ECON 2020 - Midterm 2 Q&A
The price of Cracker Jacks (a caramel-coated popcorn with peanuts) is $0.50 per box, and the price of macadamia nuts is $0.25 per bag. You have $10 to spend. You decide to purchase 8bags of macadamia nuts. The maximum number of boxes of Cracker Jacks that you can purchase is...
16
Use Table: Total Cost for Peter's Plum Pantry.Peter is the largest producer of plums in California. He is also a price-taking profit maximizer. If the market price of plums is $3.50 per unit, the profit-maximizing output is _____ units...
7
Use Table: Barbara's ProductionFunction for Hockey Jerseys. The marginal product of labor of the second worker is _____ hockey jerseys...
75
Use Table: Output and Cost Curves forBuckwheat Farm. At what quantity of production is the farm earning zero profit?
8
Use Figure: The Market for Notebooks. Assume that Sand D are the domestic supply and demand curves and that the world price is PW. Identify the area of deadweight loss when a tariff raises the domestic price from the world price to PT...
D + F
Use Figure: The Market for Tea in India. With trade,the price is PW, consumer surplus equals _____, and producer surplus equals _____
F; G + H + I + J + K
The utility-maximizing principle of marginal analysis implies that, if Katerina maximizes her utility by spending all of her income on Lakers tickets and Uber rides, with prices equal to PTickets and PRides , respectively, then it must be the case that...
MU Tickets/PTicket = MU Rides /PRides
For a perfectly competitive firm in the short run, if the firm produces the quantity at which_____, the firm is earning _____
P> ATC; economic profits
The __________ effect says that if you get paid more you'll work more because your time is more valuable and the ___________ effect says if you get paid more you'll work less because you are now wealthier so leisure is more attractive...
Substitution, Income
A firm is deciding how many workers to higher. The manager, Maggi, took some economics courses at college and remembers that firms should follow a rule to choose the optimal number of workers. She asks for your help and you tell her that she should hire workers if...
Wage = Value of MPL
Use Figure and Table:Variable, Fixed, and Total Costs for Buckwheat. The marginal cost of increasing production from 75 to 84 bushels of buckwheat is...
$22.22
Use Table: Total Cost andOutput for All-Natural Frozen Yogurt, which describes Sasha's total costs for his perfectly competitive all-natural frozen yogurt firm. If the market price of a tub of frozen yogurt is $20, how much is Sasha's profit at the optimal short-run output?
-$10
Use Table: Daniella'sConsumption of Sparkling Water and Sushi. When Daniella maximizes her utility, her marginal utility per dollar spent (not price, but total cost of the sushi) on sushi equals _____ utils per dollar....
0.8
Use Figure: The Market for Apple AirPods. Assume that Sd represents the domestic supply curve, and D d represents the domestic demand curve. If the world price equals $100, and there is free trade, domestic consumer surplus _____ and domestic producer surplus _____ compared with autarky...
increases; decreases
When making a profit-maximizing "how much" decision, if the marginal benefit of a good or activity is greater than the marginal cost of that good or activity, then the individual can be made better off by...
increasing the quantity as long as the marginal benefit of one more unit exceeds themarginal cost
Total profit is maximized when marginal benefit _____ marginal cost...
is equal to
Suppose that Wendy gets 15 units of utility from one muffin and 23 units of utility from two muffins. The principle of diminishing marginal utility implies that Wendy's total utility from three muffins will be _____ units of utility...
less than 31
Jacob owns a bed and breakfast in Napa Valley. He pays $32,000 per year for insurance,$408,000 in wages, and $23,000 for supplies. He forgoes $32,000 per year he could make as apolice officer. His total revenue last year equaled $460,000. That means his economic _____equaled _____
losses; $35,000
The purpose of behavioral economics is to determine why...
people make decisions that appear to be irrational
A(n) ______ decision maker is willing to sacrifice some economic payoff to avoid a potential loss...
risk averse
India exports shirts, which are labor-intensive, to the United States. The likely source ofIndia's comparative advantage in shirts is...
that, in comparison with the United States, India is a labor-abundant country
Use Table: ProductionPossibilities for the United States and Brazil. Both nations can produce automobiles and sugar. In_____, the opportunity cost of _____ automobiles is _____ pounds of sugar...
the United States; 1 million; 1 million
Use Table: Marginal Cost of Sweaters. The marginal cost of the second sweater is...
$11
Use Figure: Short-Run Costs for Wallets. At 6 wallets, average variable cost is approximately...
$115
Use Table: Costs of Wedding Cakes. Assume that fixedcosts are $10. What is the average variable cost of 2 wedding cakes?
$12.50