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1.Juan likes both Burgers and Tacos. All else equal, when the price of Burgers rises, he buys more Tacos. This can best be explained by: diminishing marginal utility. the income effect. increasing marginal cost. the substitution effect.2. Consider each of the following scenarios and determine whether it is an example of the income effect, the substitution effect, or diminishing marginal utility.a. Teresa likes to treat herself to a small Frappuccino each Morning. On Wednesdays, when the coffee shop decreases the price of Frappuccino, Sasha buys a large latte instead.the substitution effect.diminishing marginal utility. the income effect. b. The price of chicken nuggets rises from $3 to $3.50 for a box of six. The price of hamburgers stays the same. Mateo used to eat chicken nuggets three times a week. All else equal, he now eats them twice a week. the substitution effect.diminishing marginal utility. the income effect. c. Jack offers Victoria a plate of a dozen chicken wings. Victoria enjoys the first wing the best, the second wing a little bit less, and by the seventh wing, she has had enough and chooses not to eat the remaining five wings.the substitution effect.diminishing marginal utility. the income effect. 3. The table below represents the demand for bottles of sunscreen at Daytona Beach on a sunny June day.Demand for SunscreenPrice (dollars)Quantity of Sunscreen Demanded (bottles)$42,200142,000241,800341,600441,400If the price of a bottle of sunscreen is $34, what will be the quantity demanded?-4527113110 Bottles4.Price (U.S. dollars per metric ton)JapanTaiwanSouth KoreaMarket Total$60040,0001,00010050070,00050030040080,000100050030090,0001,50070020010,0002,000900What is the quantity of rice demanded in the market (in millions of metric tons) if the market price is $400 per metric ton????? million metric tons5. The monthly quantity demanded for cars is shown in the table below.Price (dollars)Quantity of Cars Demanded (thousands of cars)$23,00060021,00062019,00064017,00066015,000680An increase in income increases the quantity demanded by 10% at every price.?Which of the following columns represents the new monthly quantity demanded for cars (in thousands of cars)?Price (dollars)ABCD$23,00066853266060021,00068855268262019,00070857270464017,00072859272666015,000748612748680Column A Column B Column C Column D6. Identify which of the following scenarios is likely to NOT shift the demand for wheat bread to the right.The population of Arizona grows by 20%. A drought in Kansas makes people believe that the price of wheat bread will increase in a couple of months. People learn that certain bread additives may be bad for their health. As people become more health conscious, they discover the benefits of whole wheat as a part of their diet.7. Pam sees that the price of bananas has risen in the grocery store. All else equal, she decides to buy more tangerines than she normally purchases. From the information given, you might conclude that.tangerines and bananas are complements. tangerines and bananas are substitutes. bananas are a luxury good. tangerines are an inferior good.8. Which of the following scenarios?would likely shift the supply of cars to the left (decrease in supply)?The price of cars decreases. Automobile workers become more productive. The price of automotive paint decreases. The price of steel and aluminum increase. 9. An "increase in the quantity supplied" suggests arightward shift of the supply curve. movement down and to the left along the supply curve.movement up and to the right along the supply curve.leftward shift of the supply curve.10. Use the figure below to answer the following question. A decrease in supply is depicted by amovement from point x to point yshift from S1 to S2.shift from S2 to S1. movement from point y to point x.11. The demand and supply schedules for sunscreen at a small beach are shown below.Price (dollars per bottle)Quantity of Sunscreen Demanded (bottles)Quantity of Sunscreen Supplied (bottles)$354,00011,500305,00010,000256,0009,500208,0008,000159,0007,5001010,0006,000a. If the price is $15 per bottle, how many bottles of sunscreen are demanded and supplied?Qd = ?bottlesQs = ?bottlesb. What is the equilibrium price and quantity in the market for sunscreen?P =?$ ??Q = ?bottles12.Market for New CarsPrice (dollars)Quantity of Cars DemandedQuantity of Cars Supplied$30,0000250025,0001500225020,0002500200015,0003500175010,00045001500?If the dealership is currently charging $20,000 for a new car, at the end of the month there will be:a shortage of 125 cars. a surplus of 500 cars. a surplus of 125 cars. a shortage of 500 cars. neither a surplus nor a shortage; the market will be in equilibrium.13. The market for bicycles in rural Indiana is described in the table below. Suppose that public spending improves bicycle lanes in rural areas. As a result, the demand for bicycles shifts to the right by 100 bicycles at every price.Market for BicyclesPrice (dollars)Initial Quantity of Bicycles DemandedQuantity of Bicycles SuppliedNew Quantity of Bicycles Demanded$2001,0006501,1002259507001,0502509008001,0002758508509503008009009003257509508503507001,000800a. What are the initial equilibrium price and quantity in the bicycle market??? P = $ ?? Q = bicycles?b. What are the new equilibrium price and quantity in the market???? P = $ ????? Q = bicycles?c. Because of the increased number of bicycle lanes in rural Indiana, the equilibrium price of bicycles _________ and the equilibrium quantity of bicycles _________.increases by $25; increases by 50 bicycles decreases by $25; increases by 50 bicycles decreases by $25; decreases by 50 bicycles increases by $25; decreases by 50 bicycles14. Recent rains increase the demand for kayaks, as paddlers want to take advantage of the exciting river conditions on the Oconee River. At the same time, new plastics technology makes kayaks less expensive to make. As a result, one should expect:the equilibrium price to rise, but the equilibrium quantity to be indeterminate from the information given. the equilibrium price to fall, but the equilibrium quantity to be indeterminate from the information given. the equilibrium price to be indeterminate from the information given, but the equilibrium quantity to rise. the equilibrium price to be indeterminate from the information given, but the equilibrium quantity to fall.15. A binding price ceiling?on apartments will:increase the quantity supplied of rental housing. decrease the quantity demanded of rental housing. create a greater quantity supplied of rental housing to be made available to renters. cause the quantity demanded to exceed the quantity supplied of rental housing.16. The table below presents the annual market for sofas in Akron, Ohio. Suppose?the state government imposes a $200 excise tax on every sofa sold to be paid by customers at the point of sale.Price (dollars)Quantity of Sofas DemandedQuantity of Sofas Supplied Quantity of Sofas Demanded with Excise Tax $1,240190290901,1802202701201,1202502501501,0602802301801,000310210210940340190240880370170270820400150300760430130330700460110360?a.?Before the excise tax is imposed, what are the?equilibrium price and quantity of sofas in Akron?$1,180 and 250 sofas $1,120 and 250 sofas $1,200 and 280 sofas $1,000 and 210 sofas b. Including the excise tax, what is the new equilibrium price consumers pay for sofas after the tax is imposed?$1,000 $1,120 $800 $1,200 c. After the excise tax is imposed, what is the new equilibrium quantity of sofas?230 sofas 210 sofas 190 sofas 250 sofas d. How much tax revenue does the excise tax on sofas raise per year in Akron?$4,200 $42 $420 $42,000left2320200Where is the producer surplus at equilibrium? Where is the consumer surplus at equilibrium?Where is economic surplus at equilibrium?left27109600At a price floor where is the producer surplus?At a price floor where is the consumer surplus? At a price floor where is the dead weight loss?23.At a price ceiling where is the producer surplus?24.At a price ceiling where is the consumer surplus? 25.At a price ceiling where is the dead weight loss?26. The table presents the weekly demand and supply schedules for lawnmowers.Market for LawnmowersPrice (dollars)Quantity of Lawnmowers DemandedQuantity of Lawnmowers Supplied$4004510535050953005585250607520065651507055Assuming suppliers produce 85 lawnmowers per week:this quantity is allocatively efficient because the last lawnmower provides more benefits to consumers than alternative uses of the resources required to produce it. this quantity is allocatively efficient because it requires producers to reduce the price of lawnmowers in order to sell all of the lawnmowers produced. this quantity is allocatively inefficient because the marginal cost of producing the last lawnmower is less than the marginal benefit to consumers. this quantity is allocatively inefficient because the marginal cost of producing the last lawnmower exceeds the marginal benefit to consumers.27. The marginal benefit of an additional beach towel is $12. The marginal cost of producing an additional beach towel is $8. If producers are minimizing the average costs of production, then we can conclude:beach towel production is not allocatively efficient but is productively efficient. beach towel production is neither allocatively nor productively efficient. beach towel production is allocatively efficient but not productively efficient. beach towel production is both allocatively and productively efficient.317500329565Use the figure below to answer the following question.28. ?What area represents consumer surplus after the government imposes the excise tax on the market?triangle abctriangle $1c$9square $13ac$triangle $21a$1329. Generally, we calculate elasticity as the:percentage change in quantity demanded/supplied divided by the change in price. percentage change in quantity demanded/supplied divided by the percentage change in price. change in quantity demanded/supplied divided by the change in price. percentage change in price divided by the percentage change in quantity demanded/supplied.30.?When going from a price of $30 per unit to a price of $20 per unit, what is the price elasticity of demand?for GPS units?????? ?31. When going from a price of $20 per unit to a price of $30 per unit, what is the price elasticity of demand?for GPS units?????? ?32. Using the midpoint formula, what is the midpoint price elasticity of demand?for GPS units between a price of $20 per unit and a price of $30 per unit?????? ?33.?When going from a price of $20 per unit to a price of $10 per unit, what is the price elasticity of demand?for GPS units?????? ?34. When going from a price of $10 per unit to a price of $20 per unit, what is the price elasticity of demand?for GPS units????? ?35. Using the midpoint formula, what is the midpoint price elasticity of demand?for GPS units between a price of $10 per unit and a price of $20 per unit?????? ?36. The demand for Gold Toe socks is likely to be more elastic than the demand for power tools because:power tools in general have more substitutes than Gold Toe socks. Gold Toe socks have more substitutes than power tools in general. Gold Toe socks are more expensive than power tools in general. power tools in general are more expensive than Gold Toe socks.?37. The passage of time increases the elasticity of demand for many goods because:time allows people to discover more substitutes for goods. time allows people to produce more of the goods. time allows price to fluctuate so that consumers will get to pick the price they like. time allows people to earn more income.38. If an increase in the price of pineapple juice of 20% results in an increase in the demand for grape juice of 5%, the cross-price elasticity of demand between pineapple juice and grape juice is:-2.0. 0.2. -0.2. 2.0.39. An economist studying the market for wild Alaskan salmon determines the price elasticity of supply to be 0.43.a. In this case, the price elasticity of supply is said to be:elastic. inelastic. unit-elastic. b. A 10% increase in price will lead to:exactly a 10% increase in quantity supplied. a more than 10% increase in quantity supplied. a less than 10% increase in quantity supplied.40. Which of the following is an implicit cost of owning and operating a farm?The money received for crops grown during the growing season The money paid for fertilizer each growing season The money a farmer could earn by working for someone else The money paid for repairing a tractor41. A business owner makes 50 items by hand in 40 hours.?She could have earned $20 an hour working for someone else.?Her total explicit costs are $200.?If each item she makes sells for $15, her economic profit equals:42. a. Fill in the missing values for total fixed cost, total variable cost, and total cost in the table below.Vintage Model Car Production CostsOutputTotal Fixed Cost (dollars)Total Variable Cost (dollars)Total Cost (dollars)0$2,500$0$2,5001005002001,0003004,5004003,000?43. Pete’s Electronics is a small company that produces 8 gigabyte flash drives in a perfectly competitive market. The market price for 8 gigabyte flash drives is $15 each.?Complete the table below with the total revenue (TR), marginal revenue (MR), and average revenue (AR) for Pete’s Electronics.?? Pete's Electronics Flash Drive Production RevenuesQuantity (8GB flash drives)TR (dollars)MR (dollars)AR (dollars)10 2030405060?44. The table below shows the total cost (TC) and marginal cost (MC) for Baker Street, a perfectly competitive firm producing different quantities of apple pies.?The market price of apple pies is $4.00 per pie.a. Fill in the marginal revenue (MR) and average revenue (AR) columns.Baker Street's Costs and RevenuesQuantity (apple pies)TC (dollars)MC (dollars)MR (dollars)AR (dollars)5$55.00$1.00 1057.500.501562.501.002072.502.002592.504.0030122.506.00b. At the market price of $4.00 per apple pie, how many apple pies should Baker Street make???? apple pies?c. If the market price for apple pies were to rise to $6.00 per apple pie, how many apple pies should Baker Street make????? apple pies?45. The table below shows the weekly marginal cost (MC) and average total cost (ATC) for Smitten, a perfectly competitive firm that produces children’s mittens in a competitive market.?Smitten's Production CostsQuantity (pairs of mittens)Marginal Cost (dollars)Average Total Cost (dollars)5$1.50$8.00102.005.00152.504.50203.504.00254.004.00305.004.50356.005.00408.505.50a. If the market price of children’s mittens is $6.00 per pair, how many pairs of children’s mittens should Smitten produce per week to maximize its profits????? pairs of mittensb. What is Smitten’s average total cost at the profit-maximizing quantity of children’s mittens????? $ ?c. What are Smitten’s weekly profits if the market price is $6.00 per pair and the firm produces the profit-maximizing quantity of mittens??????$ d. What are Smitten’s weekly profits if the market price is $5.00 per pair and the firm produces the profit-maximizing quantity of mittens??????$ e. At what price would Smitten earn a normal profit??????$ ?46. If a perfectly competitive firm is facing a situation where the price of its product is lower than the average total cost, which of the following statements is true?Other firms will want to enter the industry because of the economic profits generated by the firm.The firm may be earning some accounting profits, but less than what it could earn elsewhere.The firm is generating a loss, and if things are not expected to improve the firm will leave the industry.The firm may earn economic profits in the long run if it expands its plant in order to exploit economies of scale.47. The table below shows the marginal revenue and costs for a monopolist.Demand, Costs, and RevenuesPrice (dollars)Quantity DemandedMarginal Revenue (dollars)Marginal Cost (dollars)Average Total Cost (dollars)$130200$110$25$139.001203009032103.30110400704087.50100500505080.0090600306277.0080700107777.00What is the monopolist's profit at the profit-maximizing level of output?$50,000 $80,000 $10,000 $048. One defining characteristic of pure monopoly is that the _____.monopoly is a price taker monopoly uses advertising monopoly produces a product with no close substitutes entry into the industry is relatively easy, but exit is difficult49. What is one difference between a firm in a perfectly competitive industry and a firm in a monopolistically competitive industry?A monopolistically competitive firm does not face a downward-sloping demand curve. A monopolistically competitive firm does not choose a level of output where marginal cost is equal to marginal revenue. A monopolistically competitive firm is guaranteed to make more than normal profits in the long run. A monopolistically competitive firm faces competition from firms producing close substitutes.50. A firm is operating in the United States with only two other competitors in the industry.a. It is likely this industry would be characterized as:oligopoly. pure monopoly. monopolistically competitive. perfectly competitive. b. Firms in this industry will likely earn:a normal profit. an economic loss. an economic profit. c. If foreign firms begin supplying the product, increasing the number of competitors, it is likely that:economic losses will become smaller. normal profits will increase. economic profits will fall. economic profits will increase. ................
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