Econ 2010

Assume that a firm wants to set up a factory. It has four different options. The rent of the factory in the four different locations andthe time taken to transport the product from each location to the market is shown in the table below. The opportunity cost of timeis $10 per hour. Refer to the table above. Which is the optimum location for the firm to set up its factory?

Far

The buyers of a good will want to purchase it as long as their willingness to pay for the good is

greater than or equal to the price

Economic models are often based on assumptions because they ________.

help simplify complex real-world phenomena

Assume that an individual has to decide between a two-day vacation and a three-day vacation to the same place. If he uses optimization in differences, they will:

only think about the net benefits of the extra day.

The best alternative use of a resource is referred to as its ________.

opportunity cost

In competitive markets, firms ________.

take the market price as given

The following table shows the market demand schedule and supply schedule for notebooks. Refer to the table above. What is the shortage in the market when the price of a notebook is $1?

16 units

If the total cost incurred in hiring ten workers by a firm is $45, and the total cost incurred when the eleventh worker is hired is $60, the marginal cost of hiring the eleventh worker is:

$15

Assume that a firm wants to set up a factory. It has four different options. The rent of the factory in the four different locations andthe time taken to transport the product from each location to the market is shown in the table below. The opportunity cost of timeis $10 per hour.

$200

The following table shows the market demand schedule and supply schedule for notebooks. Refer to the table above. What is the equilibrium price of notebooks?

$4

Maria has to choose between driving and taking a train to destination A. Traveling by train will cost her $400 and will take 4 hours.Driving to destination A takes 6 hours, and the required amount of gasoline costs $250. Her opportunity cost of time is $15 perhour. Refer to the scenario above. What is the total cost involved if Maria chooses to travel by train?

$460

Refer to the figure above. When the demand curve for gas is D1 and the supply curve for gas is S, the equilibrium price is ________.

$5

If an individual's opportunity cost of commute is $300 per month and his monthly commuting time is 60 hours, his opportunity cost of time is ________.

$5 per hour

Refer to the figure above. When the demand curve for gas is D2 and the supply curve for gas is S, the surplus in the market when price is $8 is ________ gallons.

50

Refer to the table above. If the market price of wine is $8 per bottle, and the market demand for wine is 19 bottles, David's consumption of wine is ________.

7 bottles

Which of the following is most likely to be an example of causation?

A firm producing compact fluorescent light bulbs installs new machinery. Their per-day production of light bulbs increases.

Which of the following will lead to a change in the opportunity cost of buying a pen in terms of pencils?

A twofold increase in the price of pens and a threefold increase in the price of pencils

Refer to the figure above. Suppose that MaxOil, through a negotiation with the labor union representing its workforce, reduced its contribution to workers' health insurance. Meanwhile, MagnusPetro successfully negotiated to lower the price of ethanol (to be blended with its gasoline) with a supplier.How do these changes affect the supply curves?

Both companies supply curves and the total supply curve will shift rightward.

Which of the following is NOT a key principle of economics?

Substitution

A fall in the price of flour, used in making cakes, is likely to ________ of cakes.

increase the supply

The demand schedule for a commodity illustrates how the consumption of a commodity changes with changes in ________. You Answered

its price

Assume that the economy is in a recession and consumers are expecting a fall in their income levels.This will cause a(n) ________.

leftward shift in the market demand for all goods

A surplus occurs in a market when ________.

the price is higher than the equilibrium price

Refer to the figure above. Suppose that MaxOil and Magnus Petro merged and became a single company, Empoleum. Then, all else being equal, the ________.

total supply curve will not change

A correlation between two variables implies that ________.

with a negative correlation, when one variable goes up, the other variable usually goes down