Econ Exam 2
A firm had sales revenue of $1 million last year. It spent $600,000 on labor, $150,000 on capital and $200,000 on materials. The firm's factory sits on land owned by the firm that could be rented out for $30,000 per year. What was the firm's economic profit last year?
$20,000
A firm had sales revenue of $1 million last year. It spent $600,000 on labor, $150,000 on capital and $200,000 on materials. What was the firm's accounting profit?
$50,000
What is the elasticity for legal services?
0.4 inelastic
Kim has $24 per week in her entertainment budget. She splits her time between going to the movies and yoga classes. Each movie costs $8 while each yoga class costs $3. The total utility from each of these activities is set out in the table below. What is Kim's total utility maximizing point?
1 movie, 5 yoga classes
When the price of bubble gum is $0.50, the quantity demanded is 400 packs per day. When the price falls to $0.40, the quantity demanded increases to 600. Given this information and using the midpoint method, what do you know about the elasticity of demand for bubble gum?
1.80
Terry attends college and works part-time job in a drug store. She can work up to 40 hours each week, and is paid $9 per hour. The table below shows her utility from different levels of leisure and income. If Terry decides to work 20 hours per week, her total utility from both leisure and income would be:
142
Suppose after paying her bills Joana has $130 dollars left to spend on just two goods: concerts and books. Assume concert tickets cost $55 and books cost $10. Which of the following combination of goods could possibly be her utility-maximizing bundle?
2 concert tickets and 2 books
A Barber Shop knows that a 5 percent increase in the price of their haircuts results in a 15 percent decrease in the number of haircuts purchased. What is the elasticity of demand facing Billy Bob's Barber Shop?
3.0
What would a shortage in the financial market look like?
All the individuals that would like to take out loans at a given interest rate are not able to
Using the graph below, which of the following scenarios would describe a move from Point M to Point P after an increase in income?
Concert tickets are normal goods and overnight stays are inferior goods
____________________________ occur when the marginal gain in output diminishes as each additional unit of input is added.
Diminishing marginal returns
In class we discussed a minimum wage increase that took place in Portland, Oregon. Which of the following is true?
Employers warn that an increase in the minimum wage will force them to raise prices
The elasticity of demand is 2.0. Is the demand curve relatively steep or flat? Will a fall in price raise total revenue or lower it?
Relatively flat; raise total revenue
The elasticity of demand is 0.2. Is the demand curve relatively steep or flat? Will a fall in price raise total revenue or lower it?
Relatively steep; lower total revenue
If the supply curve for housing is perfectly inelastic, then an increase in demand will cause the equilibrium price to:
Rise and the equilibrium quantity to stay the same.
______________ include all of the costs of production that increase with the quantity produced
Variable costs
In terms of microeconomic analysis, what is the function of "utils"?
a measurement of utility
Which of the following results in a rightward shift of the market demand curve for labor?
an increase in demand for the firm's product
The _____________________ curve will always lie below the curve for average cost because average cost includes _____________ in the numerator of the calculation
average variable cost; fixed costs
The term ___________________ is used to describe the common pattern whereby each marginal unit of a consumed good provides less of an addition to utility than the previous unit.
diminishing marginal utility
In your college town, the local government decrees that thousands of apartments close to campus are uninhabitable and must be torn down next semester. If you want to pay the lowest rent possible, should you hope that demand for apartments is elastic or inelastic?
elastic
When the price of bubble gum is $0.50, the quantity demanded is 400 packs per day. When the price falls to $0.40, the quantity demanded increases to 600. Given this information and using the midpoint method, what do you know about the elasticity of demand for bubble gum?
elastic
Slope is the same thing as elasticity
false
A firm's ___________ consist of expenditures that must be made before production starts that typically, over the short run, _______________ regardless of the level of production.
fixed costs; do not change
If you ask an economist how to maximize the utility you get from a limited budget, what might they tell you?
if you can afford it, purchase the item with the greatest marginal utility per dollar
The term _____________ describes a situation where a ________________ causes a reduction in the buying power of income, even though actual income has not changed.
income effect; higher price
In your college town, real estate developers are building thousands of new student-friendly apartments close to campus. If you want to pay the lowest rent possible, should you hope that demand for apartments is elastic or inelastic?
inelastic
Refer to the table below. If the firm produces 5 units that it sells at a price of $30.00 each, what will its profits or losses equal?
losses equal $5
The term _____________ is used to describe the additional cost of producing one more unit.
marginal cost
Marcella operates a small, but very successful art gallery. All but one of the following can be classified as a variable cost arising from the physical inputs Marcella requires to operate her business. Which is it?
physical space for the gallery
The "law of supply" functions in labor markets; that is, a higher ___________ for labor leads to a higher quantity of labor supplied.
price
Why would labor be treated as a variable cost?
producing larger quantities of a good or service generally requires more workers
If more companies are looking to hire individuals with college degrees, the demand curve for labor would
shift out/ to the right
A more efficient means of processing algae to produce an anticancer drug is discovered. As a result, the supply curve for the drug will
shift to the right, decreasing the price of the drug
The ________________ arises when a price changes because consumers have an incentive to consume less of the good with a relatively higher price and more of the good with a relatively lower price
substitution effect
If more babies were born in the United States in 2020 than for decades before, how would this impact the labor supply in 20+ years when the babies enter the workforce?
the labor supply curve would shift out/ to the right
Which of the following is considered to be a tell-tale signal that the point with the highest total utility has been found?
the marginal utility per dollar is the same for both goods
Refer to the diagram below. Based on the information illustrated in the graph, which of the following is correct?
the minimum point of the AC curve is where it intersects the MC curve
Many states do have ____________, which impose an upper limit on the interest rate that lenders can charge
usury laws
