be

7. Jennifer buys a piece of costume jewelry for $30, for which she was willing to pay $35. The minimum acceptable price to the seller, Nathan, was $15. Jennifer experiences a

Refer to the above table. Equilibrium will occur when the price is

9. Refer to the above diagram for the milk market. If the price were $2.00 per gallon, then there would be

10. Answer the question based on the given supply and demand data for wheat.

Equilibrium price in this market is

11. The minimum acceptable price for a product that producer Sam is willing to receive is 10. The price he could get for the product in the market is 15. How much is Sam’s producer surplus?

12.

Refer to the provided table. What is the total producer surplus in the market for all producers A, B, C, D, and E?

13. Which of the following statements is ? If supply decreases and demand decreases, equilibrium price is indeterminate. If supply decreases and demand decreases, equilibrium price will rise. If supply decreases and demand decreases, equilibrium price will fall. If supply decreases and demand decreases, equilibrium quantity will rise. If supply decreases and demand remains constant, equilibrium price is indeterminate.

14. Suppose product X is an input in the production of product Y. Product

Y in turn is a substitute for product Z. A decrease in the price of X can be expected to decrease the demand for Z. increase the demand for Z. have no effect on the demand of product Z. decrease the supply of Z. increase the supply of Z.

15.

Refer to the provided table. The surplus for Producer B is

16. In the following question you are asked to determine, other things equal, the effects of a given change in a determinant of demand or supply for product X upon (1) the demand (D) for, or supply (S) of, X; (2) the equilibrium price (P) of X; and (3) the equilibrium quantity (Q) of X. Removing the subsidy placed on product X years ago will

Refer to the above diagram of the market for corn. If the price in this market is $2 per bushel, then there will be Multiple Choice • a shortage of 8 thousand bushels. • a shortage of 4 thousand bushels. • a surplus of 12 thousand bushels. • a surplus of 8 thousand bushels.

The minimum acceptable price for a product that producer Sam is willing to receive is 5. The price he could get for the product in the market is 9. How much is Sam’s producer surplus? Multiple Choice • 5 • 14 • 4 • more than $9 • 45

Jennifer buys a piece of costume jewelry for $30, for which she was willing to pay $35. The minimum acceptable price to the seller, Nathan, was $15. Jennifer experiences a Multiple Choice • consumer surplus of $5, and Nathan experiences a consumer surplus of $5. • producer surplus of $65, and Nathan experiences a producer surplus of $50. • consumer surplus of $5, and Nathan experiences a producer surplus of $15. • consumer surplus of $15, and Nathan experiences a producer surplus of $20. • producer surplus of $5, and Nathan experiences a consumer surplus of $15.

Producer A $6 B 7 C 9 D 11 E 13

Minimum Acceptable Price $ 19 19 19 19 19

Actual Price (Equilibrium Price)

Refer to the provided table. What is the total producer surplus in the market for all producers A, B, C, D, and E? Multiple Choice • $19 • $32 • $6 • $44 • $49

Suppose product Y is an input in the production of product Z. Product Z in turn is a substitute for

product X. An increase in the price of Y can be expected to Multiple Choice • increase the demand for X. • decrease the demand for X. • have no effect on the demand for product X. • decrease the supply of X. • increase the supply of X.

Price Per Unit $ 5 2,000 10 1,800 15 1,600 20 1,400 25 1,200 30 1,000

Quantity Demanded Per Year Quantity Supplied Per Year 0 300 600 900 1,200 1,500

Refer to the above table. A shortage of 1,500 units will occur when the price is Multiple Choice • $10. • $20. • $15. • $5. • $25.

(1) Qd (2) Qd (3) Price Qs (5) Qs 50 40 60 50 80 60 90 70 100 80

(4)

$ 10 70 9 60 8 50 7 40 6 30

80 70 60 50 40

Refer to the table. If demand is represented by columns (3) and (1) and supply is represented by columns (3) and (4), equilibrium price and quantity will be Multiple Choice • $9 and 60 units. • $10 and 60 units. • $8 and 80 units.

• •

$8 and 60 units. $9 and 70 units.

Charlie is willing to pay $16 for a T-shirt that is priced at $12. If Charlie buys the T-shirt, then his consumer surplus is Multiple Choice • $28. • $192. • more than $12. • $4. • Refer to the above diagram for the milk market. There would be equilibrium whenever the price is Multiple Choice • $1.50 per gallon. • less than $1.50 per gallon. • more than $2.00 per gallon. • less than $1.00 per gallon.

Which of the following statements is ? Multiple Choice • If supply decreases and demand decreases, equilibrium quantity will fall. • If supply decreases and demand decreases, equilibrium quantity will rise.In • If demand decreases and supply increases, equilibrium price will rise. • If supply decreases and demand remains constant, equilibrium price will fall. • If supply increases and demand remains constant, equilibrium price will rise.

Answer the question based on the given supply and demand data for wheat. Bushels Demanded Per Month 45 $ 5 45 50 4 42 56 3 39 61 2 36 67 1 33

Equilibrium price in this market is Multiple Choice • $5. • $4.

Price Per Bushel

Bushels Supplied Per Month

• •

$3. $2.

In the following question you are asked to determine, other things equal, the effects of a given change in a determinant of demand or supply for product X upon (1) the demand (D) for, or supply (S) of, X; (2) the equilibrium price (P) of X; and (3) the equilibrium quantity (Q) of X. Removing the excise tax on product X will Multiple Choice • increase S, decrease P, and increase Q. • decrease S, decrease P, and increase Q. • decrease S, increase P, and increase Q. • increase D, increase P, and decrease Q.

Producer A $6 B 7 C 9 D 11 E 13

Minimum Acceptable Price $ 13 13 13 13 13

Actual Price (Equilibrium Price)

Refer to the provided table. The surplus for Producer E is Multiple Choice • $26. • $13. • $0. • $4. • $7.

In the following question you are asked to determine, other things equal, the effects of a given change in a determinant of demand or supply for product X upon (1) the demand (D) for, or supply (S) of, X; (2) the equilibrium price (P) of X; and (3) the equilibrium quantity (Q) of X. A decrease in the price of a product that is a complement to X will Multiple Choice • increase D, increase P, and increase Q. • increase D, decrease P, and increase Q. • increase D, increase P, and decrease Q. • decrease S, decrease P, and increase Q. • shift D left with no change in P and Q.

Amanda buys a ruby for $240 for which she was willing to pay $340. The minimum acceptable price to the seller, Tony, was $190. Amanda experiences Multiple Choice • a consumer surplus of $100, and Tony experiences a producer surplus of $50. • a producer surplus of $100, and Tony experiences a consumer surplus of $190. • a consumer surplus of $580, and Tony experiences a producer surplus of $200. • a consumer surplus of $100, and Tony experiences a consumer surplus of $150. • a producer surplus of $200, and Tony experiences a consumer surplus of $100. Refer to the above diagram for the milk market. If the price were more than $1.50 per gallon, then there would be Multiple Choice • equilibrium in the market.In • a shortage in the market. • a surplus in the market. • no buyers in the market.

ECO 365T Wk 3 - Practice Knowledge Check (2021 New) Assume that Abby, Ben, Clara, Joe, and Matt are the only citizens in a community. A proposed public good has a total cost of $1,000. All five citizens will share an equal portion of this cost in taxes. The benefit of the public good is $220 to Abby, $210 to Ben, $210 to Clara, $180 to Joe, and $120 to Matt. Who will likely vote in favor of this proposal? Multiple Choice • Abby, Ben, Clara, and Joe • Ben, Clara, Joe, and Matt • Ben, Clara, and Joe • Abby, Ben, and Clara Price per Ticket $ 13 1,000 11 2,000 9 3,000 7 4,000 5 5,000 3 6,000

Quantity Demanded

Refer to the information and assume the stadium capacity is 5,000. The supply of seats for the game Multiple Choice • varies inversely with ticket prices. •

varies directly with ticket prices. • is perfectly inelastic. • is perfectly elastic.

People enjoy outdoor holiday lighting displays and would be willing to pay to see them, but can't be made to pay. Because most people who put up lights are unable to charge others to view them, they don't put up as many lights as people would like. This is an example of a Multiple Choice • negative externality. • supply-side market failure. • demand-side market failure. • government failure.

Political corruption occurs in the following instances, except when Multiple Choice • government officials use their powers for personal gain. • people pay a government official to do what she should be doing. • people pay a bureaucrat to do something that he should not be doing. • businesses pay property taxes and license fees.

An auto rental company lowers the price of its rentals to increase its market share. The price cut increases quantity demanded, but total revenue decreases. This result suggests that over this price range, the demand for the auto rentals is Multiple Choice • elastic. • inelastic. • unit elastic. • perfectly elastic.

The larger the coefficient of price elasticity of demand for a product, the Multiple Choice • larger the resulting price change for an increase in supply. •

more rapid the rate at which the marginal utility of that product diminishes. • less competitive will be the industry supplying that product. • smaller the resulting price change for an increase in supply.

Suppose that the price of product X rises by 20 percent and the quantity supplied of X increases by 15 percent. The coefficient of price elasticity of supply for good X is Multiple Choice • negative, and therefore X is an inferior good. • positive, and therefore X is a normal good. • less than 1, and therefore supply is inelastic. • more than 1, and therefore supply is elastic.

The supply of product X is perfectly inelastic if the price of X rises by Multiple Choice • 5 percent and quantity supplied rises by 7 percent. • 8 percent and quantity supplied rises by 8 percent. • 10 percent and quantity supplied stays the same. • 7 percent and quantity supplied rises by 5 percent.

Price per Ticket $ 13 1,000 11 2,000 9 3,000 7 4,000 5 5,000 3 6,000

Quantity Demanded

Refer to the information. If the Mudhens' management wanted to maximize total ticket revenue from the game, it would set the ticket price at Multiple Choice •

$5. • $7. • $9. • $13.

According to the paradox of voting, Multiple Choice • public goods that cost more than the total benefits they confer may get produced under majority voting. • trading of votes may either add to or subtract from economic efficiency. • the median voter decides what public goods all voters should have. • majority voting fails, under some circumstances, to make consistent choices that reflect the community's underlying preferences.

The total revenue received by sellers of a good is computed by Multiple Choice • multiplying the price times the quantity sold. • adding the price and the quantity sold. • multiplying the percentage change in price times the percentage change in quantity. • dividing the percentage change in quantity by the percentage change in price.

Supply curves tend to be Multiple Choice • perfectly elastic in the long run because consumer demand will have sufficient time to adjust fully to changes in supply. • more elastic in the long run because there is time for firms to enter or leave the industry. • perfectly inelastic in the long run because the law of scarcity imposes absolute limits on production. less elastic in the long run because there is time for firms to enter or leave an industry.

Refer to the diagram. Between prices of $5.70 and $6.30, Multiple Choice • D1 is more elastic than D2. • D2 is an inferior good and D1 is a normal good. • D1 and D2 have identical elasticities. • D2 is more elastic than D1.

As it relates to the political process, the principal-agent problem results from the Multiple Choice • negative externalities that are created by some policy actions. • political rules that encourage elected officials to engage in unethical and illegal behavior. • inconsistency between voters' interest in programs and politicians' interest in reelection. • paradox of voting.

Which statement best describes the special-interest effect? Multiple Choice • It is a program or policy that is adopted during a special session of Congress or a state legislature. • It is a policy issue in which both the supporters and opponents employ paid lobbyists to represent their interests. • It is a program or policy which one political party strongly supports and other political parties strongly oppose. • It is a program or policy in which a large number of people will suffer small costs, while a small number will receive large gains.

Alex, Kara, and Susie are the only three people in a community. Alex is willing to pay $40 for the third unit of a public good; Kara is willing to pay $25. If the marginal cost of producing the third unit is $100, what is the minimum amount that Susie must be willing to pay for it to be efficient for government to produce the third unit? Multiple Choice • $35 • $100 • $65 • The amount cannot be determined with the information provided.

Public choice theory focuses on the economics of Multiple Choice • fiscal and monetary policy. • the behavior of business firms. • antitrust and regulatory policy. • government decision making, politics, and elections.

Refer to the diagram. If price falls from P1 to P2, total revenue will become area(s) Multiple Choice • B + D. • C + D. • A + C. • C.

Sony is considering a 10 percent price reduction on its HD televisions. If the price-elasticity coefficient for the sets in this price range is 0.75, then the price cut will cause Multiple Choice • sales quantity to increase and revenues to also increase. • sales quantity to increase but revenues to decrease. • sales quantity to decrease and revenues to also decrease. sales quantity to decrease but revenues to increase.

When the percentage change in price is greater than the resulting percentage change in quantity demanded, Multiple Choice • a decrease in price will increase total revenue. • demand may be either elastic or inelastic.

• an increase in price will increase total revenue. • demand is elastic.

Consider the demand curve above. If the price is OA, then the total revenues of sellers would be the area Multiple Choice • D-A-B-E. • 0-A-B-C. • 0-D-E-F. • C-B-E-F.

In corporations, owners are __________________ and managers are ________________. Multiple Choice • agents; principals • stockholders; bondholders • agents; employees • principals; agents

• elastic. • inelastic. • unit elastic. • perfectly elastic.

Refer to the graph above. Which demand curve is relatively most elastic between P1 and P2? Multiple Choice • D1 • D2 • D3

Assume there is no way to prevent someone from using an interstate highway, regardless of whether or not he or she helps pay for it. This characteristic is called Multiple Choice • nonrivalry. • nonexcludability. • nontaxability. • nondiscrimination.

Answer the question based on the following information for four highway programs of increasing scope. All figures are in millions of dollars. Program A $2 B 6 C 12 D 20

Total Cost $9 16 21 23

Total Benefit

Based on the data, we can say that Multiple Choice • Program D is the most efficient on economic grounds. • Program C is the most efficient on economic grounds. • Program B is the most efficient on economic grounds. •

Some people argue that the three main television networks all have similar programming. If true, this observation might best be explained by the Multiple Choice • paradox of voting. • median-voter model. • law of diminishing marginal utility. • ability-to-pay principle.

Suppose a college economics department decides to use a single economics text for all sections of principles of economics. Also assume that the three individual members of the textbook selection committee have the following preferences. Professor Ideal TextbookAnalytical Level of the Textbook Adams C/F Very Difficult Bennett M/B Moderately Difficult Clay O/S Relatively Easy Assuming all other textbook qualities except analytical level are the same, majority voting will result in the committee Multiple Choice • being deadlocked and unable to decide on a book. • selecting the C/F book. • selecting the M/B book. • selecting the O/S book.

Which of the following factors will make the demand for a product relatively elastic? Multiple Choice • There are few substitutes. • The time interval considered is long. • The good is considered a necessity. • Purchases of the good require a small portion of consumers' budgets.

The larger the coefficient of price elasticity of demand for a product, the Multiple Choice • larger the resulting price change for an increase in supply. • more rapid the rate at which the marginal utility of that product diminishes. • less competitive will be the industry supplying that product. • smaller the resulting price change for an increase in supply.

Price per Ticket $ 13 1,000 11 2,000 9 3,000 7 4,000 5 5,000 3 6,000

Quantity Demanded

Refer to the information and assume the stadium capacity is 5,000. The supply of seats for the game Multiple Choice • varies inversely with ticket prices. • varies directly with ticket prices. • is perfectly inelastic. • is perfectly elastic.

Regulatory capture is said to have occurred when which of the following is true? Multiple Choice • Rules and enforcement in an industry are heavily influenced by the industry being regulated. • One firm controls an entire market, having captured customers away from other firms. • Government imposes excessive regulations in an industry, resulting in inefficiencies. • Consumers make all the rules for an industry, forcing firms into inefficient production methods.

Answer the question on the basis of this table showing the marginal benefit that a particular public project will provide to each of the three members of a community. No vote trading is allowed. Voter Marginal Benefit Xavier $ 500 Yoho 200 Zest 2,000 If the tax cost of this proposed project is $300 per person, a majority vote will Multiple Choice • defeat this project and resources will be underallocated to it. • pass this project and resources will be allocated efficiently. • pass this project and resources will be underallocated to it. • defeat this project and resources will be overallocated to it.

Which types of goods are most adversely affected by recessions? Multiple Choice • Goods for which the income elasticity coefficient is relatively low or negative. • Goods for which the income elasticity coefficient is relatively high and positive. • Goods for which the cross elasticity coefficient is positive. • Goods for which the cross elasticity coefficient is negative.

ECO 365T Wk 3 - Apply Summative Assessment Quiz (2021 New) Suppose that as the price of Y falls from $12 to $10, the quantity of Y demanded increases from 500 to 600. Then the absolute value of the price elasticity (using the midpoint formula) is approximately

Multiple Choice • 50. • 1.2. • 1. • 0.83.

Answer the question based on the following data. Price Per Unit Quantity Demanded Per Unit of Time $ 20 12 18 17 16 20 14 24 12 30 10 36 8 40 6 44 4 48 What is the price elasticity of demand over the range of $4 to $6? Multiple Choice • 4.6 • 0.22 • 0.47 • 0.33

Alex, Kara, and Susie are the only three people in a community. Alex is willing to pay $20 for the fifth unit of a public good; Kara, $15; and Susie, $25. Government should produce the fifth unit of the public good if the marginal cost is less than or equal to Multiple Choice • $60. • $20. • $15. • $45.

•

$25.

Answer the question based on the following information for a public good. Pa and Pb are the prices that individuals A and B are willing to pay for the last unit of a public good, rather than do without it. These people are the only two members of society.

Q 1 2 3 4 5

Pa $3 2 1 0 0

Pb $5 4 3 2 1

The collective willingness of this society to pay for the second unit of this public good is Multiple Choice • $6. • $2. • $1. • $8. • $4.

If a firm finds that it can sell $32,000 worth of a product when its price is $8 per unit and $35,000 worth of it when its price is $10, then Multiple Choice • the demand for the product is inelastic in the $10-$8 price range. • the demand for the product must have increased. • elasticity of demand is 1.67. • the demand for the product is elastic in the $10-$8 price range.

Suppose the price elasticity of supply for crude oil is 1.5. How much would price have to rise to increase production by 9 percent? Multiple Choice • 6 percent • 13.5 percent

• 9 percent • 15 percent

The price of season tickets to a performing arts theater decreases by 4 percent. As a result, the quantity demanded increases by 10 percent. The price elasticity of demand for season tickets is Multiple Choice • 0.4. • 4. • 2.5. • 0.25.

If the price elasticity of demand for a product is equal to 2.0, then a decrease in price of 4 percent will increase quantity demanded by Multiple Choice • 2 percent. • 0.8 percent. • 8 percent. • 0.5 percent.

Suppose that the price of peanuts falls from $4 to $3 per bushel and that, as a result, the total revenue received by peanut farmers changes from $20 to $17 billion. Thus, Multiple Choice • the demand for peanuts is elastic. • the demand for peanuts is inelastic. • the demand curve for peanuts has shifted to the left. • no inference can be made as to the elasticity of demand for peanuts.

Refer to the diagram and assume a single good. If the price of the good decreased from $6.30 to $5.70 along D1, the price elasticity of demand along this portion of the demand curve would be Multiple Choice 0.83. 1.25. • 1.2. • 0.8. Suppose that Mick and Cher are the only two members of society and are willing to pay $10 and $15, respectively, for the fifth unit of a public good. Also, assume that the marginal cost of the fifth unit is $23. We can conclude that Multiple Choice • the fifth unit should be produced. • zero units should be produced. • just 4 units should be produced. • the fifth unit should not be produced.

You are the only seller of eggs in town, and the price-elasticity coefficient for eggs is known to be 1.25. If you want to increase your sales quantity by 4 percent through a price change, what should you do to the price? Multiple Choice • reduce price by 3.2 percent • increase price by 3.2 percent • reduce price by 5 percent • increase price by 5 percent

The price elasticity of demand for widgets is 0.5. Assuming no change in the demand curve for widgets, an increase in sales of 8 percent implies a(n) Multiple Choice •

8 percent reduction in price. • 4 percent reduction in price. • 16 percent reduction in price. • 12 percent reduction in price.

Suppose we find that the price elasticity of demand for a product is 0.8 when its price is increased by 10 percent. We can conclude that quantity demanded Multiple Choice • increased by 0.08 percent. • decreased by 8 percent. • decreased by 1.2 percent. • decreased by 0.08 percent.

Suppose that Katie and Kelly each expect to receive $500 worth of marginal benefits from a proposed new recreation center, whereas Kerry expects to receive only $100 worth. If the proposed tax levied on each for the center would be $300, a majority vote will Multiple Choice • pass this project and resources will be underallocated to it. • pass this project and resources will be efficiently allocated to it. • defeat this project and resources will be underallocated to it. • pass this project and resources will be overallocated to it.

Answer the question based on the following table, which shows a demand schedule. Price Quantity Demanded $ 5 10 4 13 3 15 2 19 1 25 Total revenues will increase if price Multiple Choice •

rises from $4 to $5. • falls from $3 to $2. • falls from $4 to $3. •

A 12 percent increase in the price of tea causes 3 percent increase in the demand for coffee. The cross elasticity of demand for coffee with respect to the price of tea is Multiple Choice • -4. • 4. • -0.25. • 0.25.

Suppose you are given the following data on demand for a product. The price elasticity of demand (based on the midpoint formula) when price decreases from $8 to $6 is Price Quantity Demanded $ 10 30 9 40 8 50 7 60 6 70 Multiple Choice • 0.86. • 0.33. • 1.14. • 1.33.

The coefficient of price-elasticity of supply for a product is 0.65 if Multiple Choice

• a 4 percent decrease in the price causes a 0.16 percent decrease in quantity supplied. • a 4 percent decrease in price causes a 0.65 percent decrease in quantity supplied. • a 4 percent decrease in price causes a 2.6 percent decrease in quantity supplied. • a 0.65 percent decrease in price causes a 0.65 percent decrease in quantity supplied.

Suppose the price elasticity of demand for beef is about 0.6. Other things equal, this means that a 20 percent increase in the price of beef will cause the quantity of beef demanded to Multiple Choice • increase by approximately 12 percent. • decrease by approximately 12 percent. • decrease by approximately 32 percent. • decrease by approximately 26 percent. The supply of product X is perfectly inelastic if the price of X rises by Multiple Choice • 3 percent and quantity supplied rises by 4 percent. • 9 percent and quantity supplied rises by 9 percent. • 2 percent and quantity supplied stays the same. • 2 percent and quantity supplied rises by 1 percent.

The income elasticity of demand for food is roughly 1. Suppose a consumer's monthly income is $2,000, of which 20 percent is spent on food. If the income of this consumer doubles, the amount she'll spend on food will be Multiple Choice • $400 per month. • $500 per month. • $800 per month. • $1,000 per month.

Suppose that an 8 percent increase in the price of normal good Y causes an 8 percent increase in the quantity demanded of normal good X. The coefficient of cross elasticity of demand is Multiple Choice • negative, and therefore these goods are substitutes. • negative, and therefore these goods are complements. • positive, and therefore these goods are substitutes. • positive, and therefore these goods are complements.

Suppose the price elasticity of demand for bread is 2. If the price of bread falls by 8 percent, the quantity demanded will increase by Multiple Choice • 16 percent and total expenditures on bread will fall. In • 16 percent and total expenditures on bread will rise. • 4 percent and total expenditures on bread will fall. • 4 percent and total expenditures on bread will rise.

If the price elasticity of demand for a product is equal to 2.0, then a decrease in price of 4 percent will increase quantity demanded by Multiple Choice • 2 percent. • 0.8 percent. In • 8 percent. • 0.5 percent.

Suppose the income elasticity of demand for toys is +2.4. This means that Multiple Choice • a 4 percent increase in income will increase the purchase of toys by 9.6 percent. • a 4 percent increase in income will increase the purchase of toys by 1.67 percent. • a 4 percent increase in income will decrease the purchase of toys by 9.6 percent. • toys are an inferior good.

Answer the question based on the following information for four highway programs of increasing scope. All figures are in millions of dollars. Program A $2 B 6 C 12 D 20

Total Cost $9 16 21 23

Total Benefit

Based on the data, we can say that the marginal costs of Program A are Multiple Choice • $6. • $8. • $2. • $4.

Refer to the diagram and assume a single good. If the price of the good increased from $5.70 to $6.30 along D1, the price elasticity of demand along this portion of the demand curve would be Multiple Choice • 0.8. • 1. In • 1.2. • 2.

The supply of product X is inelastic (but not perfectly inelastic) if the price of X rises by Multiple Choice • 5 percent and quantity supplied rises by 7 percent. • 8 percent and quantity supplied rises by 8 percent. • 10 percent and quantity supplied remains the same. • 7 percent and quantity supplied rises by 5 percent.

When the price of a product is increased 5 percent, the quantity demanded decreases 10 percent. The price-elasticity of demand coefficient for this product is Multiple Choice • 2. • 0.2. • 0.5. • 5.

A consumer's weekly income is $550, and the consumer buys 9 bars of chocolate per week. When weekly income increases to $600, the consumer buys 10 bars per week. The income elasticity of

demand for chocolate by this consumer is about Multiple Choice • 1.82. • 0.83. • 1. • 1.21.

Suppose the price of local cable TV service increased from $15.00 to $20.00 and as a result the number of cable subscribers decreased from 248,000 to 200,000. Along this portion of the demand curve, using the midpoint method, price elasticity of demand is approximately Multiple Choice • 1.33. • 0.72. • 4. • 0.6.

Assume that Abby, Ben, Clara, Joe, and Matt are the only citizens in a community. A proposed public good has a total cost of $1,200. All five citizens will share an equal portion of this cost in taxes. The benefit of the public good is $220 to Abby, $210 to Ben, $210 to Clara, $180 to Joe, and $120 to Matt. In a majority vote, this proposal will most likely be Multiple Choice • accepted, all 5 in favor. • accepted, 3 in favor, 2 against.In • defeated, 1 in favor, 4 against. • defeated, all 5 against

The following data are for a series of increasingly extensive flood-control projects. Total Cost Per Year Total Benefit Per Year Plan A = Levees $ 10,000 $ 16,000 Plan B = Small Reservoir 24,000 36,000 Plan C = Medium Reservoir 44,000 52,000

Plan D = Large Reservoir

72,000

64,000

For Plan A marginal costs and marginal benefits are Multiple Choice • $20,000 and $16,000, respectively. • $16,000 and $26,000, respectively. • $20,000 and $32,000, respectively. • $10,000 and $16,000, respectively.

Answer the question based on the following table, which shows a demand schedule. Price Quantity Demanded $ 5 10 4 13 3 15 2 19 1 25 Total revenues will decrease if price Multiple Choice • rises from $1 to $2. • falls from $5 to $4. • rises from $3 to $4. In • falls from $4 to $3.

Suppose that Katie and Kelly each expect to receive $500 worth of marginal benefits from a proposed new recreation center, whereas Kerry expects to receive only $100 worth. If the proposed tax levied on each for the center would be $450, a majority vote will Multiple Choice • defeat this project. • pass this project. • pass this project and resources will be efficiently allocated to it. • defeat this project and resources will be underallocated to it.

The price elasticity of demand for widgets is 1. Assuming no change in the demand curve for widgets, a 10 percent decrease in sales implies a(n)

Multiple Choice • 13.8 percent increase in price. • 18 percent increase in price. • 10 percent increase in price. • 8 percent increase in price.

If the price elasticity of demand for a product is 2.5, then a price cut from $2.00 to $1.80 will Multiple Choice • increase the quantity demanded by about 2.5 percent. • decrease the quantity demanded by about 2.5 percent. • increase the quantity demanded by about 25 percent. • increase the quantity demanded by about 250 percent.

Q 1 2 3 4 5

Pa $3 2 1 0 0

Pb $5 4 3 2 1

The collective willingness of this society to pay for the third unit of this public good is Multiple Choice • $8. • $1. • $2. • $6.In • $4.

ECO 365T Wk 4 - Practice Knowledge Check (2021 New) Answer the question on the basis of the following marginal utility data for products X and Y. Assume that the prices of X and Y are $4 and $2, respectively, and that the consumer's income is $18. Units of X 1 20 1 2 16 2 3 12 3 4 8 4 5 6 5 6 4 6

Marginal Utility, X Units of Y 16 14 12 10 8 6

Marginal Utility, Y

Which of the following represents the demand schedule for X? Multiple Choice • P Qd $4 2 2 5 • P Qd $4 2 2 4 • P Qd $4 3 2 6 • P Qd $4 3 2 5

The individual demand curve that is implied by the budget constraints and indifference curves above will be Multiple Choice • perfectly elastic. • relatively elastic. • perfectly inelastic. • relatively inelastic.

A change in the slope of a budget line is solely the result of a change in Multiple Choice • consumer preferences. • the price of one good relative to the other. • money income. • the slope of the indifference curve that is tangent to the budget line.

If the marginal utility from consuming the fifth unit of a product is 6 and the total utility from all five units is 162, then the total utility from consuming four units must be Multiple Choice • 168. • 27. • 156. • 972.

The goal of a rational consumer is to maximize Multiple Choice • the quantities of all goods consumed. • the MU/P of all goods consumed. • marginal utility of all goods consumed. • total utility from all goods consumed.

In the face of rising costs, some firms reduce the quality of the goods they produce rather than maintain quality and increase prices. How would behavioral economics explain this strategy? Multiple Choice • People have an aversion to losses, and consumers are more likely to feel the loss of a price increase than a quality reduction. • Consumers are more tolerant of diminished quality because diminishing marginal utility causes people to get rid of goods sooner than in the past. • Firms are myopic in their decision making, with little regard for future profitability. • The availability heuristic will cause people to buy whatever is offered, regardless of the quality.

• Consumers are more interested in maximizing calories per dollar than health per dollar. • Restaurants lowered the prices of healthier items, signaling to consumers that they are less appealing. • Restaurants cut portion sizes on all items to reduce calorie counts.

Which of the following statements best reflects how a behavioral economist views individual decision making? Multiple Choice • Alex makes wrong decisions sometimes, but usually it is only when he has been given bad information. • Kara carefully calculates and weighs the expected benefits and costs of every option before making a decision. • Alyssa may appear to care about others, but even her seemingly altruistic behaviors are really about furthering her own interests. • Balin tries to make good, well-thought-out decisions, but his desire for utility in the present means that he often gives in to costly temptations.

Given the indifference curve and budget line above, this individual Multiple Choice • prefers B to A, but B costs more. • prefers B to A, and they cost the same. • is indifferent between A and B, but A costs less. • is indifferent between A and B, and they cost the same

When someone tries to "multitask" despite mounting evidence that multitasking is actually inefficient, this illustrates Multiple Choice • confirmation bias. • the framing effect. • hindsight bias. • the availability heuristic.

The fact that specific areas of the human brain deal with specific sensations and activities like hearing, speech, and breathing is referred to as brain Multiple Choice • heuristics. • specificity. • modularity.

•

myopia.

Refer to the graph. As the consumer equilibrium point shifts from point a to point b, Multiple Choice • the consumer's purchase of good 2 decreases even though its price stays constant. • the slope of the budget line decreases because the price of good 1 increased. • the marginal utility of good 1 increases and the marginal utility of good 2 decreases. • the consumer's total utility decreases.

One major consequence of the framing effect is that Multiple Choice • people may spend more to insure themselves against rare events but leave themselves uninsured against more common events. • someone could persist in pursuing a failed policy despite overwhelming evidence of the failure. • major business projects may create bottlenecks in the organization because they are not completed as scheduled. • decision makers may make faulty decisions if they are lulled by the environment in which they are making their decisions.

Which of the following sets of personal characteristics best reflects what behavioral economists assume about how people make decisions? Multiple Choice • People are irrational, are prone to systematic errors, have stable preferences, and care about fairness. • People are rational, adjust for errors, have stable preferences, and easily resist temptation. • People care deeply about fairness, eagerly and accurately calculate ways to help others, assess future and present options equally well, and resist temptations in their selflessness. • People have preferences that depend on context, avoid and are bad at computation, often give in to temptation, and are often selfless in their behavior.

Refer to the diagram. The equilibrium points shown in the diagram, along with the price change that produced the shift of the budget line from ab to ac, Multiple Choice • are consistent with a downsloping demand curve for product K. • imply that the consumer's money income has declined, but his or her real income has

increased. • imply consumer irrationality since the dearer product is being substituted for the cheaper product. • suggest that K is an inferior good.

Refer to the diagram. The budget line shift that moves the consumer's equilibrium position from point A to point B suggests Multiple Choice • an increase in the quantity of Y demanded. • a decrease in the quantity of Y demanded. • a leftward shift in the demand curve for Y. • a rightward shift in the demand curve for Y.

"Heuristics" used by the human brain are one of the reasons why Multiple Choice • our preferences are quite stable and consistent. • neoclassical economic models accurately predict human behavior. • human perception is susceptible to context and prone to error. • the utility-maximizing model of decision making is precise.

Which of the following statements is ? Multiple Choice • Marginal utility is the accumulation or summation of total utility. • Total utility is the accumulation or summation of marginal utility. • Total utility is the product of multiplying price times marginal utility. • Total utility is the change in marginal utility as quantity consumed increases.

Why do credit card companies typically require small minimum payment amounts on their customers' monthly credit card statements? Multiple Choice • Credit card companies are concerned that their customers will be put in financial distress if required to make higher payments. • Credit card companies want to promote faster repayment, and customers will be encouraged to pay more each month if they're able to pay well beyond the minimum. • Credit card companies want to increase profits by promoting slower repayment, and actual customer payments will be anchored by the smaller payment requirements. • Credit card companies actually charge the highest minimum payment they are allowed by law to charge.

If you receive a gift whose market price is $20, but you consider it to be worth only $10, then Multiple Choice • there is a $10, or 50 percent, value gain. • there may or may not be a value loss. • there is a $10, or 50 percent, value loss. • you can be relatively certain the giver was a sibling or other close relative. Answer the question on the basis of the following marginal utility data for products X and Y. Assume that the prices of X and Y are $4 and $2, respectively, and that the consumer's income is $18. Units of X 1 20 1 2 16 2 3 12 3 4 8 4 5 6 5 6 4 6

Marginal Utility, X Units of Y 16 14 12 10 8 6

Marginal Utility, Y

Which of the following represents the demand schedule for X? Multiple Choice • P Qd $4 2 2 5 • P Qd $4 2 2 4 • • P Qd $4 3 2 6 • P Qd $4 3 2 5

The tendency of people to discount long-term values more than they do near-term values—making many people "future blind"— is known in behavioral economics as Multiple Choice • myopia. • anchoring. • framing effects. • time inconsistency.

Thea committed a traffic violation that resulted in an accident. She learns first that the violation will result in a $500 fine; she then learns that she will have to pay another $500 for damage caused in the accident. According to prospect theory, Multiple Choice • she will suffer as much disutility from paying for the accident damage as she does from

paying the fine. • she will suffer less disutility from paying for the accident damage than from paying the fine. • she will suffer more disutility from paying for the accident damage than from paying the fine. • she will feel less disutility from paying $1,000 than she would receive positive utility from receiving $1,000.

Refer to the graph. The shift of the budget line from AB to CD is consistent with Multiple Choice • a decrease in the consumer’s money income. • a decrease in the prices of both Goods 1 and 2. • an increase in the prices of both Goods 1 and 2. • a decrease in the price of Good 1, and an increase in the price of Good 2.

Which of the following do behavioral economists blame for why many households in sunny areas resist solar panels because they focus on the upfront installation costs instead of the larger longrun benefits that accrue from the solar panels? Multiple Choice • framing effects • anchoring • myopia • time inconsistency

The facts that many people give to charity and that most people obey the law regardless of whether someone is watching or not, are field evidence for Multiple Choice

• • • •

the invisible hand. fairness. self-interest. cognitive biases.

The dictator game and ultimatum game are experiments that have provided field evidence for Multiple Choice • the invisible hand. • fairness. • self-interest. • cognitive biases.

Refer to the diagram. Marginal utility Multiple Choice • increases at an increasing rate. • becomes negative after consuming 4 units of output. • is found by dividing total utility by the number of units purchased. • cannot be calculated from the total utility information.

"Heuristics" used by the human brain refer to the Multiple Choice • ability of the brain to make sophisticated and accurate mental processes. • shortcuts that the brain uses in order to process information. • elements in the brain that lead to consistent interpretation of all visual information. • mental processes that burn and often waste a lot of energy.

Which of the following is not an implication of hardwired heuristics? Multiple Choice • Getting people to make positive behavioral changes is about putting them in situations where heuristics kick in and lead them to the desired outcome. • Getting people to make better decisions is simply a matter of providing more information and more options. • People who know and understand hardwired tendencies of others can take advantage of situations. • Even when confronted with irrefutable information that a behavior is detrimental, people still may not change what they're doing.

Assume initially that the price of X (the quantity of which is measured on the horizontal axis) is $9 and the price of Y (the quantity of which is measured on the vertical axis) is $4. If the price of X now declines to $6, the budget line will Multiple Choice • be unaffected. • shift outward on the vertical axis. • shift inward on the horizontal axis. • shift outward on the horizontal axis.

If the marginal utility from consuming the fifth unit of a product is 6 and the total utility from all five units is 162, then the total utility from consuming four units must be

Multiple Choice • 168. • 27. • 156. • 972.

(Consider This) When the federal government started requiring restaurants to print calorie counts next to menu items, some people increased their consumption of higher-calorie items. Which of the following best explains this phenomenon? Multiple Choice • Consumers at restaurants are systematically irrational. • Consumers are more interested in maximizing calories per dollar than health per dollar. • Restaurants lowered the prices of healthier items, signaling to consumers that they are less appealing. • Restaurants cut portion sizes on all items to reduce calorie counts.

ECO 365T Wk 4 - Apply Quiz (2021 New) A child is given $2.50 of pocket money to be spent on either hard candies or chocolates. Chocolates cost 10 cents and hard candies 50 cents each. The marginal utilities derived from each product are as shown in the following table. Number of Items 1 60 150 2 50 140 3 40 120 4 30 100 5 20 80 6 10 70 7 5 50 8 0 20

MU of Chocolates MU of Hard Candies

Which combination would give the child the maximum utility out of spending $2.50? Multiple Choice • 7 chocolates and 3 hard candies • 8 chocolates and 2 hard candies • 5 chocolates and 4 hard candies • 4 chocolates and 4 hard candies

Suppose Faith and Mickey are playing both dictator and ultimatum games. Faith is the dictator/proposer and has $80 to allocate. Based on repeated experiments of the dictator and

ultimatum games, what payouts to Faith would be most consistent with the findings of behavioral economists? Multiple Choice • Faith receives $80 from the dictator game and $60 from the ultimatum game. • Faith receives $40 from the dictator game and $34 from the ultimatum game. • Faith receives $40 from the dictator game and $40 from the ultimatum game. • Faith receives $47 from the dictator game and $41 from the ultimatum game.

Suppose that Ms. Thomson is currently exhausting her money income by purchasing 10 units of A and 8 units of B at prices of $2 and $4, respectively. The marginal utility of the last units of A and B are 16 and 24, respectively. These data suggest that Ms. Thomson Multiple Choice • has preferences that are at odds with the principle of diminishing marginal utility. • considers A and B to be complementary goods. • should buy less A and more B. • should buy less B and more A.

If the marginal utility from consuming the fourth unit of a product is 20 and the total utility from all four units is 126, then the total utility from consuming three units must be Multiple Choice • 146. • 42. • 106. • 504.

Suppose Ryan and Rita were randomly shown the numbers 49 and 47, respectively, and then asked to estimate the price of an item about which they have relatively limited knowledge. According to findings from behavioral economics, we would expect Multiple Choice • Ryan to estimate a price higher than what Rita would estimate. • Ryan to estimate a price about the same as what Rita would estimate. • Ryan to estimate a price lower than what Rita would estimate. • the randomly shown numbers to have no influence on their estimates.

Answer the question on the basis of the following total utility data for products L and M. Assume that the prices of L and M are $3 and $4, respectively, and that the consumer's income is $25 Units of L 1 9 1 2 15 2

Total Utility 16 28

Units of M

Total Utility

3 4 5

18 3 20 4 21 5

36 40 42

How many units of the two products will the rational consumer purchase? Multiple Choice • 5 of L and 2 of M • 1 of L and 5 of M • 4 of L and 3 of M • 3 of L and 4 of M

Mrs. Arnold is spending all her money income by buying bottles of soda and bags of pretzels in such amounts that the marginal utility of the last bottle is 60 utils and the marginal utility of the last bag is 30 utils. The prices of soda and pretzels are $0.6 per bottle and $0.4 per bag, respectively. It can be concluded that Multiple Choice • the two commodities are substitute goods. • Mrs. Arnold should spend more on pretzels and less on soda. • Mrs. Arnold should spend more on soda and less on pretzels. • Mrs. Arnold is buying soda and pretzels in the utility-maximizing amounts. The first Pepsi yields Craig 12 units of utility and the second yields him an additional 15 units of utility. His total utility from three cans of Pepsi is 36 units of utility. The marginal utility of the third Pepsi is Multiple Choice • 21 units of utility. • 27 units of utility. • 9 units of utility. • 36 units of utility.

According to behavioral economics research, in which of the following cases would we expect a person to experience no net change in their utility? Multiple Choice • When the person gains $100 and loses $100. • When the person gains $250 and loses $100. • When the person gains $100 and loses $250. • When the person gains $100 while everyone else gains $200.

Parker’s shares of stock in ACME Corporation lost $10 in value, but his shares in XYZ, Inc. gained $18. According to behavioral economics research, how would Parker feel as a result of these changes?

Multiple Choice • Parker would feel better off. • Parker would feel worse off. • Parker would feel about the same. • Behavioral economics research suggest that the intensity of losses versus gains follows no measurable pattern.

Tony ran a marathon in 4 hours; his performance last year on the same course was 4.5 hours. Stacey ran the same marathon in 4 hours; her previous time was 4.4 hours. According to behavioral economists, and based solely on the information given, we would expect Multiple Choice • Tony to feel bad about his performance, and Stacey to feel good about hers. • Tony to feel good about his performance, and Stacey to feel good about hers. • Tony to feel bad about his performance, and Stacey to feel bad about hers. • Tony to feel good about his performance, and Stacey to feel bad about hers.

Suppose a consumer has an income of $24, the price of A is $3, and the price of B is $1. Which of the following combinations is on the consumer's budget line? Multiple Choice • 4A and 10B • 2A and 18B • 8A and 24B • 5A and 7B

Suppose Justine and Sarah are playing the ultimatum game. Justine is the proposer, has $250 to allocate, and Sarah can accept or reject the offer. Based on repeated experiments of the ultimatum game, what combination of payouts to Justine and Sarah is most likely to occur? Multiple Choice • $250 for Justine and $0 for Sarah • $125 for Justine and $125 for Sarah • $150 for Justine and $100 for Sarah • $0 for Justine and $250 for Sarah

Number of Units of Commodity 3 36 4 80 5 150 6 252 7 350 8 440

Total Utility

Refer to the table. What is the marginal utility of the eighth unit? Multiple Choice • 55 • 90 • 440 • 404

Suppose Faith and Mickey are playing both dictator and ultimatum games. Faith is the dictator/proposer and has $20 to allocate. Based on repeated experiments of the dictator and ultimatum games, what payouts to Mickey would be most consistent with the findings of behavioral economists? Multiple Choice • Mickey receives $0 from the dictator game and $2 from the ultimatum game. • Mickey receives $10 from the dictator game and $8 from the ultimatum game. • Mickey receives $10 from the dictator game and $10 from the ultimatum game. • Mickey receives $8 from the dictator game and $10 from the ultimatum game.

Assume that a consumer purchases a combination of products Y and Z and that the MUy/Py = 8 and MUz/Pz = 5. To maximize utility, without spending more money, the consumer should Multiple Choice • purchase less of Y and more of Z. • purchase more of Y and less of Z. • purchase more of both Y and Z. • make no change in the quantities Y and Z.

The table shows an indifference schedule for several combinations of X and Y. Combination Quantity of X Quantity of Y a 20 1 b 16 2 c 12 3 d 10 4 e 9 5 Approximately how much of Y is the consumer willing to give up to obtain the twelfth unit of X? Multiple Choice • 2 • 1/2 • 4 • 1/4

A child is given $4 of pocket money to be spent on either hard candies or chocolates. Chocolates cost 40 cents and hard candies 50 cents each. The marginal utilities derived from each product are as shown in the following table. Number of Items 1 60 150 2 50 140 3 40 120 4 30 100 5 20 80 6 10 70 7 5 50 8 0 20

MU of Chocolates MU of Hard Candies

If the child buys either chocolates or hard candies one piece at a time, what will be his first two purchases? Multiple Choice • a hard candy, followed by another hard candy • a hard candy, followed by a chocolate • a chocolate, followed by a hard candy • a chocolate, followed by another chocolate

Ben is exhausting his money income consuming products A and B in such quantities that MUa/Pa = 8 and MUb/Pb = 6. Ben should purchase Multiple Choice • less of A and more of B. • less of B and more of A. • more of both A and B. • less of both A and B.

The income of a consumer is $40, the price of A is $4, and the price of B is $6. If the quantity of A is measured vertically, then the slope of the budget line is Multiple Choice • −1.5. • −0.5. • −0.67. • −2.5. If a consumer has an income of $24, the price of X is $2, and the price of Y is $3, what is the

maximum quantity of X the consumer is able to purchase? Multiple Choice • 6 • 24 • 8 • 12

The table shows an indifference schedule for several combinations of X and Y. Combination Quantity of X Quantity of Y a 20 1 b 16 2 c 12 3 d 10 4 e 9 5 How much of X is the consumer willing to give up to obtain the second unit of Y? Multiple Choice • 2 • 4 • 6 • 7

A child is given $4.00 of pocket money to be spent on either hard candies or chocolates. Chocolates cost 40 cents and hard candies 80 cents each. The marginal utilities derived from each product are as shown in the following table. Number of Items 1 60 150 2 50 140 3 40 120 4 30 100 5 20 80 6 10 70 7 5 50 8 0 20

MU of Chocolates MU of Hard Candies

Which combination would give the child the maximum utility out of spending $4.00? Multiple Choice • 6 chocolates and 2 hard candies • 4 chocolates and 3 hard candies • 2 chocolates and 4 hard candies

•

0 chocolates and 5 hard candies

Suppose a consumer has an income of $16, the price of A is $2, and the price of B is $1. Which of the following combinations is on the consumer's budget line? Multiple Choice • 4A and 9B • 5A and 6B • 6A and 6B • 3A and 8B

Rosa received a corgi pillow as a raffle prize; she would have been willing to pay $20 to buy it herself. Based on the endowment effect, we would expect Rosa to be willing to sell the pillow Multiple Choice • for some amount less than $20. • only if she is offered more than $20. • for the $20 she would have been willing to pay for the pillow. • under no circumstances whatsoever.

The table shows an indifference schedule for several combinations of X and Y. Combination Quantity of X Quantity of Y a 20 1 b 16 2 c 12 3 d 10 4 e 9 5 In moving from combination a to b, the consumer Multiple Choice • gets 8 units of X for 2 units of Y. • gets 1 unit of X for 4 units of Y. • gives up 4 units of X for 2 units of Y. • gives up 4 units of X for 1 unit of Y.

Assume that a consumer purchases a combination of products Y and Z and that the MUy/Py = 30/2 and MUz/Pz = 45/3. To maximize utility, without spending more money, the consumer should Multiple Choice • purchase less of Y and more of Z. • purchase more of Y and less of Z.

• •

purchase more of both Y and Z. make no change in the quantities Y and Z.

The table shows an indifference schedule for several combinations of X and Y. Combination Quantity of X Quantity of Y a 20 1 b 16 2 c 12 3 d 10 4 e 9 5 Approximately how much of Y is the consumer willing to give up to obtain the twentieth unit of X? Multiple Choice • 4 • 1/4 • 2 • 1/2

If you purchase a gift worth $12 for your sister, but your sister would be willing to pay only $8 if she bought the item for herself, then the Multiple Choice • total utility of the gift is $20. • total utility of the gift is $4. • marginal utility of the gift is $4. • loss of value in the gift is $4.

A child is given $4 of pocket money to be spent on either hard candies or chocolates. Chocolates cost 20 cents and hard candies 95 cents each. The marginal utilities derived from each product are as shown in the following table. Number of Items 1 60 150 2 50 140 3 40 120 4 30 100 5 20 80 6 10 70 7 5 50 8 0 20

MU of Chocolates MU of Hard Candies

If the child buys either chocolates or hard candies one piece at a time, what will be his first two purchases? Multiple Choice • a hard candy, followed by another chocolate • a hard candy, followed by a hard candy • a chocolate, followed by a hard candy • a chocolate, followed by another chocolate

Answer the question on the basis of the following total utility data for products L and M. Assume that the prices of L and M are $6 and $2, respectively, and that the consumer's income is $22 Units of L 1 9 1 2 15 2 3 18 3 4 20 4 5 21 5

Total Utility 16 28 36 40 42

Units of M

Total Utility

What level of total utility does the rational consumer realize in equilibrium? Multiple Choice • 186 utils • 49 utils • 57 utils • 63 utils

Answer the question on the basis of the following two schedules, which show the amounts of additional satisfaction (marginal utility) that a consumer would get from successive quantities of products J and K. Units of J MUj Units of K 1 56 1 32 2 48 2 28 3 32 3 24 4 24 4 20 5 20 5 12 6 16 6 10 7 12 7 8

MUk

What level of total utility is realized from the equilibrium combination of J and K, if the consumer has a money income of $36 and the prices of J and K are $4 and $4, respectively? Multiple Choice

• • • •

238 utils 280 utils 284 utils 40 utils

Tony ran a marathon in 4.5 hours; his performance last year on the same course was 4 hours. Stacey ran the same marathon in 4 hours; her previous time was 4.4 hours. According to behavioral economists, and based solely on the information given, we would expect Multiple Choice • Tony to feel good about his performance, and Stacey to feel good about hers. • Tony to feel bad about his performance, and Stacey to feel good about hers. • Tony to feel bad about his performance, and Stacey to feel bad about hers. • Tony to feel good about his performance, and Stacey to feel bad about hers.

The first Pepsi yields Craig 12 units of utility and the second yields him an additional 15 units of utility. His total utility from three cans of Pepsi is 36 units of utility. The marginal utility of the third Pepsi is Multiple Choice • 21 units of utility. • 27 units of utility. • 9 units of utility. • 36 units of utility.

A consumer is in equilibrium and is spending income in such a way that the marginal utility of product X is 40 units and that of Y is 16 units. If the unit price of X is $5, then the price of Y must be Multiple Choice • $1 per unit. • $2 per unit. • $3 per unit. • $4 per unit.

The table shows the utility schedule for a consumer of candy bars. Number Consumed Total Utility 0 0 1 5 2 11 3 18 4 24

5 6 7

30 35 32

Based on the data in the table, you can conclude that the Multiple Choice • marginal utility of the sixth unit is 210. • marginal utility of the third unit is 18. • total utility of 2 units is 16. • total utility of 5 units is 30.

Assume that a consumer purchases a combination of product A and product B such that the MUa/Pa = 4 and MUb/Pb = 6. To maximize utility without spending more money, the consumer should Multiple Choice • purchase more of product A and less of product B.In • purchase less of product A and more of product B. • purchase more of both product A and product B. • make no change in purchases of products A and B.

If the marginal utility from consuming the ninth unit of a product is 3 and the total utility from all nine units is 115, then the total utility from consuming eight units must be Multiple Choice • 118.In • 38. • 112. • 1,035.

Suppose Justine and Sarah are playing the dictator game. Justine is the dictator and has $100 to allocate. Based on repeated experiments of the dictator game, what is the least likely outcome for

this game? Multiple Choice • $100 for Justine and $0 for Sarah.In • $58 for Justine and $42 for Sarah. • $50 for Justine and $50 for Sarah. • $0 for Justine and $100 for Sarah.

ECO 365T Wk 5 - Practice Knowledge Check (2021 New) Refer to the provided graph showing the marginal product (MPL) and the average product of labor (APL). At which quantity of labor employed is total product maximized? Multiple Choice • A • B • C • D (Consider This) Which of the following is an example of a sunk cost, as it relates to a firm? Multiple Choice • an expenditure on raw materials used in the production process • an expenditure on a nonrefundable, nontransferable airline ticket • an expenditure to buy a delivery van • an expenditure for a new factory

If the total cost of 20 units of a product is $20, and the total cost of 21 units is $21, then from 20 to 21 units of product the Multiple Choice • marginal cost is decreasing. • marginal cost equals average total cost. • marginal cost equals average variable cost. • average total cost equals average variable cost.

Refer to the graph. Which one of the following would cause a move from point d to point e along short-run average total cost curve ATC2? Multiple Choice • diminishing marginal returns • an increase in the wage rate • a decrease in the wage rate

•

increasing marginal returns

Answer the question on the basis of the following output data for a firm. Assume that the amounts of all nonlabor resources are fixed. Number of WorkersUnits of Output 0 0 1 40 2 90 3 126 4 150 5 165 6 180 What is the firm’s average product when three workers are hired? Multiple Choice • 18 units of output. • 36 units of output. • 42 units of output. • 21 units of output. In the short run, total output in an industry Multiple Choice • is fixed at a specific level. • can vary as the result of using a fixed amount of plant and equipment more or less intensively. • may be altered by varying the size of plant and equipment which now exist in the industry. • can vary as the result of new firms entering or leaving the industry.

Refer to the short-run production and cost data. In Figure A curve (1) is Multiple Choice • total product and curve (2) is average product. • total product and curve (2) is marginal product. • average product and curve (2) is marginal product. • marginal product and curve (2) is average product.

At what point does marginal product equal average product? Multiple Choice

• • • •

where average product is equal to its minimum value where average product is equal to its maximum value where marginal product is equal to its minimum value where marginal product is equal to its maximum value

In the short run, Multiple Choice • TVC will increase for a time at a diminishing rate, but then beyond some point will increase at an increasing rate. • TVC will increase for a time at an increasing rate, but then beyond some point will increase at a diminishing rate. • TVC will increase by the same absolute amount for each additional unit of output produced. • one cannot generalize concerning the behavior of TVC as output increases.

Use the following data to answer the question. The letters A, B, and C designate three successively larger plant sizes. Output 10 $ 6 20 5 30 4 40 5 50 7 60 10 70 14 80 19 90 25 100 32

ATC-A ATC-B $ 13 $ 44 9 35 6 27 4 20 3 14 4 11 5 8 7 6 10 5 16 7

ATC-C

In the long run, the firm should use plant size "A" for Multiple Choice • all possible levels of output. • 10 to 30 units of output. • 30 to 60 units of output. • all outputs greater than or equal to 40.

Refer to the diagram. The vertical distance between ATC and AVC reflects Multiple Choice

• • • •

the law of diminishing returns. the average fixed cost at each level of output. marginal cost at each level of output. the presence of economies of scale.

If a technological advance reduces the amount of variable resources needed to produce any level of output, then the Multiple Choice • AVC curve will shift upward. • MC curve will shift downward. • ATC curve will shift upward. • AFC curve will shift downward.

In comparing the changes in TVC and TC associated with an additional unit of output, we find that Multiple Choice • no generalization about the changes in TC and TVC can be made. • the changes in TC and TVC are equal. • the change in TC is greater than the change in TVC. • the change in TVC is greater than the change in TC.

At an output of 1,000 units per year, a firm's variable costs are $5,000 and its average fixed costs are $3. Its total costs per year are Multiple Choice • $10,000. • $8,000. • $6,000. • $5,000.

At the Amarillo Piano Company, the average product of labor stays constant at 5, regardless of how much labor is employed. This implies that Multiple Choice • there are no fixed costs. • this firm can never maximize its profits. • the marginal product of labor is constant. • labor exhibits diminishing marginal returns.

Refer to the diagram, where variable inputs of labor are being added to a constant amount of property resources. Average variable cost will be at a minimum when the firm is hiring Multiple Choice • Q3 workers. • Q2 workers. • Q1 workers. • more than Q3 workers.

The vertical distance between a firm's ATC and AVC curves represents Multiple Choice • AFC, which increases as output increases. • AFC, which decreases as output increases. • marginal costs, which decrease as output decreases. • marginal costs, which increase as output increases.

Which of the following is a short-run adjustment? Multiple Choice • A local bakery hires two additional bakers. • Six new firms enter the plastics industry. • The number of farms in the United States declines by 5 percent. • BMW constructs a new assembly plant in South Carolina.

Harvey quit his job at State University, where he earned $45,000 a year. He figures his entrepreneurial talent or forgone entrepreneurial income to be $5,000 a year. To start the business, he cashed in $100,000 in bonds that earned 10 percent interest annually to buy a software company, Extreme Gaming. In the first year, the firm sold 11,000 units of software at $75 for each unit. Of the $75 per unit, $55 goes for the costs of production, packaging, marketing, employee wages and benefits, and rent on a building. The economic profits of Harvey's firm in the first year were Multiple Choice • $220,000. • $60,000. • $160,000. • $825,000.

Assume that the only variable resource used to produce output is labor. Amount of Labor

Total Product

1 2 3 4 5 6

6 16 24 30 34 36

Refer to the provided table. With diminishing marginal returns, if the firm hires seven units of labor, which of the following numbers would most probably be the total product? Multiple Choice • 40 • 39 • 42 • 37 If a technological advance reduces the amount of variable resources needed to produce any level of output, then the Multiple Choice • AVC curve will shift upward. • MC curve will shift downward. • ATC curve will shift upward. • AFC curve will shift downward.

Use the following data to answer the question. The letters A, B, and C designate three successively larger plant sizes. Output 10 $ 6 20 5 30 4 40 5 50 7 60 10 70 14 80 19 90 25 100 32

ATC-A ATC-B $ 13 $ 44 9 35 6 27 4 20 3 14 4 11 5 8 7 6 10 5 16 7

ATC-C

In the long run, the firm should use plant size "A" for Multiple Choice • all possible levels of output. • 10 to 30 units of output. • 30 to 60 units of output.

•

all outputs greater than or equal to 40.

Input (Workers) 0 0 50 0 1 8 50 40 2 20 50 80 3 28 50 120 4 35 50 5 41 50 200

Output

TFC ($) TVC ($) Total Cost ($)

90 170 210 250

Refer to the provided table. The average total cost of producing 20 units of output is Multiple Choice • $4.00. • $4.50. • $6.50. • $8.50.

(Consider This) Which of the following is an example of a sunk cost, as it relates to a firm? Multiple Choice • an expenditure on raw materials used in the production process • an expenditure on a nonrefundable, nontransferable airline ticket • an expenditure to buy a delivery van • an expenditure for a new factory

The law of diminishing returns describes the Multiple Choice • relationship between total costs and total revenues. • profit-maximizing position of a firm. • relationship between resource inputs and product outputs in the short run. • relationship between resource inputs and product outputs in the long run.

In the short run, the Sure-Screen T-Shirt Company is producing 500 units of output. Its average variable costs are $2.00 and its average fixed costs are $.50. The firm's total costs Multiple Choice • are $2.50. • are $1,250. • are $750. • are $1,100.

The reason the marginal cost curve eventually increases as output increases for the typical firm is because of Multiple Choice • diseconomies of scale. • diminishing marginal utility. • diminishing marginal returns. • increasing opportunity cost.

Assume that the only variable resource used to produce output is labor. Amount of Labor 1 6 2 16 3 24 4 30 5 34 6 36

Total Product

Refer to the diagram. At output level Q, average fixed cost Multiple Choice • is equal to EF. • is equal to QE. • is measured by both QF and ED. • cannot be determined from the information given.

The fixed cost of the firm is $500. The firm's total variable cost is indicated in the table. Output Total Variable Cost 1 $ 400 2 720 3 1,000 4 1,400 5 2,000 6 3,600 The average variable cost of the firm when 5 units of output are produced is Multiple Choice • $100. • $200. • $300. • $400.

Refer to the diagram. Minimum efficient scale Multiple Choice • occurs at some output greater than Q3. • is achieved at Q1. • is achieved at Q3. • cannot be identified in this diagram.

At what point does marginal product equal average product? Multiple Choice • where average product is equal to its minimum value • where average product is equal to its maximum value • where marginal product is equal to its minimum value •

Refer to the diagram. At output level Q, total variable cost is Multiple Choice • 0BEQ. • BCDE. • 0CDQ. • 0AFQ.

Diseconomies of scale occur mainly because Multiple Choice • of the law of diminishing returns. • firms in an industry must be relatively large in order to use the most efficient production techniques. • of the inherent difficulties involved in managing and coordinating a large business enterprise. • the short-run average total cost curve rises when marginal product is greater than average total cost.

A firm doubles the quantity of all resources it employs and, as a result, output doubles. Which of the following is ? Multiple Choice • There are increasing returns to scale. • The long-run average total cost curve is flat. • The law of diminishing returns is proven wrong. • The example is for the short-run rather than the long-run.

ECO 365T Wk 5 - Apply Summative Assessment Quiz (2021 New) Answer the question on the basis of the following information. Number of WorkersTotal Product Marginal Product 0 0 ---

1 2 3 4 5 6

8 10

25 30 3 34

The average product when there are two workers Multiple Choice • is 10. • is 9. • is 28. • cannot be determined from the information given. The following is cost information for the Creamy Crisp Donut Company. Entrepreneur's potential earnings as a salaried worker = $40,000 Annual lease on building = $25,000 Annual revenue from operations = $420,000 Payments to workers = $150,000 Utilities (electricity, water, disposal) costs = $8,000 Value of entrepreneur's talent in the next best entrepreneurial activity = $80,000 Entrepreneur's forgone interest on personal funds used to finance the business = $6,000 Creamy Crisp's total revenues exceed its total costs, including a normal profit, by Multiple Choice • $309,000. • $183,000. • $237,000. • $111,000. Plant sizes get larger as you move from ATC-1 to ATC-4. Output 1,500 2,000 2,500 3,000 3,500 4,000 4,500 5,000 5,500 6,000

ATC-1 $ 10 15 8 12 9 10 12 8 15 6 18 10 20 12 24 15 29 19 35 25

ATC-2 ATC-3 $ 20 $ 30 17 25 15 20 13 18 11 16 9 14 7 12 11 10 13 8 15 9

ATC-4

In the long run, the firm should use plant size ATC-3 for what level of output? Multiple Choice • less than 3,000 • 3,000 to 3,500 • 4,000 to 4,500 • 5,000 to 5,500 Use the following data to answer the question. Inputs of Labor 0 0 1 10 2 22 3 36 4 48 5 58 6 66 7 63

Total Product

The average product (AP) when three units of labor are hired is Multiple Choice • 14 • 12. • 108. • 28. Answer the question on the basis of the following output data for a firm. Assume that the amounts of all nonlabor resources are fixed. Number of WorkersUnits of Output 0 0 1 50 2 90 3 125 4 150 5 170 6 165 The marginal product of the sixth worker is Multiple Choice • 165 units of output. • 20 units of output.

• −5 units of output. • −15 units of output. Harvey quit his job at State University, where he earned $65,000 a year. He figures his entrepreneurial talent or forgone entrepreneurial income to be $5,000 a year. To start the business, he cashed in $70,000 in bonds that earned 10 percent interest annually to buy a software company, Extreme Gaming. In the first year, the firm sold 20,000 units of software at $50 for each unit. Of the $50 per unit, $45 goes for the costs of production, packaging, marketing, employee wages and benefits, and rent on a building. The total revenues of Harvey's firm in the first year were Multiple Choice • $100,000. • $23,000. • $900,000. • $1,000,000. Assume that in the short run a firm is producing 500 units of output, has average total costs of $300, and has average variable costs of $220. The firm's total variable costs are. Multiple Choice • $110,000. • $150,000. • $80. • $40,000. The table shows three short-run cost schedules for three plants of different sizes that a firm might build in the long run. Plant 1 Plant 2 Plant 3 Output ATC Output ATC Output 10 $ 10 10 $ 15 10 $ 20 20 9 20 10 20 15 30 8 30 7 30 10 40 9 40 10 40 8 50 10 50 14 50 9

ATC

What is the long-run average cost of producing 20 units of output? Multiple Choice • $9 • $10 • $15 • $34

The following is cost information for the Creamy Crisp Donut Company. Entrepreneur's potential earnings as a salaried worker = $60,000 Annual lease on building = $30,000 Annual revenue from operations = $250,000 Payments to workers = $100,000 Utilities (electricity, water, disposal) costs = $8,000 Value of entrepreneur's talent in the next best entrepreneurial activity = $80,000 Entrepreneur's forgone interest on personal funds used to finance the business = $6,000 Creamy Crisp's economic profit is Multiple Choice • $284,000. • $138,000. • $112,000. • −$34,000. Answer the question on the basis of the following cost data. Output Total Cost 0 $ 24 1 33 2 41 3 48 4 54 5 61 6 69 The average variable cost of producing 6 units of output is Multiple Choice • $7.50. • $45. • $11.50. • $4.00. Answer the question on the basis of the following cost data. Output Average Fixed CostAverage Variable Cost 1 $ 50.00 $ 100.00 2 25.00 80.00 3 16.67 66.67 4 12.50 65.00 5 10.00 68.00

6 7 8

8.37 73.33 7.14 80.00 6.25 87.50

The marginal cost of the third unit of output is Multiple Choice • $16.67. • $200.00. • $40.00. • $250.00. Answer the question on the basis of the following output data for a firm. Assume that the amounts of all nonlabor resources are fixed. Number of WorkersUnits of Output 0 0 1 30 2 70 3 122 4 165 5 190 6 210 Diminishing marginal returns become evident with the addition of the Multiple Choice • first worker. • third worker. • fourth worker. • sixth worker. Harvey quit his job at State University, where he earned $65,000 a year. He figures his entrepreneurial talent or forgone entrepreneurial income to be $5,000 a year. To start the business, he cashed in $70,000 in bonds that earned 10 percent interest annually to buy a software company, Extreme Gaming. In the first year, the firm sold 20,000 units of software at $50 for each unit. Of the $50 per unit, $45 goes for the costs of production, packaging, marketing, employee wages and benefits, and rent on a building. The implicit costs of Harvey's firm in the first year were Multiple Choice • $100,000.

• • •

$77,000. $23,000. $1,000,000.

Round Things, Inc.'s production process exhibits constant returns to scale. Currently their long-run average cost is $20/unit. If Round Things doubles its use of all inputs, its new long-run average total cost will be Multiple Choice • Less than $20/unit. • $20/unit. • greater than $40/unit. • greater than $20/unit but less than $40/unit. The following is cost information for the Creamy Crisp Donut Company. Entrepreneur's potential earnings as a salaried worker = $40,000 Annual lease on building = $25,000 Annual revenue from operations = $420,000 Payments to workers = $150,000 Utilities (electricity, water, disposal) costs = $8,000 Value of entrepreneur's talent in the next best entrepreneurial activity = $80,000 Entrepreneur's forgone interest on personal funds used to finance the business = $6,000 If, other things equal, Creamy Crisp's revenue fell to $309,000, Multiple Choice • its implicit costs would exceed its economic costs. • it would earn a normal profit but not an economic profit. • it would suffer an economic loss. • its accounting profit would fall to $0. Answer the question on the basis of the following cost data. Output Average Fixed CostAverage Variable Cost 1 $ 50.00 $ 100.00 2 25.00 80.00 3 16.67 66.67 4 12.50 65.00 5 10.00 68.00 6 8.37 73.33 7 7.14 80.00 8 6.25 87.50 The total cost of six units of output is Multiple Choice

• $440.00. • $81.70. • $490.00. • $100.00. The following is cost information for the Creamy Crisp Donut Company. Entrepreneur's potential earnings as a salaried worker = $55,000 Annual lease on building = $23,000 Annual revenue from operations = $320,000 Payments to workers = $130,000 Utilities (electricity, water, disposal) costs = $8,000 Value of entrepreneur's talent in the next best entrepreneurial activity = $80,000 Entrepreneur's forgone interest on personal funds used to finance the business = $6,000 Creamy Crisp's total economic costs are Multiple Choice • $302,000. • $161,000. • $18,000. • $167,000. The following is cost information for the Creamy Crisp Donut Company. Entrepreneur's potential earnings as a salaried worker = $50,000 Annual lease on building = $22,000 Annual revenue from operations = $380,000 Payments to workers = $120,000 Utilities (electricity, water, disposal) costs = $8,000 Value of entrepreneur's talent in the next best entrepreneurial activity = $80,000 Entrepreneur's forgone interest on personal funds used to finance the business = $6,000 Creamy Crisp's explicit costs are Multiple Choice • $286,000. • $150,000. • $94,000. • $156,000. Assume that in the short run a firm is producing 1,000 units of output, has average total costs of

$100, and has average variable costs of $75. The firm's total fixed costs are. Multiple Choice • $25,000. • $40. • $0.03. • $25. Answer the question on the basis of the following output data for a firm. Assume that the amounts of all nonlabor resources are fixed. Number of WorkersUnits of Output 0 0 1 45 2 100 3 160 4 230 5 320 6 400 Average product is at a maximum when Multiple Choice • two worker(s) is/are hired. • five worker(s) is/are hired. • six worker(s) is/are hired. • four worker(s) is/are hired.

Answer the question on the basis of the following cost data. Output Total Cost 0 $ 24 1 33 2 41 3 48 4 54 5 61 6 69 The marginal cost of producing the sixth unit of output is Multiple Choice • $12.00. • $8. • $24.00.

•

$45.

The following is cost information for the Creamy Crisp Donut Company. Entrepreneur's potential earnings as a salaried worker = $40,000 Annual lease on building = $25,000 Annual revenue from operations = $420,000 Payments to workers = $150,000 Utilities (electricity, water, disposal) costs = $8,000 Value of entrepreneur's talent in the next best entrepreneurial activity = $80,000 Entrepreneur's forgone interest on personal funds used to finance the business = $6,000 Creamy Crisp's total economic costs are Multiple Choice • $309,000. • $183,000 • $111,000. • $189,000.

Answer the question on the basis of the following cost data. Output Average Fixed CostAverage Variable Cost 1 $ 50.00 $ 100.00 2 25.00 80.00 3 16.67 66.67 4 12.50 65.00 5 10.00 68.00 6 8.37 73.33 7 7.14 80.00 8 6.25 87.50 The total cost of six units of output is Multiple Choice • $440.00. • $81.70. • $490.00. • $100.00.

The following is cost information for the Creamy Crisp Donut Company. Entrepreneur's potential earnings as a salaried worker = $40,000 Annual lease on building = $25,000 Annual revenue from operations = $420,000 Payments to workers = $150,000 Utilities (electricity, water, disposal) costs = $8,000 Value of entrepreneur's talent in the next best entrepreneurial activity = $80,000 Entrepreneur's forgone interest on personal funds used to finance the business = $6,000 Creamy Crisp's implicit costs, including a normal profit, are Multiple Choice • $126,000. • $183,000. • $111,000. • $189,000.

Answer the question on the basis of the following cost data. Output Total Cost 0 $ 24 1 33 2 41 3 48 4 54 5 61 6 69 The average total cost of producing 6 units of output is Multiple Choice • $7.5. • $4. • $8.In • $11.5.

The ABC Corporation decreases all of its inputs by 25 percent and finds that its output falls by 21 percent. This means that initially it was producing Multiple Choice • in the range of diseconomies of scale. • in the range of economies of scale. • where AP is less than MP. • in the range of constant returns to scale.

Assume that in the short run a firm is producing 200 units of output, has average total costs of $250, and has average variable costs of $150. The firm's total variable costs are. Multiple Choice • $30,000. • $50,000. • $100. • $20,000. Suppose that you could either prepare your own tax return in 8 hours or hire a tax specialist to prepare it for you in 2 hours. You value your time at $20.00 an hour; the tax specialist will charge you $45 an hour. The opportunity cost of preparing your own tax return is Multiple Choice • $250. • $45. • $90. • $160.

The following is cost information for the Creamy Crisp Donut Company. Entrepreneur's potential earnings as a salaried worker = $55,000 Annual lease on building = $23,000 Annual revenue from operations = $320,000 Payments to workers = $130,000 Utilities (electricity, water, disposal) costs = $8,000 Value of entrepreneur's talent in the next best entrepreneurial activity = $80,000 Entrepreneur's forgone interest on personal funds used to finance the business = $6,000 Creamy Crisp's total revenues exceed its total costs, including a normal profit, by Multiple Choice • $302,000. • $161,000. • $159,000. • $18,000.

Suppose that a firm produces 140,000 units a year and sells them all for $15 each. The explicit costs of production are $1,700,000 and the implicit costs of production are $275,000. The firm earns an accounting profit of Multiple Choice • $400,000 and an economic profit of $125,000. • $2,100,000 and an economic profit of $140,000. • $140,000 and an economic profit of $2,100,000.

•

$125,000 and an economic profit of $400,000.

Answer the question on the basis of the following cost data. Output Total Cost 0 $ 24 1 33 2 41 3 48 4 54 5 61 6 69 The total variable cost of producing 3 units of output is Multiple Choice • $8.00. • $24. • $16.00. • $12.

The following is cost information for the Creamy Crisp Donut Company. Entrepreneur's potential earnings as a salaried worker = $38,000 Annual lease on building = $20,000 Annual revenue from operations = $280,000 Payments to workers = $118,000 Utilities (electricity, water, disposal) costs = $8,000 Value of entrepreneur's talent in the next best entrepreneurial activity = $80,000 Entrepreneur's forgone interest on personal funds used to finance the business = $6,000 Creamy Crisp Donut Company Multiple Choice • has lower explicit costs, than implicit costs. • is earning a normal profit but not an economic profit. • is earning an economic profit. • is suffering an economic loss, when implicit costs are considered.

Answer the question on the basis of the following output data for a firm. Assume that the amounts of all nonlabor resources are fixed. Number of WorkersUnits of Output

0 1 2 3 4 5 6

0 30 70 122 165 190 210

What is the firm’s average product when four workers are hired? Multiple Choice • 21.5 units of output. • 43 units of output. • 41.25 units of output. • 28.75 units of output.

Answer the question on the basis of the following output data for a firm. Assume that the amounts of all nonlabor resources are fixed. Number of WorkersUnits of Output 0 0 1 50 2 90 3 125 4 150 5 170 6 165 The marginal product of the second worker is Multiple Choice • 41.7 units of output. • 50 units of output. • 40 units of output. • 35 units of output.

If a firm increases all of its inputs by 12 percent and its output increases by 15 percent, then Multiple Choice • it is encountering diseconomies of scale. • it is encountering constant returns to scale. • it is encountering economies of scale. • the firm's long-run ATC curve will be rising. The following is cost information for the Creamy Crisp Donut Company.

Entrepreneur's potential earnings as a salaried worker = $55,000 Annual lease on building = $23,000 Annual revenue from operations = $320,000 Payments to workers = $130,000 Utilities (electricity, water, disposal) costs = $8,000 Value of entrepreneur's talent in the next best entrepreneurial activity = $80,000 Entrepreneur's forgone interest on personal funds used to finance the business = $6,000 If, other things equal, Creamy Crisp's revenue fell to $302,000, Multiple Choice • its implicit costs would exceed its economic costs. • it would earn a normal profit but not an economic profit. • it would suffer an economic loss. • its accounting profit would fall to $0. Output Average Fixed CostAverage Variable Cost 1 $ 50.00 $ 100.00 2 25.00 80.00 3 16.67 66.67 4 12.50 65.00 5 10.00 68.00 6 8.37 73.33 7 7.14 80.00 8 6.25 87.50 The average total cost of 8 units of output is Multiple Choice • $95.50. • $140.00. • $93.75. • $6.25.

Multiple Choice • $220,000. • $60,000. • $160,000. • $825,000.

Answer the question on the basis of the following output data for a firm. Assume that the amounts of all nonlabor resources are fixed. Number of WorkersUnits of Output 0 0 1 50 2 90 3 125 4 150 5 170 6 165 Average product is at a maximum when Multiple Choice • two worker(s) is/are hired • five worker(s) is/are hired. • one worker(s) is/are hired. • four worker(s) is/are hired. Plant sizes get larger as you move from ATC-1 to ATC-4. Output ATC-1 ATC-2 ATC-3 ATC-4 1,500 $ 10 15 $ 20 $ 30 2,000 8 12 17 25 2,500 9 10 15 20 3,000 12 8 13 18 3,500 15 6 11 16 4,000 18 10 9 14 4,500 20 12 7 12 5,000 24 15 11 10 5,500 29 19 13 8 6,000 35 25 15 9 Which plant size would produce at the least cost for the 1,500-2,500 range of output? rev: 03_01_2021_QC_CS-255181 Multiple Choice • ATC-2

• • •

ATC-1 ATC-3 ATC-4