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econ
| Question | Answer |
|---|---|
| Patrick McCarthy has estimated that on average for every 1% increase in income, the quantity of European cars demanded increases by 1.93%. From this information one can conclude that European cars are: | A. a luxury. |
| Which of the following statements is true about a downward-sloping demand curve that is a straight line? | C. The slope remains the same, but elasticity falls as you move down the demand curve. |
| If an economist observed that higher hotdog prices lead to a decrease in the demand for chili, she would most likely conclude: | A. chili and hotdogs are complements |
| The demand for a good is elastic. Which of the following would be the most likely explanation for this? | C. The good is a large portion of one's total income. |
| ) Refer to the following table to answer the question. Which of the following statements is true? | A. A and B are complements while A and C are substitutes |
| If the elasticity of demand for electricity is 0.13, the demand for electricity is | A. inelastic. |
| Measuring the price of gasoline in dollars per quart, an economist calculates the price elasticity of demand to be 1. What would the price elasticity of demand be if the economist had chosen to measure the price in dollars per gallon? | A. 1 |
| According to Exhibitor Relations Co., in 2003 average movie ticket prices were $6.03 and attendance was 243 million; in 2004, average movie ticket prices were $6.25 and attendance was 239 million. Other things equal, the data imply that the elasticity o | C. inelastic, so the increase in price caused total revenue to rise. |
| The Wall Street Journal article reported in 2004 when gas prices rose to over $2 a gallon that, "In dispersed metropolitan areas like Tampa, the new jobs are far from affordable housing…That leaves lowincome workers with little choice but to shoulder th | D. Demand for gasoline is inelastic. |
| For which of the following goods is the demand curve likely to be most inelastic? | C. Candy |
| The distance between the demand curve and the price the consumer has to pay for a product given quantity demanded is referred to as: | C. consumer surplus |
| ) Refer to the graph above. With an effective price ceiling at $3, total surplus is reduced by: | C. 50. |
| Refer to the graph above. With an effective price ceiling at Pc, the effect is an implicit tax on: | A. suppliers shown by area C and subsidy to consumers of that same area. |
| Refer to the graph above. An effective price floor at Pf causes producer surplus to: | A. change from areas C + D + F to areas B + C + D. |
| The price of gasoline is generally higher in Hawaii than in the continental United States. In 2002 the Hawaiian legislature passed a law forbidding gas stations from charging a price higher than the average price of gas in the West Coast of the United S | B. a price ceiling. |
| An effective price ceiling | B. is in essence an implicit tax on producers and an implicit subsidy to consumers. |
| Refer to the graph above. Initially, the market is in equilibrium with price equal to $25 and quantity equal to 100. As a result of a per unit tax imposed by the government, the supply curve shifts from S0 to S1. | C. reduce producer surplus by $375 |
| Refer to the graph above. Assume that the market is initially in equilibrium at a price of $6 and a quantity of 40 units. If the government imposes a $2 per unit tax on this product, producer surplus will fall from: | A. 80 to 45 |
| Assuming a binding price floor, the more elastic the supply and the demand curves are, the: | D. greater surplus a price floor will create. |
| Refer to the graph above in questions 13. With an effective price ceiling at Pc, the quantity supplied: | B. falls from Q1 to Q2 |
| Given the price, the lower the marginal utility of a good: | A. the less you are willing to buy of it. |
| Suppose that the following table lists the utility that Gwen receives from consuming bananas at 25 cents a piece. What is the total utility of consuming 4 bananas? (Note:change the marginal utility of 1 banana from 0 to 10) | B. 40 |
| Jason is faced with two choices: A BMW costs $40,000 giving him an additional 800 units of utility and a laser printer for his computer costing $1000 giving him an additional 25 units of utility. Rational choice theory would predict that he would choose | B. to purchase the laser printer |
| Conspicuous consumption refers to the consumption of goods and services: | A. not for one's direct pleasure, but simply to show off to others. |
| The marginal utility curve associated with this total utility curve is: | C. an upward sloping curve. |
| Suppose that if you buy one Big Mac that gives you marginal utility of 500 and a second Big Mac that gives you marginal utility of 200, total utility of buying (and eating) two Big Macs is: | D. 700. |
| Joseph Gallo poured two glasses of wine from the same bottle, but put a more expensive price tag on one glass than on the other. He let people test both and asked them which they wanted, and most wanted the more expensive glass, not knowing they had com | A. be careful about lowering the price of their product, because consumers may assume that a lower price means lower quality |
| ) Refer to the table below. Fill in the table and answer the following question: What is the marginal utility of the ninth can of soda? | A. -6 units of utility |
| The principle of diminishing marginal utility says that: | C. as you consume more of a good, you enjoy the additional units less than you did the previous units. |
| Joan is deciding where to spend her spring break. If she goes to Cancun, Mexico, the trip will give her 9,000 units of utility and will cost her $300. If, instead, she travels to Florida, the trip will give her 8,000 units of utility and will cost her o | D. Florida because her pleasure per dollar will be greater. |
| Refer to the table above. When average product is 8, total output is: | D. 48. |
| Refer to the table above. Marginal product declines when which worker is hired? | A. The fifth |
| Average fixed cost: | C. decreases as output increases. |
| Robert withdrew $100,000 from an account that paid 10 percent annual interest and used the funds to purchase real estate. After one year he sold the property for $120,000. The accounting profit on this deal was: | C. $20,000 |
| This set of cost curves is: | C. wrong because the marginal cost curve should go through the minimum points of the AVC and ATC curves. |
| A business owner makes 50 items by hand in 6 hours. She could have earned $10 an hour working for someone else. If each item sells for $5 and the explicit costs total $14, economic profit equals: | C. $176 |
| Mr. Woodard's cabinet shop is experiencing rapid growth in sales. As sales have increased, Mr. Woodard has found it necessary to hire more workers. However, he has observed that doubling the number of workers has less than doubled his output. What is th | B. The law of diminishing marginal productivity. |
| When the average variable cost curve is at its minimum point, average product will be: | A. at its maximum. |
| ) Refer to the graph above. Within which part of the production function is the firm most likely to operate? | B. B. |
| If the average cost of producing 9 sweaters is $6.50 and the marginal cost of producing the 10th sweater is $6.75, then the average cost of producing 10 sweaters will | B. be more than $6.50. |
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ofskyrimer