Microecon culmulative midterm

At the initial price of $10, the quantity demanded is 10. When the price rises to $14, the quantity demanded is 6. Find the price elasticity of demand (use answers from 2 problems above):

-3/2

At the initial price of $10, the quantity demanded is 10. When the price rises to $14, the quantity demanded is 6. Find the relative change in quan`tity (use the midpoint method):

-4/8

Let's say the government taxes consumption of a good with excise tax of $8 due to its harmful impact on public health, and at the same time subsidizes (negative tax) production with $2 per unit. Let's say the resulting price consumers pay is $128, and the market quantity is 20,000. What is the net tax revenue (tax revenue - spendings on subsidies) collected by the government?

120,000

A Coffee Plantation pays $5000 every year to pay rent for land, workers wage is $100 per year. The Plantation produces 200 pounds of coffee beans with 10 workers, and 500 pounds of coffee beans with 50 workers. What is the average variable cost of 500th pound of coffee beans?

10

Sarah's 3 choices in life (in no particular order) are: to take a job that gives her a net benefit of $150,000 a year; open a business or get into PhD program. Her estimated annual business benefit (revenue+satisfaction) is $150,000 while costs come up to $40,000. The average net benefit of the PhD program is estimated at $100,000 a year. What is the accounting profit of starting a business?

110,000

Sarah's 3 choices in life (in no particular order) are: to take a job that gives her a net benefit of $150,000 a year; open a business or get into PhD program. Her estimated annual business benefit (revenue+satisfaction) is $150,000 while costs come up to $40,000. The average net benefit of the PhD program is estimated at $100,000 a year. What is the implicit cost of taking a job?

110,000

Eating food in the morning would increase Sarah's wellbeing by $20, cooking would deplete the groceries supply by $4, and take away $15 worth of time that could have been spent working. At the same time, a take-out costs $16. What is Sarah's net benefit of cooking food in the morning?

16

Eating food in the morning would increase Sarah's wellbeing by $20, cooking would deplete the groceries supply by $4, and take away $15 worth of time that could have been spent working. At the same time, a take-out costs $16. What is Sarah's accounting profit of ordering food in the morning?

19

Company A's inputs of production are rented space, machinery, workers, and electricity. The length of the supply contract are: rent space - 4 years, machinery - 2 years, labor - 12-month, electricity - monthly. What is the minimal length of the long run period for company A?

4 years

At the initial price of $10, the quantity demanded is 10. When the price rises to $14, the quantity demanded is 6. Find the relative change in price (use the midpoint method):

4/12

Alex enjoyment of eating donuts is as follows: 1st - 10, 2nd - 9, 3rd - 8 and so on... What is the total net benefit that Alex got from eating donuts, given that the donuts cost $1.5 per piece.

40.5

A Coffee Plantation pays $5000 every year to pay rent for land, workers wage is $100 per year. The Plantation produces 200 pounds of coffee beans with 10 workers, and 500 pounds of coffee beans with 50 workers. What is the marginal cost of 200th pound of coffee beans?

5

Change of price by 10% generates negative 50% change in quantity demanded, price elasticity of demand of the good is equal to:

5

Firm A decides to sell fidgets. Fidgets' production process involves five different but equally time and effort -consuming steps. Firm A invests in five workstations, each fit for a specific part of the production process. How many workers should Firm A hire to maximize the marginal product of the last hired worker? Assumer that the workers can specialize and increase their skill.

5

A Coffee Plantation pays $5,000 every year to pay rent for land, workers wage is $100 per year. The Plantation produces 200 pounds of coffee beans with 10 workers, and 500 pounds of coffee beans with 50 workers. What is the fixed cost of 500th pound of coffee beans?

5,000

Alex enjoyment of eating donuts is as follows: 1st - 10, 2nd - 9, 3rd - 8 and so on... What is the total quantity of donuts eaten by Alex, given that the donuts cost $1.5 per piece.

9

If Alex and Dari were to negotiate a deal regarding doing home chores, who would do what?

Alex - vacuuming, Dari - dishes. (one cant do everything)

A firm has increased its price, and the revenue fell, this means that the price elasticity of demand for their good was:

Between -infinity and -1

A government decided to reduce the excise tax paid by tobacco consumers, this means that

Demand will shift to the right.

When quantity demanded is equal to zero (minimal quantity demanded), what does the demand price equal to?

Highest WTP

when people who want to work for low wage are unable to find job is the issue of ____

Inefficiency

How many points on the PPF represent Productively Efficient production?

Infinity

A price elasticity of demand that is equal to 0.5 is

Innelastic

In the cabbage market, price elasticity of supply is greater than the price elasticity of demand (but none are perfectly elastic or inelastic), this means that the tax burden:

Is mostly paid by consumers.

Which one of these goods is more likely to have quantity demanded that is highly responsive to price change?

Luxury cars

Assuming you are a rational human being, what does this actually mean to be a rational human being in economic sense?

Make decisions that increase your well-being.

Every year Alexa pays $20,000 in school tuition. Every year she learns new skills and is qualified to do higher paying jobs. This means that next year in school:

Marginal cost increases

Which of the following is NOT the assumption of a perfectly competitive market model:

No government intervention in the market

Consider that person A has opportunity cost of 10 of washing the dishes, while the person B has opportunity cost of 12 of washing the dishes; while person A has opportunity cost of 5 of vacuuming, and person B has opportunity cost of 7 of vacuuming.

Person A, A

There are two goods: X, Y. The goods are such that the good X is an input good in the production of Y. Given that the price of Y is likely to increase really soon, while is price of X is increasing right now. What is the effect on the market for Y?

Price increases, quantity is undetermined.

Given an economy of two goods - X and Y; X-intercept of the budget constraint is 25 and Yintercept of the budget constraint is 100, what do we know about prices of these goods?

Price of X = 4 * Price of Y

What happens in the market for pork, when the price of soap (which is surprisingly a complement in production to pork) goes up, while at the same time everybody becomes vegetarian?

Quantity of pork sold becomes zero.

Sammy eats handfuls of kale and sunflower seeds, and he has a food budget of $25 per day. Kale costs $2 per handful, and sunflower seeds cost $4 per handful. Assuming that Sammy is a rational human being, and his marginal utility of consumption follows diminishing patterns, Sammy should eat handfuls of kale and sunflower seeds such that:

The enjoyment of the next handful of kale is two times smaller than the enjoyment of the next handful of sunflower seeds

The tax levied on a market:

Will produce larger DWL than the tax levied on a market with less elastic supply and demand.

Consider the two-good setup from the problem above: X-intercept = 25, Y-intercept = 100. Sarah has $1000 budget, which of the following is a consumption bundle located on the budget constraint?

X- 2 Y- 92

X-intercept = 25, Y-intercept = 100. Sarah has $1000 budget, which of the following is a consumption bundle located on the budget constraint?

X-2 Y-92

What is the best example of the explicit cost of buying popcorn instead of a soda?

cost of popcorn

In an hour Alex can wash 300 dishes or vacuum 10 rooms, while Dari can wash 600 dishes or vacuum 15 rooms. Who has the absolute and comparative advantages in washing dishes?

dari- absolute dari- comparative

The excise tax on cabbages is equal to $0.01 per cabbage, in total US market sells 100,000,000 units of cabbages each year. Yearly revenue of the cabbage tax is:

$1,000,000

The weekly demand and supply for apples is given by the following equations where P is the price per ear of bushel of apples, and Q is the number of ears of bushels in thousands. Demand: Q = 30-2P Supply: Q = P

equilibrium price: 10 WTP: 15

When people are unable to afford living for the wage they work is the issue of _____________,

equity

Positive statement

fact

Two goods have cross-price elasticity equal to 3, let's say one good increases its price by 100%, what is the resulting effect on the other good?

increase by 300

A pair of goods that have negative income elasticity, are called:

inferior

Which of the following is the best classical example of a variable input of production?

labor

The principal of marginal analysis states that we should consume (produce) next unit until next unit's

marginal cost exceeds marginal benefit

Price elasticity of demand is always _________________; while price elasticity of supply is always ______________________

negative, positive

Given the existence of a binding price floor on a market, is it possible for a decrease in the price of a consumption substitute to put the market in equilibrium? Use the empty space to draw a market with the price control and see how things shift around.

no

A good that has income elasticity of demand equal to 0.5 is

normal

Normative

opinion

Company A's inputs of production are rented space, machinery, workers, and electricity. The length of the supply contract are: rent space - 4 years, machinery - 2 years, labor - 12-month, electricity - monthly. Given a term length of 2.5 years, which of the following is a fixed input?

rented space

When we consider an example of a single buyer on the market, why would his willingness to pay decrease when the quantity of goods that he buys increases?

satisfaction of each next unit decreases

why are people forced to make economic choices?

scarcity

Which of the following economic principles is the main driver of trade facilitation?

specilization

Law of Demand states that as price goes _____, quantity demanded goes _

up,down

A firm knows that the price elasticity of demand between the current price and the price+$10 is inelastic, should they increase the price to maximize the revenue

yes

Given the existence of a binding price ceiling on a market, is it possible for a decrease in the price of a consumption substitute to put the market in equilibrium? Use the empty space to draw a market with the price control and see how things shift around.

yes

Let's say the government taxes consumption of a good with excise tax of $8 due to its harmful impact on public health, and at the same time subsidizes (negative tax) production with $2 per unit. Let's say the resulting price consumers pay is $128, and the market quantity is 20,000. What is the price suppliers receive net of tax?

. $122

Opportunity cost of making a choice is equal to:

. Net benefit of the next best forgone alternative

When given a choice between caviar and filet-mignon during your 1970s trans-Atlantic flight (given that the ticket is already bought and cannot be refunded as you are in the middle of the flight), the immediate monetary cost of choosing caviar (given your second-best choice is filetmignon and you are not vegan) is equal to:

0

Alex enjoyment of eating donuts is as follows: 1st - 10, 2nd - 9, 3rd - 8 and so on... What is the net benefit of the last donut eaten by Alex, given that the donuts cost $1.5 per piece.

0.5

The price of good B decreases by 10%, causing the quantity demanded of good A to decrease by 6%. The cross-price elasticity of demand of goods A and B is:

0.6

A 3-pound cat ate a pound of meat, calculated the relative change of the kitten's weight after he finished the meal (use the midpoint method).

1/3.5

When given a choice between caviar and filet-mignon during your 1970s trans-Atlantic flight (given that the ticket is already bought and cannot be refunded as you are in the middle of the flight), the implicit cost of choosing caviar (given your second-best choice is filet-mignon and you are not vegan) is equal to:

Enjoyment of filet

What is "X elasticity of Y":

Responsiveness of Y to change in X.

The price elasticity of supply is smaller than 1, while price elasticity of demand is bigger than 1. Which side pays higher tax?

Suppliers, due to inelasticity of supply.

What should happen for the movement along the demand curve to take place?

change in price

Who has the largest elasticity of demand for the CTA ride:

chicagoans a week from today

A pair of goods that have negative cross-price elasticity, are called:

complement goods