econ exam review #2

Jack owns a pumpkin patch and has been selling pumpkins for $10. As Halloween approaches, he worries about having too many unsold pumpkins, so he lowers the price by 20%. If the price elasticity for pumpkins is 1.5, how many more pumpkins will Jack sell?

30% more

Andrea has $30 to spend on game apps and movie downloads. If game apps are $3 each and movie downloads are $5 each, which combination can Andrea afford?

5 game apps and 3 movie downloads

A wedding planner determines that 1 waiter can serve 30 guests, 2 can serve 70 guests, 3 can serve 120, 4 160, and 5 180. The MP for the 3rd waiter is...

50 guests

In which situation would consumers bear the highest incidence of tax?

an inelastic demand with an elastic supply

AJ paid a $500 registration fee, made hotel reservations for $200, and budgeted $150 for gas & food. Assuming he is able to cancel his hotel without penalty, what is his sunk cost?

$500

Dan's Car Wash produces $150,000 in revenues and incurs $120,000 in labor wages, materials, rent, and other explicit costs. Moreover, Dan gave up a $40,000-a-year job as a hotel valet to start his car wash business. Dan's economic profit is _____, and he _____ earning a normal profit.

-$10,000; is not bc price does not equal to zero

The local convenience store advertises 50% off frozen slushies. As a result of the sale, the store sells 80% more slushies, but 20% fewer fountain drinks. The cross elasticity between slushies and fountain drinks is _____.

0.4

If the average price of homes rose by 15% last year, and, as a result home builders increased the supply of new homes by 10%, the price elasticity of supply is ______, and the supply of new homes is ______.

0.67; inelastic bc 0.67<1

In the town of Skatesville, avg income falls by 20% due to a recession; as a result the sales of skateboards fall by 15%. The elasticity of demand is ______, and skateboards are a ______ good.

0.75; normal

Which of the following inputs can be altered in the short run?

The number of hours current employees work

Jenn's marginal utility of the last candy bar consumed is 8 and her MU of the last smoothie is 20. If candy bars cost $2 and smoothies cost $4, which statement is true according to the utility maximizing rule?

Jenn must consume more smoothies and less candy bars to maximize utility.

If Jeremy's budget line shifts inward in a parallel manner, what may have happened?

Jeremy has less money to spend on the two goods.

If you allocate your time b/w attending classes and practicing for an upcoming game, you will maximize your utility by choosing a bundle in which:

MU per hour for each activity is equal

Why doesn't this quote make econ. sense: "The round of golf I just played was so much fun and worth the money that I should play another round before going to work."

The marginal benefit of the second round of golf in the same day is likely to be less than the first round.

Which statement describes a situation in which negative returns to labor occur?

The marginal product falls below zero

Due to a drought in Georgia, the market price for peanuts rises by 20% nationwide. If the price elasticity of demand for peanuts is 0.8, what would happen to total revenue for peanut farmers who were not affected by the drought?

Total revenue would rise as quantity demanded falls by 16%

Which of the following would be the most inelastic?

a cavity filled at the dentist

Which is a best example of a framing bias?

airlines that advertise low airfare but then add fees for checked bags and seat assignments

Which factor would increase elasticity the most?

an increase in the number of tablet brands being offered.

Indifference curves exhibit all of the following except

being concave to the origin (they are convex)

One employee can do 2 home installations per month; 2 can do 5, 3 can do 9, 4 12, and 5 11. Diminishing marginal returns start with the _____ worker.

fourth

If the cross elasticity of fly rods and reels is -0.8, a dec. in the price of rods would ______ sales of reels bc the two goods are ______?

increase;complements

Amy decides to open up a bakery. Her explicit costs include all of the following except:

interest earnings she forgoes from selling her savings bonds to finance her store

Which is NOT a characteristic of a corporation

its investors face unlimited liability

When walking home, you find a $20 bill on the street. You spend it on PF Chang's rather than eating leftovers. This type of behavior is called:

overvaluing the past relative to the future

The highest indifference curve that can be achieved, given a budget line:

will be tangent to the budget line