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Midterm Review Tables Have Fun (

|Alternatives |A |B |C |D |E |F |

|Consumer goods per |0 |1 |2 |3 |4 |5 |

|period | | | | | | |

|Capital goods per |30 |28 |24 |18 |10 |0 |

|period | | | | | | |

|Table 3-1: Production Possibilities Schedule I |

1. (Table 3-1: Production Possibilities Schedule I) If the economy produces 2 units of consumer goods per period, it also can produce at most ________ units of capital goods per period.

|a. |30 |

|b. |28 |

|c. |24 |

|d. |18 |

|e. |26 |

|Quantity of Hours of Study Time |Quantity of Hours of Leisure Time |

|16 |0 |

|12 |4 |

|8 |8 |

|4 |12 |

|0 |16 |

|Table 3-3: Trade-off of Study Time and Leisure Time |

2. (Table 3-3: Trade-off of Study Time and Leisure Time) A student sleeps 8 hours per day and divides the remaining time between study time and leisure time. The table shows the combinations of study and leisure time that can be produced in the 16 waking hours of each day. If a student decides to consume one additional hour of leisure time, how many hours of study time must be given up?

|a. |4 |

|b. |.25 |

|c. |1 |

|d. |16 |

|e. |2 |

Figure 3-11: Production Possibilities and Circular-Flow Diagram

[pic]

3. (Figure 3-11: Production Possibilities and Circular-Flow Diagram) Assume the figures represent the same economy. Suppose that in the circular-flow diagram there is a significant decrease in the amount of labor that is flowing to the firms that produce coconuts. If all other variables remain unchanged, then this adjustment in the economy would be best represented in the production possibilities figure by a move from point A toward:

|a. |point A (no movement would occur). |

|b. |point B (an increase in fish production). |

|c. |point C (a decrease in coconut production). |

|d. |point D (an outward shift of the entire curve.. |

|e. |point B (an increase in coconut production). |

|Combination |Good Z |Good X |

|A |0 |75 |

|B |5 |70 |

|C |10 |60 |

|D |15 |45 |

|E |20 |25 |

|F |25 |0 |

|Table 3-5: Production of Good Z and Good X in Urbanville |

4. (Table 3-5: Production of Good Z and Good X in Urbanville) Suppose Urbanville is currently producing 15Z and 45X. This combination is:

|a. |both allocatively and productively efficient. |

|b. |productively efficient. |

|c. |allocatively efficient. |

|d. |neither productively nor allocatively efficient. |

|e. |not feasible. |

| |Wheat Production |Aluminum Production |

|U.S. |100 |0 |

| |0 |100 |

| |Wheat Production |Aluminum Production |

|Germany |50 |0 |

| |0 |100 |

|Table 4-4: Wheat and Aluminum |

5. (Table 4-4: Wheat and Aluminum) The United States and Germany can produce both wheat and aluminum. The table shows the maximum annual output combinations of wheat and aluminum that can be produced. Which of the following choices would represent a possible trade based upon specialization and comparative advantage?

|a. |Germany would trade 2 wheat to the U.S. for 1 aluminum. |

|b. |Germany would trade 2 aluminum to the U.S. for .5 wheat. |

|c. |The United States would trade 1 wheat to Germany for 1 aluminum. |

|d. |The United States would trade 1 wheat to Germany for 1.5 aluminum. |

|e. |The United States would trade 1 aluminum to Germany for 1 wheat. |

| |Quantity Demanded (bags per month) |

|Price per Bag |George |Barbara |Dan |

|$0.90 |10 |0 |60 |

|0.80 |15 |10 |80 |

|0.70 |20 |20 |100 |

|0.60 |25 |30 |120 |

|0.50 |30 |40 |140 |

|0.40 |35 |50 |160 |

|0.30 |40 |60 |180 |

|Table 5-1: The Demand for Chocolate-Covered Peanuts |

6. (Table 5-1: The Demand for Chocolate-Covered Peanuts) If the price of chocolate-covered peanuts is $0.60 the quantity demanded by George is ________ bags per month.

|a. |10 |

|b. |15 |

|c. |25 |

|d. |30 |

|e. |120 |

7. (Table 5-1: The Demand for Chocolate-Covered Peanuts) If Barbara is only able to purchase 20 bags of chocolate-covered peanuts, the maximum price she is willing and able to pay for each bag is ________.

|a. |$0.90 |

|b. |$0.80 |

|c. |$0.70 |

|d. |$0.60 |

|e. |$0.50 |

| | |

| | |

8. (Table 5-1: The Demand for Chocolate-Covered Peanuts) If George, Barbara, and Dan are the only three buyers in the market, and the price of a bag of chocolate-covered peanuts is $0.80, the total market demand is ________ bags per month.

|a. |70 |

|b. |80 |

|c. |105 |

|d. |280 |

|e. |15 |

9. (Table 5-1: The Demand for Chocolate-Covered Peanuts) If George, Barbara, and Dan are the only three buyers in the market, and the price of a bag of chocolate-covered peanuts is $0.50, the total market demand is ________ bags per month.

|a. |80 |

|b. |105 |

|c. |140 |

|d. |280 |

|e. |210 |

10. A market is composed of three individuals, Nicholas, Benjamin, and Alexander. Their individual demand schedules are given below and are as follows:

|Nicholas |Benjamin |Alexander |

|Price |Quantity Demanded |Price |Quantity Demanded |Price |Quantity Demanded |

|1 |10 |1 |15 |1 |12 |

|2 |9 |2 |11 |2 |10 |

|3 |8 |3 |9 |3 |8 |

Based on this information, which of the following market demand schedules accurately portrays this market?

|a. |Price Quantity Demanded |

| |1 27 |

| |2 35 |

| |3 30 |

|b. |Price Quantity Demanded |

| |1 20 |

| |2 5 |

| |3 25 |

|c. |Price Quantity Demanded |

| |1 37 |

| |2 30 |

| |2 25 |

|d. |Price Quantity Demanded |

| |1 25 |

| |2 30 |

| |3 10 |

|e. |Price Quantity Demanded |

| |1 35 |

| |2 25 |

| |3 25 |

| | |

|Price of Lemonade (per cup) |Number of Cups Demanded (Qd.) |Number of Cups Supplied (Qs) |

|$ .50 |250 |25 |

|$ .75 |200 |50 |

|$1.00 |150 |75 |

|$1.25 |100 |100 |

|$1.50 |50 |125 |

|$1.75 |20 |150 |

|Table 6-3: The Lemonade Market |

11. (Table 6-3: The Lemonade Market) If the price of a cup of lemonade is $1.00, what will exist in the market?

|a. |equilibrium |

|b. |a shortage of 150 cups |

|c. |a shortage of 75 cups |

|d. |a surplus of 75 cups |

|e. |a shortage of 225 cups |

|Price (unit) |Quantity Demanded (units) |Quantity Supplied (units) |

|$1.10 |9,000 |3,000 |

|1.20 |8,000 |5,000 |

|1.30 |7,000 |7,000 |

|1.40 |6,000 |9,000 |

|1.50 |5,000 |1,100 |

|Table 8-1: Market for Fried Twinkies |

12. (Table 8-1: Market for Fried Twinkies) In response to popular anger over the high price of fried Twinkies, the government imposes a price ceiling of $1.20 per fried Twinkie. From this table, the price ceiling causes:

|a. |a shortage of 3,000 fried Twinkies. |

|b. |a shortage of 5,000 fried Twinkies. |

|c. |a surplus of 8,000 fried Twinkies. |

|d. |a surplus of 3,000 fried Twinkies. |

|e. |a shortage of 5,000 fried Twinkies. |

|Price ($/unit) |Quantity Demanded (units) |Quantity Supplied (units) |

|0.50 |10 |7 |

|0.75 |8 |8 |

|1.00 |6 |9 |

|1.25 |4 |10 |

|1.50 |2 |11 |

|Table 8-2: Market for a Can of Soda |

13. (Table 8-2: Market for a Can of Soda) If the government does not impose a price control, the price of a can of soda will equal:

|a. |$0.50. |

|b. |$0.75. |

|c. |$1.00. |

|d. |$1.25. |

|e. |$1.50 |

|P |Qp |Qs |

|$1.20 |9.0 |12.0 |

|1.10 |9.5 |11.0 |

|1.00 |10.0 |10.0 |

|0.90 |10.5 |9.0 |

|0.80 |11.0 |8.0 |

|Table 8-3: Market for Butter |

Note:

P = Price per lb in $;

Qp = Quantity demanded in millions of lbs;

Qs = Quantity supplied in millions of lbs.

14. (Table 8-3: Market for Butter) If the government imposes a price ceiling of $0.90 per pound of butter, the quantity of butter actually purchased will be:

|a. |10.5 million pounds. |

|b. |9.0 million pounds. |

|c. |1.5 million pounds. |

|d. |10.0 million pounds. |

|e. |19.5 million pounds. |

|Price per Treatment |Quantity Treatments Demanded |Quantity Treatments Supplied |

| |(monthly) |(monthly) |

|$50 |100 |20 |

|100 |80 |40 |

|150 |60 |60 |

|200 |40 |80 |

|250 |20 |100 |

|Table 9-2 The Market for Acupuncture |

15. (Table 9-2 The Market for Acupuncture) A small town has a thriving market for acupuncture treatments. In an effort to regulate this market, the town requires each acupuncture therapist to purchase a license. Initially, the government issues only enough licenses to provide for 20 treatments per month. This quota creates a quota rent equal to:

|a. |$50. |

|b. |$100. |

|c. |$150. |

|d. |$250 |

|e. |.$200. |

| | |

16.

|Price |Quantity of |Quantity of |

|(per pizza) |Pizza Demanded (given income |Pizza Demanded (given income of |

| |of $1,000 per month) |$1,400 per month) |

|$20 |3 |7 |

|18 |4 |8 |

|16 |5 |9 |

|14 |6 |10 |

|12 |7 |11 |

|10 |8 |12 |

|8 |9 |13 |

|6 |10 |14 |

|Table: Market for Pizza |

In the table, when income changes from $1,000 to $1,400 per month, the income elasticity of demand for pizza at a price of $14 per pizza is:

|a. |–1. |

|b. |1. |

|c. |0.25. |

|d. |4. |

|e. |1.5. |

Table 48-1: Johnson’s Income and Expenditures

|Monthly |Quantity Purchased per Month |

|Income | |

| |Steaks |Magazines |Movies |Pizzas |

|$2,000 |2 |4 |6 |8 |

|$3,000 |2 |6 |6 |6 |

|Table 48-1: Johnson's Income and Expenditures |

17. (Table 48-1: Johnson's Income and Expenditures) Johnson's income elasticity of demand for steaks is:

|a. |greater than 1. |

|b. |1. |

|c. |less than 1 but greater than 0. |

|d. |0. |

|e. |less than zero. |

| | |

|This table shows some Atlanta college students' |

|willingness to pay to see The Nutty Nutcracker, by the |

|Atlanta Ballet. |

|Student |Willingness to Pay |

|Lois |$100 |

|Miguel |90 |

|Narum |65 |

|Oscar |50 |

|Pat |15 |

|Table 49-2: Consumer Surplus |

18. (Table 49-2: Consumer Surplus) If the price of a ticket to see The Nutty Nutcracker is $50, then Lois's consumer surplus is:

|a. |$60. |

|b. |$50. |

|c. |$15. |

|d. |$240. |

|e. |$150. |

|Number of |Eli's |Madison's |

|Music Downloads |Willingness to Pay |Willingness to Pay |

|1st song |$4.50 |$3 |

|2nd song |3.50 |2 |

|3rd song |2.50 |1 |

|4th song |1.50 |0.50 |

|5th song |0.50 |0.50 |

|Table 49-3: Music Downloads |

19. (Table 49-3: Music Downloads) Two consumers, Eli and Madison, like to download songs to their MP3 players. The table represents their willingness to pay for each downloaded song. If an individual song can be downloaded at a price of $1, what is the total consumer surplus received by these consumers?

|a. |$19.25 |

|b. |$18 |

|c. |$10 |

|d. |$11 |

|e. |$19 |

20. Recently, the government considered adding an excise tax on CDs that can be used to record music. If this tax is enacted, how would it affect the price consumers pay, the price producers receive, and the quantity of CDs exchanged?

| |Price consumers pay |Price producers receive |Quantity of CDs |

| | | |Exchanged |

|(A) |Higher |Lower |Fewer |

|(B) |Higher |Higher |Fewer |

|(C) |Lower |Lower |Fewer |

|(D) |Higher |Lower |More |

|(E) |Lower |Higher |More |

|a. |A |

|b. |B |

|c. |C |

|d. |D |

|e. |E |

21. Suppose the demand for good Z is downward sloping and the supply of good Z is upward sloping. When the government imposes an excise tax in the market for good Z, what happens to consumer surplus, producer surplus, and deadweight loss?

| |Consumer surplus |Producer surplus |Deadweight loss |

|(A) |falls |falls |rises |

|(B) |falls |rises |rises |

|(C) |rises |falls |falls |

|(D) |falls |falls |falls |

|(E) |rises |falls |rises |

|a. |A |

|b. |B |

|c. |C |

|d. |D |

|e. |E |

22. How does an excise tax affect consumer surplus and producer surplus

| |Consumer surplus |Producer surplus |

|(A) |Increases |Increases |

|(B) |Increases |Decreases |

|(C) |Decreases |Increases |

|(D) |Decreases |Decreases |

|(E) |No change |No change |

|a. |A |

|b. |B |

|c. |C |

|d. |D |

|e. |E |

|Pre-Tax |Proposal 1: |Proposal 2: |Proposal 3: |

|Income |After-Tax Income |After-Tax Income |After-Tax Income |

|$20,000 |$16,000 |$18,000 |$16,000 |

|$40,000 |$32,000 |$34,000 |$34,000 |

|$60,000 |$48,000 |$45,000 |$54,000 |

|$80,000 |$64,000 |$56,000 |$76,000 |

|$100,000 |$80,000 |$65,000 |$98,000 |

|Table 50-3: Three Tax Structure Proposals |

23. (Table 50-3: Three Tax Structure Proposals) A regressive tax structure can be found in:

|a. |Proposal 1. |

|b. |Proposal 2. |

|c. |Proposal 3. |

|d. |all the proposals. |

|e. |Proposals 2 and 3. |

|Units |0 |1 |2 |3 |4 |5 |6 |7 |

|Total Utility |0 |20 |35 |45 |50 |50 |45 |35 |

|Table 51-1: Utility |

24. (Table 51-1: Utility) The marginal utility for the second unit is:

|a. |35. |

|b. |15. |

|c. |10. |

|d. |5. |

|e. |55. |

|Hours of |Total Utility |

|Exercise | |

|0 |0 |

|1 |5 |

|2 |15 |

|3 |23 |

|4 |29 |

|5 |33 |

|Table 51-2: Exercise and Total Utility |

25. (Table 51-2: Exercise and Total Utility) The table shows a consumer's total utility from consuming hours of exercise at the gym. Given this information, what can be said about this consumer's marginal utility curve for exercise?

|a. |Marginal utility initially decreases, but eventually increases as more exercise is consumed. |

|b. |Marginal utility always decreases as more exercise is consumed. |

|c. |Marginal utility always increases as more exercise is consumed. |

|d. |Marginal utility initially increases, but eventually stays constant as more exercise is consumed. |

|e. |Marginal utility initially increases, but eventually decreases as more exercise is consumed. |

26.

|Pounds of |Total Utility |Pounds of |Total Utility |

|Oranges |from Oranges |Starfruit |from Starfruit |

|0 |0 |0 |0 |

|1 |24 |1 |70 |

|2 |44 |2 |130 |

|3 |60 |3 |180 |

|4 |72 |4 |220 |

|5 |80 |5 |250 |

|6 |84 |6 |270 |

|7 |84 |7 |280 |

|Table: Utility from Oranges and Starfruit |

Oranges costs $2 per pound and starfruit cost $5 per pound. The table shows Ned's total utility from eating various amounts of oranges and starfruits. How many pounds of oranges and starfruit should Ned eat, if Ned has $26?

|a. |0 pound of oranges, 5 pounds of starfruit, $1 left over |

|b. |8 pounds of oranges and 2 pounds of starfruit |

|c. |3 pounds of oranges and 4 pounds of starfruit |

|d. |4 pounds of oranges and 5 pounds of starfruit |

|e. |3 pounds of oranges and 3 pounds of starfruit |

|Number of Games |Total Benefit |

|0 |0 |

|1 |50 |

|2 |90 |

|3 |120 |

|4 |140 |

|5 |152 |

|6 |160 |

|7 |164 |

|8 |162 |

|Table 53-1: Marginal and Total Benefit |

27. (Table 53-1: Marginal and Total Benefit) Rodger is deciding how many football games he wants to attend this year. The total benefit that Rodger receives from football games is shown in the table. Rodger's marginal benefit from increasing the number of games that he attends from two to three is:

|a. |40. |

|b. |120. |

|c. |10. |

|d. |20. |

|e. |30. |

28.

|Quantity |Total Cost |

|of Gadgets | |

|Produced | |

|0 |$100 |

|1 |$105 |

|2 |$110 |

|3 |$115 |

|4 |$120 |

|5 |$125 |

|Table: The Cost of Producing Gadgets |

You own a small manufacturing company that produces gadgets. The table shows the quantity of gadgets that you could produce, and the total cost you incur at each level of production. According to this table, marginal cost is:

|a. |increasing at a constant rate. |

|b. |increasing at an increasing rate. |

|c. |increasing at a decreasing rate. |

|d. |constant and equal to $5. |

|e. |decreasing. |

|Quantity |Total |

|of Labor |Output |

|0 |0 |

|1 |12 |

|2 |22 |

|3 |30 |

|4 |36 |

|5 |40 |

|6 |43 |

|7 |44 |

|Table 54-1 : Labor and Output |

29. (Table 54-1: Labor and Output) Referring to the table, the marginal product of the fifth worker is:

|a. |8. |

|b. |4. |

|c. |3. |

|d. |40. |

|e. |36. |

|Quantity |Quantity of |Marginal Product |

|of Labor |Cabinets Q |of Labor |

|(workers) | |(cabinets per worker) |

|0 |0 | |

|1 |5 |5 |

|2 |11 |6 |

|3 |16 |5 |

|4 |20 |4 |

|5 |23 |3 |

|6 |25 |2 |

|7 |26 |1 |

|8 |25 |-1 |

|Table 54-3: Production of Cabinets |

30. (Table 54-3: Production of Cabinets) The table shows how many cabinets your firm can make with a variable quantity of labor hired. After which worker does the firm first begin to experience diminishing returns to labor?

|a. |first |

|b. |second |

|c. |third |

|d. |fourth |

|e. |fifth |

|Quantity |Variable Cost |Total Cost |

|of Output |VC |TC |

|0 |0 |50 |

|1 |50 |100 |

|2 |70 |120 |

|3 |100 |150 |

|4 |140 |190 |

|5 | |240 |

|6 |250 |300 |

|7 |320 |370 |

|Table 55-1: Cost Data |

31. (Table 55-1: Cost Data) The table shows some cost data for a firm currently operating in the short run. What is the value of the total fixed cost for this firm?

|a. |$40 |

|b. |$50 |

|c. |$100 |

|d. |$70 |

|e. |It is impossible to determine without more information. |

|Q = output, FC = fixed cost, VC = variable cost, |

|TC = total cost, MC = marginal cost |

|Q |FC |VC |TC |MC |

|1 |20 |10 |30 | |

|2 |20 |18 |38 | |

| | | | |13 |

|3 |20 |31 | | |

| | | | |17 |

|4 |20 | |68 | |

|Table 55-2: Output and Costs |

32. (Table 55-2: Output and Costs) Using the information in the table, when quantity increases from one to two, marginal cost equals:

|a. |13. |

|b. |10. |

|c. |18. |

|d. |17. |

|e. |8. |

|Quantity |Total |Total |

|of Bagels |Variable Costs |Fixed Costs |

|(per period) | | |

|0 |$0.00 |$0.10 |

|1 |0.20 |0.10 |

|2 |0.30 |0.10 |

|3 |0.35 |0.10 |

|4 |0.45 |0.10 |

|5 |0.60 |0.10 |

|6 |0.80 |0.10 |

|7 |1.05 |0.10 |

|8 |1.35 |0.10 |

|Table 55-3: Costs of Producing Bagels |

33. (Table 55-3: Costs of Producing Bagels) The total cost of producing six bagels is:

|a. |$0.10. |

|b. |$0.20. |

|c. |$0.80. |

|d. |$0.90. |

|e. |$0.15. |

34. (Table 55-3: Costs of Producing Bagels) The marginal cost of producing the sixth bagel is:

|a. |$0.10. |

|b. |$0.15. |

|c. |$0.20. |

|d. |$0.80. |

|e. |$0.60. |

35. (Table 55-3: Costs of Producing Bagels) Marginal cost reaches its minimum value for the ________ bagel.

|a. |first |

|b. |third |

|c. |fourth |

|d. |fifth |

|e. |second |

36. (Table 55-3: Costs of Producing Bagels) The average total cost of producing six bagels is:

|a. |$0.10. |

|b. |$0.60. |

|c. |$0.20. |

|d. |$0.80. |

|e. |$0.15. |

37. (Table 55-3: Costs of Producing Bagels) The total cost of producing two bagels is:

|a. |$0.10. |

|b. |$0.20. |

|c. |$0.40. |

|d. |$0.50. |

|e. |$0.30. |

38. (Table 55-3: Costs of Producing Bagels) The average total cost of producing two bagels is:

|a. |$0.05. |

|b. |$0.10. |

|c. |$0.20. |

|d. |$0.40. |

|e. |$0.25. |

39. (Table 55-3: Costs of Producing Bagels) The marginal cost of producing the second bagel is:

|a. |$0.05. |

|b. |$0.10. |

|c. |$0.30. |

|d. |$0.40. |

|e. |$0.20. |

40.

|Quantity of |Long-Run |

|Soybeans |Total Cost |

|(bushels) | |

|1 |$ 50 |

|2 |$ 80 |

|3 |$ 90 |

|4 |$120 |

|5 |$200 |

|6 |$300 |

|Table: Long-Run Total Cost |

Over what range of output does this soybean grower experience constant returns to scale?

|a. |the first and second bushels |

|b. |the third and fourth bushels |

|c. |the fourth and fifth bushels |

|d. |the fifth and sixth bushels |

|e. |the second and third bushels |

41.

|Output |Total Cost |

|0 |$10 |

|1 | 60 |

|2 | 80 |

|3 |110 |

|4 |170 |

|5 |245 |

|Table: Total Cost and Output |

The table describes Bart's perfectly competitive ice cream-producing firm. If the market price is $67.50, how many units of output will the firm produce?

|a. |one |

|b. |two |

|c. |three |

|d. |four |

|e. |five |

|Quantity |Total Cost |

|of Soybeans |(TC) |

|(bushels) | |

|0 | 12 |

|1 | 26 |

|2 | 33 |

|3 | 42 |

|4 | 54 |

|5 | 69 |

|6 | 84 |

|7 |104 |

|Table 58-1 : Soybean Cost |

42. (Table 58-1: Soybean Cost) The costs of production of a perfectly competitive soybean farmer are given in the table. If the market price of a bushel of soybeans is $15, how many bushels will the farmer produce to maximize short-run profit?

|a. |4 |

|b. |5 |

|c. |3 |

|d. |7 |

|e. |2 |

|Quantity |Total Cost |

|per Period | |

|0 |$10 |

|1 | 16 |

|2 | 20 |

|3 | 22 |

|4 | 24 |

|5 | 25 |

|6 | 27 |

|7 | 30 |

|8 | 34 |

|9 | 39 |

|10 | 45 |

|Table 58-3: Total Cost for a |

|Perfectly Competitive Firm |

43. (Table 58-3: Total Cost for a Perfectly Competitive Firm) If the market price is $4.50, the profit-maximizing quantity of output is ________ units.

|a. |five |

|b. |seven |

|c. |eight |

|d. |nine |

|e. |ten |

|Quantity |Variable Costs |

|of Lots | |

|0 |$0 |

|10 |200 |

|20 |300 |

|30 |500 |

|40 |750 |

|50 |1,100 |

|Table 59-1: Variable Costs for Lots |

44. (Table 59-1: Variable Costs for Lots) During the winter, Alexa runs a snow-clearing service, and snow-clearing is a perfectly competitive industry. Her only fixed cost is $1,000 for a tractor. Her variable costs per cleared lot, shown in the table, include fuel and hot coffee. What is Alexa's shut-down price in the short run?

|a. |$0 |

|b. |$15 |

|c. |$50 |

|d. |$42 |

|e. |$20 |

|Quantity |Total Cost |

|per Period | |

|0 |$10 |

|1 |16 |

|2 |20 |

|3 |22 |

|4 |24 |

|5 |25 |

|6 |27 |

|7 |30 |

|8 |34 |

|9 |39 |

|10 |45 |

|Table 59-2: Total Cost for a Perfectly |

|Competitive Firm |

45. (Table 59-2: Total Cost for a Perfectly Competitive Firm) In the short run, the firm will produce, but at a loss, if the price is:

|a. |$2.00. |

|b. |$2.50. |

|c. |$3.50. |

|d. |$4.50. |

|e. |$1.50. |

46.

|Quantity |VC |

|of Appels | |

|(bushels) | |

|0 |$ 0 |

|1 | 40 |

|2 | 70 |

|3 | 80 |

|4 |130 |

|5 |190 |

|6 |260 |

|7 |340 |

|8 |430 |

|Table: Lilly's Apple Orchard |

Lilly is the price-taking owner of an apple orchard; its variable costs are given in the table. Her orchard has fixed costs of $30. If the price of a bushel of apples is $85, we would expect total industry output to:

|a. |rise, and Lilly's output will rise in the long run. |

|b. |fall, and Lilly's output will fall in the long run. |

|c. |fall, while Lilly's output will rise in the long run. |

|d. |rise, while Lilly's output will fall in the long run. |

|e. |rise, while Lilly's output will remain unchanged in the long run. |

|Quantity |Price per |Total Cost |

|(megawatts) |Megawatt | |

|1 |$550 |$1,000 |

|2 | 500 | 1,075 |

|3 | 450 | 1,200 |

|4 | 400 | 1,375 |

|5 | 350 | 1,600 |

|6 | 300 | 1,875 |

|7 | 250 | 2,200 |

|8 | 200 | 2,575 |

|Table 61-1: Demand and Total Cost |

47. (Table 61-1: Demand and Total Cost) Lenoia runs a natural monopoly producing electricity for a small mountain village. The table shows Lenoia's demand and total cost of producing electricity. The price effect of increasing production from 3 megawatts to 4 megawatts is:

|a. |–$150. |

|b. |$500. |

|c. |$450. |

|d. |–$50. |

|e. |- $400 |

|Price |Quantity |

|of Coffee |of Coffee |

|(per cup) |Sold (daily cups) |

|$10 |0 |

|9 |1 |

|8 |2 |

|7 |3 |

|6 |4 |

|5 |5 |

|4 |6 |

|3 |7 |

|2 |8 |

|1 |9 |

|0 |10 |

|Table 61-2: Demand for Lenny's Coffee |

48. (Table 61-2: Demand for Lenny’s Coffee) Lenny's Café is the only source of coffee for hundreds of miles in any direction. The demand schedule for Lenny's coffee is given by the table. If Lenny wants to increase the quantity of cups sold from five to six, his marginal revenue will be equal to:

|a. |$4. |

|b. |$24. |

|c. |–$1. |

|d. |$5. |

|e. |$20. |

49.

|Price |Quantity |

|of Coffee |of Coffee |

|(per cup) |Sold (daily cups) |

|10 |0 |

|9 |1 |

|8 |2 |

|7 |3 |

|6 |4 |

|5 |5 |

|4 |6 |

|3 |7 |

|2 |8 |

|1 |9 |

|0 |10 |

|Table: Demand for Lenny's Coffee |

Lenny's Cafe is the only source of coffee for hundreds of miles in any direction. The demand schedule for Lenny's coffee is given by the table. If Lenny's marginal cost of selling coffee is a constant $2, and the government forced Lenny to charge a price that eliminated deadweight loss, Lenny would charge a price of ________ per cup and sell ________ cups.

|a. |$0; ten |

|b. |$2; eight |

|c. |$4; six |

|d. |$5; five |

|e. |$1; nine |

50.

|Quantity |Price |

|of Hats |per Hat |

|Demanded | |

|0 |$30 |

|1 |28 |

|2 |26 |

|3 |24 |

|4 |22 |

|5 |20 |

|6 |18 |

|7 |16 |

|8 |14 |

|Table: Prices and Demands |

Prof. Dumbler has a monopoly on magic hats. He sells at most one hat to each customer, and the table shows each customer's willingness to pay. The marginal cost of producing a hat is $18. Suppose Dumbler can perfectly price discriminate. How many hats will he produce?

|a. |three |

|b. |four |

|c. |five |

|d. |six |

|e. |seven |

51.

|Price of |Quantity of |

|a Gadget |Gadgets Demanded |

|$10 | 0 |

| 9 | 100 |

| 8 | 200 |

| 7 | 300 |

| 6 | 400 |

| 5 | 500 |

| 4 | 600 |

| 3 | 700 |

| 2 | 800 |

| 1 | 900 |

| 0 |1000 |

|Table: Demand Schedule for Gadgets |

The market for gadgets is dominated by two producers, Margaret and Ray. Each firm can produce gadgets at marginal costs of approximately zero dollars. The table shows the market demand schedule for gadgets and the total revenue of the industry at each point on the market demand curve. If these two producers acted independently to maximize profit, total industry output would be ________. If these two producers formed a cartel and acted to maximize total industry profits, total industry output would be ________.

|a. |5 gadgets; 10 gadgets |

|b. |0 gadgets; 5 gadgets |

|c. |100 gadgets; 50 gadgets |

|d. |1,000 gadgets; 500 gadgets |

|e. |1,000 gadgets; 100 gadgets |

52.

|Quantity |Price ($/barrel) |Total Revenue ($) |

|0 |$160 |$ 0 |

|10 |150 |1,500 |

|20 |140 |2,800 |

|30 |130 |3,900 |

|40 |120 |4,800 |

|50 |110 |5,500 |

|60 |100 |6,000 |

|70 |90 |6,300 |

|80 |80 |6,400 |

|90 |70 |6,300 |

|100 |60 |6,000 |

|110 |50 |5,500 |

|120 |40 |4,800 |

|130 |30 |3,900 |

|140 |20 |2,800 |

|150 |10 |1,500 |

|160 |0 | 0 |

|Table: Demand for Crude Oil |

The table shows the demand schedule for crude oil. For simplicity, assume that the cost of producing crude oil is zero—the marginal cost of crude oil equals zero. Now assume Laverne and Shirley are the only two producers of crude oil, and they cannot cooperate. But assume they choose their output levels every week, each player has a tit-for-tat strategy, and the other player knows this. In this case, what will be the equilibrium choice of outputs? Laverne will produce ________ barrels and Shirley will produce ________ barrels.

|a. |40; 40 |

|b. |40; 50 |

|c. |50; 50 |

|d. |30; 30 |

|e. |80; 80 |

|Quantity |Total Product |

|of Labor |of Labor |

|(workers) |(cakes per worker) |

|0 |0 |

|1 |3 |

|2 |10 |

|3 |16 |

|4 |21 |

|5 |25 |

|6 |28 |

|Table 69-1: Total Product of Labor at |

|Debbie's Bakery |

53. (Table 69-1: Total Product of Labor at Debbie’s Bakery) Debbie owns a bakery and can hire workers to produce cakes selling in a competitive output market at $10 each. The table shows the relationship between the number of workers and the number of cakes produced. What is the value of the marginal product for the fourth worker?

|a. |five cakes |

|b. |$50 |

|c. |$210 |

|d. |21 cakes |

|e. |$250 |

54. (Table 69-1: Total Product of Labor at Debbie’s Bakery) Debbie owns a bakery and can hire workers to produce cakes selling in a competitive output market at $10 each. The table shows the relationship between the number of workers and the number of cakes produced. If Debbie must pay each worker a competitive market wage of $40 per day, how many workers will she hire to maximize profit?

|a. |three |

|b. |four |

|c. |two |

|d. |six |

|e. |five |

55.

|Number of |Output |

|Workers (artists) |(mud statues) |

|1 |10 |

|2 |25 |

|3 |35 |

|4 |43 |

|5 |48 |

|Table: Workers and Art Output |

Suppose you achieve your dream of opening your own art studio, specializing in selling mud statues. You pay $10 in fixed costs for equipment, and you pay $9 per day to each of your workers who make the mud statues. You know the mud statues industry is perfectly competitive, with a current market price of $1. The table shows your production function. How many statues should you produce?

|a. |25 |

|b. |35 |

|c. |43 |

|d. |48 |

|e. |10 |

56.

|Price |Quantity |Quantity |

|(P) |Demanded |Supplied |

| |(QD) |(QS) |

|$20 |15 |5.00 |

|26 |12 |7.00 |

|28 |11 |7.67 |

|32 |9 |9.00 |

|36 |7 |10.33 |

|38 |6 |11.00 |

|Table: The Socially Optimal Quantity of Widgets |

The table lists several values for price (P), quantity demanded (QD), and quantity supplied (QS) from the market demand and supply curves for widgets. Suppose that the production of widgets generates a marginal external cost equal to $10. The socially optimal quantity of widgets will be:

|a. |5. |

|b. |7. |

|c. |9. |

|d. |11. |

|e. |6. |

|Quantity of |Total Cost |Total |

|Animal Control | |Individual |

|Officers | |Benefit |

|0 |$ 0 |$ 0 |

|1 |20,000 |40 |

|2 |40,000 |70 |

|3 |60,000 |90 |

|4 |80,000 |100 |

|5 |100,000 |105 |

|Table 76-3: Total Cost and Total Individual Benefit |

57. (Table 76-3: Total Cost and Total Individual Benefit) The table shows the total cost and total individual benefit of animal control for residents of a small town. If there are 1,000 residents, what is the total social benefit of three animal control officers?

|a. |$10 |

|b. |$9,000 |

|c. |$10,000 |

|d. |$90,000 |

|e. |$90 |

Figure 77-1: Natural Monopoly

[pic]

58. (Figure 77-1: Natural Monopoly) The figure above shows a natural monopoly. If the firm is regulated such that zero economic profits are earned, what will be the corresponding price and quantity?

| |Price |Quantity |

|(A) |ATCm |Qm |

|(B) |Pr |Qr |

|(C) |Pm |Qm |

|(D) |Pc |Qc |

|(E) |MC |Qc |

|a. |A |

|b. |B |

|c. |C |

|d. |D |

|e. |E |

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