agec 105 final

Figure below illustrates the trade-off for a particular student between time spent studying per week and income per week from working part-time. What is the opportunity cost for this person of moving from point a to point b?

$10 of income per week

Given the environment illustrated in Figure below, At the profit-maximizing, or loss-minimizing, level of output for the firm in Figure above, total revenue is approximately

$10,500

In Figure below, using the supply and demand curves denoted S1 and D1, respectively,

$100 and 50,000

Figure below shows the payoff matrix for the only two auto dealerships in a community, Jim's Autos and Tim's Autos. The matrix shows the profits that each firm would earn from choosing either a low price or a high price. The equilibrium level of profit for Jim's Autos would be

$100,000

Jordan wants to sell her wedding gown for $250, but her cousin Jessica offered her $375 for it. If the gown is sold for $375, what is Jordan's producer's surplus

$125

Given the environment illustrated in Figure below, At the profit-maximizing, or loss-minimizing, level of output in Figure above, the firm's total cost is approximately

$14,000

Brittany provides manicures at the only salon in town. Her marginal cost is constant at $5 per client, her fixed cost is $25 per day, and she is able to do 8 manicures per day. On a given day, half of her clients are willing to pay $15 for a manicure; half are willing to pay only $10. If she charges all of her clients $10, then her maximum daily profit equals

$15

Assume that for John Paxton, a soybean producer from Iowa, the only source of farm income is from the production of soybeans. Paxton produced 100,000 bushels of soybeans in 2012, receiving $12 per bushel. Assuming this producer had production expenses of $800,000, and assuming the CPI for 2012 was 2.00, his real farm income for 2012 was:

$200,000

The firm in Figure below does not practice price discrimination. Its price and output will be

$250 and 125

Suppose that Trey spends all of his income on vacation trips and textbooks. If the price of a trip is $200 and the price of a textbook is $50, then the slope of his budget line (assuming vacation trips are measured on the vertical axis) would be

-.25

The marginal rate of substitution between points C and D is

-1.5

The marginal rate of substitution between points C and D is:

-1.5

What is the slope of the line given in the graph?

-2

The following graph depicts a leftward shift in the supply curve. Each letter represents the area of the shape.

-B-C

If the market price reduces from $7 to $5 what is the loss in consumer surplus?

0

f the price of food falls by 10 percent and the quantity sold increases by 5 percent, then the price elasticity of demand in that range equals

0.5, and demand is inelastic

Stanley receives the following marginal utilities from the first four car washes that he buys each year, respectively: 20, 15, 10, and 5. If each car wash sells for $10, then the marginal utility per dollar spent on the third car wash is

1

Daniel's consumption of pizzas drops from 6 per week to 4 per week when the price rises from $9 to $11. His price elasticity of demand for pizza equals

2

If the price of a certain brand of sneakers falls from $27.50 to $22.50, and the quantity demanded by consumers increases from 15 to 25 pairs per week, then the price elasticity of demand is

2.50

When the market price is $2 per pound, the consumer surplus is:

24,500

If the market price is $50, then what is consumer surplus?

3675

What is the slope of the curve above at point A?

4

A family on a trip budgets $800 for sit-down restaurant meals and fast food. If the price of a fast food meal for the family is $20, how many such meals can the family buy if they do not eat at restaurants?

40

If the market price reduces from $7 to $5 what is the gain in consumer surplus?

425

In the following table, "I" stands for the amount of a particular variable input. Assume the model of perfect competition. What is the value of y?

480

Use the following graph to answer the question. Note that this graph is not drawn to scale. What is the y-intercept of line iii?

5

The following information supposedly collected on a particular country by the CIA. Consumption Expenditures$3,600 millionImports$1,200 millionDepreciation$300 millionGovernment Expenditures$1,000 millionGross Private Domestic Investment$1,000 millionTax Revenues$700 millionExports$800 millionImplicit GDP Deflator 2.00 (1996 = 1.00) Nominal GDP is equal to:

5,200 mil

Figure below shows cost curves for Penny's Parasols, a perfectly competitive firm. At which point in Figure above would a perfectly competitive firm earn the same profit, or suffer the same loss, by producing rather than by shutting down?

B

For which of the following categories of goods is demand likely to be the most price elastic?

BMW sports car

The Federal Open Market Committee, or FOMC, sets the policy for:

Buying government bonds and selling government bonds.

For the monopolist in Figure below, Which point corresponds to the profit-maximizing level of output?

C

Oil and Natural Gas can each be used as a source of energy and are, for many purposes interchangeable. Which of the following best explains the increase in the price of natural gas that accompanied the increase in the price of oil during the 1990-1991 Persian Gulf War?

Increased oil prices raised demand for natural gas, a substitute good

Intellectual property includes

Literary, artistic and musical works, and scientific inventions

A monopolist that does not price discriminate will set the output level where

MR = MC

If a consumer allocates her income between two goods, x and y, then she will be happies when

MUx/Px = MUy/Py and all of her income is spent

In Figure below, at a temporary price of $4,

a surplus occurs

The fact that travel on buses fell as incomes increased in many cities suggests that

bus travel is an inferior good

For which of the following types of goods would demand be most price-elastic?

goods with many substitute

For which of the following types of goods would demand be most price-elastic?

goods with many substitutes

Which of the choices listed below is the best example of an inferior good?

hamburger

Use the table below to answer question dealing with the output and price of corn for 2011 and 2012. Year Output (in bushels) Price/Bushel2011 10,000 $4.002012 12,000 $5.00 Relative to 2011, the price of corn for 2012 was:

higher by 25%

If the quantity of higher education demanded rises by 5 percent when incomes rise by 10 percent,

higher education is a normal good

The three groups of decision makers in the economy are

households, business firms and government

Rent control is an example of a price ceiling. Which of the following problems must be addressed under a rent control program?

how to allocate scarce rental unit

the national debt

is equal to the debt at the beginning of the year plus the deficit during the year.

The change in total utility arising from a one-unit increase in consumption of a good is referred to as

marginal utility

For which of the following goods is the income elasticity of demand likely to be largest?

meals at restaurants

When there are many buyers and sellers, no significant barriers to entry, and a differentiated product, the market structure is called

monopolistic competition

The more available substitutes there are for a good, the

more elastic the demand for that good

The cross-price elasticity of demand is measured by the

percentage change in quantity demanded of one good divided by the percentage change in price of another good

Disposable income in the economy reflects:

personal income after taxes.

a patent

prevents anyone else from selling the same discovery or product for twenty years

Perfect planting and harvesting weather results in a record high crop of wheat. If wheat growers experience an increase in total sales revenue, then the demand for wheat must be

price - inelastic

for a monopoly,

price and output are closely linked choices

The law of supply says that

price and quantity supplied are directly related

the law of supply says that

price and quantity supplied are directly related

A monopolist earns a profit whenever

price exceeds average total cost

Which of the following will decrease the amount of a good that is traded in the market?

price floors, price ceilings, and excise taxes

In the short run, a monopoly should shut down whenever

price is less than average variable cost everywhere

Suppose the index of prices received by farmers for 2000 was 1.02 and the base year of this indexwas 1995. Then:

relative to 1995, farm prices were 2% higher in 2000

Given the graph below, one historical approach to supporting major crop prices involved the Commodity Credit Corporation (CCC):

required the CCC to acquire the excess supply that would occur at the desired price PG.

When a firm incurs losses in the short run, the most important consideration in determining whether to continue producing is whether

revenues cover some of its fixed costs and all of its variable cost

Law of dismishing marginal utility

says that marginal utility decreases as more of a good is consumed

A record level of crop production can lead to:

sharp declines in farm product prices and cash receipts from sale of production.

Given the graph below, which of the following statements is true? (Ad, AS)

the economy is experiencing a recessionary gap

Figure below shows the marginal cost and average total cost curves for a perfectly competitive firm. If the market price is $10, and the firm produces more than 200

the firm earns less profit per unit than if it produced 200 and less total profit.

If MR were $12 per unit, and if MC = $10 per unit, then:

the firm should increase production

The more narrowly we define a good, the easier it is to find substitutes, and

the greater is the supply-side response

Jim's Shoe Shine Shop operates in a perfectly competitive market. If it's marginal revenue is $5 per shine, then

the market price per shine is $5

An example of average physical product in agriculture is the yield or number of bushels of corn produced per acre

true

Copyrights and patents are examples of barriers to entry.

true

Marginal propensity to consume is the slope of the aggregate consumption function and tells us how much consumption will change if consumer disposable income changes.

true

Automatic fiscal policy instruments include:

unemployment compensation.

Suppose that for a monopolist, MR = MC = $10 and P = $15 at the profit-maximizing level of output. At this level of output, the firm

will shut down if AVC > $15

Expansionary monetary policy actions:

would likely increase farmers' total assets.

if the perfectly competitive firm pictured in Figure 9-20 is maximizing profits, it is currently selling output at a price of

$10

Given the following equation where DPI represents disposable personal income: C = 1,500 + 0.85(DPI) If disposable personal income is $5,000, consumer spending would be equal to:

$5,750

Suppose that a firm produces 9 units at a price of $13 and 12 units at a price of $12.Then marginal revenue is:

$9

When Better Beds produces 40 beds per day, its average variable cost is $600 and its average total cost is $800. The marginal cost of producing the 40th bed is $700. Based on this information, what is the Better Beds' average fixed cost (AFC) for quantities of 20 and 40 beds per day?

(20, 400) and (40, 200)

In the following table, "I" stands for the amount of a particular variable input. Assume the model of perfect competition. What is the value of w?

100

If the price elasticity of demand for Cheer detergent is 3.0, then a

12 percent drop in price leads to a 36 percent rise in the quantity demanded

Use the following graph to answer the question. Note that this graph is not drawn to scale. What is the slope at point A?

15/10

Anita consumes both pizza and Pepsi. The following tables show the amount of utility she obtained from different amounts of these two goods. Suppose Pepsi costs $0.5 per can, pizza costs $1 per slice and Anita has $9 to spend on food and drinks. MU is Marginal Utility and MU/P is Marginal Utility per dollar. PizzaPepsiQuantityUtilityMUMU/PQuantityUtilityMUMU/P4 slices115 5 cans63 5 slices135 6 cans75 6 slices154 7 cans86 7 slices171 8 cans96 Find Marginal Utility (MU) of the 7th slice of pizza?

17

Given the indifference curves in the graph above, which combination of wings and hamburgers yields the highest level of satisfaction?

6 wings, 7 hamburgers

Use the following table to answer the question: Cash receipts from farm marketing $750,000 Receipts of government payments $150,000 Other income from farm sources $100,000 Production expenses $400,000 Value of real estate assets $10 million Value of non-real estate assets $2 million Financial assets $4 million Liabilities $9 million Net farm income for this operation is:

600,000

Given the graph below, what is the change in the economic well-being of consumers in this market if the price fell from $5.00 to $4.00.

7

Carl is considering attending a concert with a ticket price of $35. He estimates that the cost of driving to the concert and parking there will total an additional $20. In order to attend the concert, Carl will have to take time off from his part-time job. He estimates that he will lose 5 hours of work, at a wage of $6 per hour. Carl's opportunity cost of attending the concert equals

85

Which of the following statements about demand is correct?

A change in the price of bicycles will not lead to a shift of the demand curve for bicycles.

Given the graph below, which of the following statements is false?

Consumers are dis-saving by $300 at a disposable income of $3,000.

Figure below shows cost curves for Penny's Parasols, a perfectly competitive firm. Which point in Figure above represents a break-even situation for a perfectly competitive firm?

D

For desert Mac has the choice between cheesecake and apple pie. The cheesecake has a marginal utility of 50 and a price of $5 and the apple pie has a marginal utility of 30 and a price of $3. Therefore, Mac should buy

Either the apple pie or cheesecake, it makes no difference

A government-imposed price ceiling set below the market's equilibrium price will create an excess demand for a product. As a result of the excess demand, either the demand curve will tend to shift to the left or the supply curve will shift to the right-or both.

False

An inferior good is defined by an income elasticity less than 1.

False

Given the figure below, Producers are better off, gaining area 6 while giving up areas 2 and 3.

False

Given the figure below,Consumers would be worse off economically under this form of supply control by area 4 plus area 6.

False

Given the figure below,The graph above illustrates the use of set asides to remove land from production for specific commodities.

False

In economics, a market is a specific location where buying and selling take place: a supermarket, a flea market, etc.

False

Indifference curves may intersect.

False

Flora's Flowers operates in a perfectly competitive market. At the point where marginal cost equals marginal revenue, ATC = $10, AVC = $5, and the price per unit is $15. In this situation,

Flora earns positive profits in the short run

If the budget for the consumer is $48, then

all of the above

Which of the following will shift the demand curve rightward?

Increase in the price of substitutes, expected prices, population and decrease in the price of complements

In Promaine Flats, Nevada there are two restaurants: Sal Monella and Road Kill Café. Current profit is $7,000 each. Cleaning will attract more customers, but profit will reduce to $5,000 each. If Sal Monella cleans up and Road Kill Café doesn't then profit will be $4,500 for Sal Monella and $3,000 Road Kill, and if Road Kill Café cleans up and Sal Monella doesn't then profit will be $4,500 and $3,000, respectively. For the figure above which of the following statements is correct?

Neither Sal Monella nor Road Kill Café has a dominant strategy.

Figure below depicts a monopoly that does not price discriminate. What are the equilibrium price and output?

P' and Q'

Among points A, B, C and D, which combination of goods yields the highest level of satisfaction?

Point D

Which of the following formulas represents total profit for a perfectly competitive firm?

Q x (P - ATC)

Figure below shows the cost and demand curves facing a monopolist whose marginal cost is constant. The firm has no fixed costs. If it does not discriminate, it will produce

Q* units and charge price P

Given the figure below, The quantity producers would have supplied at the target price is

QG

The basic problem addressed in economics is

Scarce resources and unlimited wants

Economics is the study of choice under conditions of

Scarcity

The stage of production where the total physical product curve begins to decline corresponds to:

Stage 3

The economy's aggregate supply curve includes:

all of the above, classical, normal, keynesian range

Given the graph below, which of the following statements is true? (AD, AS)

The economy is experiencing a recessionary gap.

A single-price monopolist is producing 8,000 units of output. At that level, price equals $10, average total cost equals $12, and average variable cost equals $8. In addition, both marginal cost and marginal revenue equal $6. Which of the following statements is correct in the short run?

The firm is minimizing its economic loss at $16,000.

Which of the following is the best example of physical capital used to produce a textbook?

The ink used in the printing press

Brian and Matt own the only two bicycle repair shops in town. Each must choose between a low price for repair work and a high price. The yearly economic profits from each strategy are indicated in Figure bellow. The upper right side of each rectangle shows Brian's profits; the lower left side shows Matt's profits.Which of the following statements is correct for a one-trial game?

The market equilibrium price is the low price

Assume the curves depict the aggregate demand (AD) and aggregate supply (AS) curves for a particular economy. Let $14 trillion correspond to the full employment level of aggregate output (the targeted or desired level) for this particular economy.

The potential GDP for the country is $20 trillion.

Studies show that the supply curve for bananas has shifted. All of the following could be possible explanations for the shift, except one. Which is the exception?

The price of bananas has risen.

A $1.00 increase in the price of a restaurant meal results in a drop in quantity demanded of 5 meals. Which of the following statements is correct?

The slope of the demand curve is -1/5; there is insufficient information to determine the price elasticity of demand.

A price elasticity of demand of 2 for a specific cola means that if the price increases 1 percent, the quantity demanded of the cola will decrease by 2 percent.

True

An example of average physical product in agriculture is the yield or number of bushels of corn produced per acre

True

If both the demand and supply curves for computers shift to the right, the price of computers may rise, fall, or remain unchanged.

True

If the government wants to manipulate the equilibrium price, it will normally create a price floor or price ceiling; if the government want to manipulate the equilibrium quantity, it will normally impose taxes or award subsidies

True

If the price of film increases, the demand for film processing would decrease; moreover, the equilibrium price and quantity of film processing should also decrease.

True

If the price of leather (an input for leather shoes) increases, the equilibrium price of leather shoes will increase and the equilibrium quantity of leather shoes will decrease.

True

The value of any index for the reference or base year is always 1 or 100.

True

The value of any index for the reference or base year is always 1.

True

Which budget constraint panel in Figure below shows the effect of an increase in the price of apples, other things constant?

a

This question pertains to the following table that gives the output produced (in bushels) and price of corn received ($/bushel) for Farmer Smith over the period 2008 to 2010. Assume that the only source of income for Farmer Smith is from the production of corn. Also assume that all production costs are zero. YearOutputPriceCPI20086,000$2.001.0020098,000$2.601.10201010,000$2.501.40 You are to compute output indices for 2008 and 2010 for Farmer Smith with the base year of 2009. Which of the following statement(s) is (are) true?

a and c

A decrease in the price of a particular good, with all other variables constant, causes

a movement along a given demand curve to a higher quantity demanded

An increase in the price of a particular good, with all other variables constant, causes

a movement along a given supply curve to a higher quantity supplied

A market in which there are many buyers and sellers so that each has a negligible impact on the market price and the goods offered for sale are all the same is called

a perfectly competitive market

If the government thinks the price that a consumer has to pay for a good is too high, then which of the following would solve this problem?

a price ceiling or a subsidy

An inflationary gap occurs in the economy when:

aggregate demand is greater than full employment output

Which of the following is true?

all of above

Among points A, B, C and D, which combination of goods yields the highest level of satisfaction?

all of the above

Based on the graph below, which of the following statement(s) is (are) true?

all of the above

Consumption expenditures includes:

all of the above

Given figure below, The firm in Figure above has

an economic loss of $12,500

If buyers' tastes and preferences shift in favor of a good, the result is

an increase in demand

An increase in demand causes

an increase in equilibrium price and equilibrium quantity

Figure below shows the cost and demand curves facing a monopolist whose marginal cost is constant. The firm has no fixed costs. If it does not discriminate what will it's profit be?

area PP'BA

If the budget for this consumer is $96, then

at point a, the consumer is said to be in equilibrium

Betsy graduates from college, where she earned $3,000 a year working part-time, and takes a job as a third grade teacher, where she now earns $30,000 per year. About the same time she received her first paycheck, her bicycle was stolen. With her old income she would have purchased a new bike but with her new income she purchased a new car. Therefore,

automobiles are a normal good for betsy

The fall in the market price from $3 to $2 corresponds to:

b and c

A substitute good is one that

can be used in place of another good, fulfilling the same basic purpose

Network externalities

can explain the dominance of existing firms in some industries

Investment expenditures consists of:

construction of office buildings

Given the graph below, which of the following statements is false?

consumers are dis-saving by $300 at a disposable income of $3,000.

Price ceilings are primarily targeted to help __________, while price floors generally benefit __________.

consumers; producers

A price floor on corn would have the effect of

creating a surplus supply when the floor is above the equilibrium price

High-income people will sometimes pay higher prices at convenience stores for goods that are available at discount stores. They do this because

crowded and understaffed discount stores impose higher time costs

Which budget constraint panel in Figure below shows the effect of a decrease in the price of oranges, other things constant?

d

A decrease in demand, with supply constant, results in a(n)

decrease in equilibrium price and a decrease in equilibrium quantity

If the demand curve is a horizontal line,

demand is perfectly elastic

If the percentage change in quantity demanded divided by the percentage change in price equals 1, then

demand is unit elastic

Suppose that initially the market for cassette tapes is at point A on demand curve D2in figure below. If the price of cassette tapes decreased,

equilibrium will move to point C on demand curve D2

In Figure below, if the government imposes a price ceiling of $2, the result will be

excess demand

Assume the curves depict the aggregate demand (AD) and aggregate supply (AS) curves for a particular economy. Let $14 trillion correspond to the full employment level of aggregate output (the targeted or desired level) for this particular economy.This economy is:

experiencing an recessionary gap of $2 trillion

Assume the curves depict the aggregate demand (AD) and aggregate supply (AS) curves for a particular economy. Let $14 trillion correspond to the full employment level of aggregate output (the targeted or desired level) for this particular economy. This economy is:

experiencing an recessionary gap of $2 trillion.

If income increases, there will be a parallel downward shift of the budget line

false

In economics, a market is a specific location where buying and selling take place: a supermarket, a flea market, etc.

false

Indifference curves may intersect.

false

Marginal revenue, average revenue, and price are all equal for a monopolist.

false

A physician's knowledge and skills is referred to by economists at

human resources

Use the following graph to answer the question. Note that this graph is not drawn to scale. Which line is drawn tangent to the curve i at point B?

ii

Sarah and Marisa are the only two baby-sitters available in a small town. Figure below indicates different combinations of hourly rates charged by the two teenagers, along with their weekly net earnings.If Sarah and Marisa do not collude, then

in equilibrium, both will charge $4 per hour

Federal subsidies to higher education have the effect of

increasing the demand for higher education

If the percentage change in quantity demanded is smaller (in absolute value) than the percentage change in price, then demand is

inelastic

Suppose that when the price of aspirin rises from $2 to $3 per bottle, the quantity demanded falls from 800 bottles per day to 700 bottles per day. Over this range, the demand for aspirin is

inelastic

A straight line in a graph

is all of the above

If the income elasticity of demand for a good is -2.5, then

it is an inferior good, and its demand curve will shift to the left if buyers' incomes increase

absent an ability to price discriminate, if a monopoly wants to sell more output, it must

lower its price

Given the graph below, which monetary policy actions by the Federal Reserve would lower the interest rate from the current 10 percent level?

lower the fractional rrr

The change in total revenue obtained by selling an additional unit of output is

marginal rev

To maximize profit, a monopolist should produce the level of output at which

marginal revenue equals marginal cost

Suppose that a monopoly is earning economic profits in the short run. As a result,

no new firms will enter the industry because of barriers to entry

A decrease in the fractional reserve requirement ratio will:

none of the above

Aggregate demand in the economy is equal to:

none of the above

Contractionary fiscal policy actions:

none of the above

Contractionary open market operations by the Federal Reserve System includes:

none of the above

Given the graph below, which of the following statements is true? (Ld & LS)

none of the above

The fact that travel on buses fell as incomes increased in many cities suggests that

none of the above

Which budget constraint panel in Figure below shows the combined effects of an increase in the price of oranges and a decrease in the price of apples?

none of the above

The marginal propensity to save is equal to:

one minus the marginal propensity to consume.

a single price monopolist is

one that charges the same price for all units of output

a monopoly is a

price setter

Which of the following is true?

product differentiation is the key difference between monopolistic competition and perfect competition.

Give Figure below, What is the total profit (or loss) for the (single-price) monopolist shown in Figure above?

profit of edcf

Figure below shows the market demand schedule for compact disks. If the price per disk falls from $12 to $10, the Price per CDQuantity Demanded$105.0 Million$113.5 Million$122.9 Million$132.3 Million$142.0 Million

quantity demanded will increase by 2.1 million disks

The functions of the Federal Reserve System include:

regulating the money supply

At point A, which of the following statements is (are) false?

the MRS = -4/3 or 4/3 after taking the absolute value.

Macroeconomics is the study of

the behavior of the economy as a whole

Assume the curves depict the aggregate demand (AD) and aggregate supply (AS) curves for a particular economy. Let $14 trillion correspond to the full employment level of aggregate output (the targeted or desired level) for this particular economy. Which of the following statement(s) is (are) true:

the potential GDP for the country is $20 trillion.

Each point along the market demand curve shows

the quantity of the good that consumers would be willing and able to purchase at a specific price

Which of the following is not true?

the supply curve for a firm is its MC curve

If an excise tax is imposed on a good or service,

the supply curve shifts upward

When the minimum wage is set above the equilibrium market wage,

the unemployment rate will rise

According to the law of demand,

there is a negative relationship between quantity demanded and price

When there is a positive cross-price elasticity of demand between two goods,

they are substitute goods