Quiz Questions

Widgets Inc. produces widgets. If Widgets fixed costs are $1000 and the average variable cost of producing an out put of 25 widgets is $60, the The Total Cost of producing that quantity is:

$2500

Say you scored a 65 on your first exam and 78 on the second exam. Your score increased by about?

20%

Of the following 2 events, which has a greater chance at increasing tuition rates: 1: President gets a $1 Million raise, 2: Each university worker gets a wage increase of $1000

2: The Wage Increase

Heather has one employee in her sweater shop who can sew six sweaters a day. When she hires a second person, the two employees can make ten sweaters together. Thinking at the margin, the extra benefit received from hiring a second worker is how many sweaters?

4

Suppose that a major hurricane hits Florida, causing widespread damage to homes and businesses. If the legislature imposes price controls in order to keep reconstruction costs reasonable, which of the following is the most likely result?

A shortage of building materials

Which policy is MOST likely to contribute to improved standards of living over time?

Adding after school art and music programs to promote creativity

Because people make decisions at the margin, when deciding whether to purchase a second car, they would therefore compare the.

Additional benefit expected from a second car with the additional costs of the second car.

Which example represents incentives for decisions?

All of them

Bad weather reduces the supply of good X. At the same time, scientists discover the health benefits of good X. This will result in:

An increase in the equilibrium price and an uncertain impact on the equilibrium quantity

Both of these changes happen simultaneously in a market: the supply of good X falls and the demand for good X rises. This will result in:

An increase in the equilibrium price and an uncertain impact on the equilibrium quantity.

Suppose Mike has three hours of time to spend so he ranks the following activities in order of priority: (1) see a movie, (2) attend a ball game, (3) study economics. Assume that each activity takes three hours. What is Mike's opportunity cost of seeing the movie?

Attending a Ball Game

Widgets Inc. produces widgets. Widget's monthly total fixed costs are $1000, and monthly variable costs are $3000. If for some reason Widget's fixed cost fell by $500 then:

Average Total Costs would fall

Widgets Inc. produces widgets. If widgets fixed cost rose

Average Total Costs would rise

If a restaurant that traditionally has only served lunch and dinner wants to open for breakfast, which factor should be considered?

Cost of additional food

An airline finds that its morning flights are half empty, but the mid afternoon flights are full. Which would be the most plausible statement for an economist to make?

Cut the prices of early morning flights and raise the prices of afternoon flights

Since some inputs you need to study are generally fixed, your marginal returns to the variable inputs (hours you study for an exam) will tend to

Decrease

Suppose you make BBQ sandwiches in a perfectly competitive market. Recently, you discovered that the market demand for BBQ sandwiches in your area is inelastic. Given this info, to increase profits, you should do what to their price?

Do not change the price

If the total revenue from selling good X falls as a result of an increase in the price of X, then we know that the price elasticity is

Elastic

Say there is a decrease in the price of one of the inputs needed to produce good Y. As a result, the equilibrium price of X (a substitute) will:

Fall

When the income of buyers of good X rises, the equilibrium price of good X will (assume X is an inferior good)

Fall

The opportunity costs of attending college do not include

Food expenditures

Since some inputs you need to study are generally fixed, your output as a student will tend to

Increase at a decreasing rate

People use _____ to determine how many hours to work, and businesses use _____ to determine how much of their product they are willing to supply to the market.

Marginal Analysis, Marginal Analysis

If the average total cost is $20 and the price is $30 at the profit maximizing quantity, what will happen in the long run in a perfectly competitive market?

More Firms will enter pushing the market price lower

A government that imposes a price ceiling above the equilibrium price of a good will cause

No change in the amount of supply or demand

When the government chooses to use resources to build tourist centers, the selected resources are no longer available to build highways. This BEST illustrates the concept of?

Opportunity Cost

Employers give stock options to full time employees who have been on the job more than three years. This is an example of?

People following incentives

Mary uses funds from a savings account to pay off his equipment loan. The interest rate Mary pays is greater than the interest rate he can earn on the savings account (3%). John's accounting profit____and his economic profit____.

Rises, Rises

Suppose in the market for iPhones, the following two changes take place: (1) the cost of making iPhones falls and (2) customers begin to prefer androids over iPhones. What happens to the equilibrium price and the equilibrium quantity?

The equilibrium price falls, but the equilibrium quantity is indeterminate

The opportunity cost of buying a ticket to see an MLB game is?

The net value of the next best alternative.

You work as a tutor for ECON 102. You sell your services at $12/hr. and you can only tutor one person at a time. You have 5 clients. If it costs $14 to tutor the first student, in order to increase profits, you should?

We need more info

Suppose you are studying for an exam you have tomorrow morning. Which of the following costs is a sunk cost for your production of correct problems you have in the next day?

Your general level of intelligence (the so called IQ)

The private market for education can be considered a market failure because it leads to a price of education that society believes is to ____ and a quantity of education that is too _____.

high, low

Widget Inc. produces widgets. If Widget's Fixed Costs are $1000 and the Average Variable Costs of producing an output of 25 widgets is $60, then the total cost of producing and output of output of 50 widgets is:

impossible to calculate with the given information

Say there is an increase in the price of one of the inputs needed to produce good Y. As a result, the equilibrium price of X (a substitute) will:

rise

When the income of buyers of good X rises, the equilibrium price of good X will (assume X is a normal good)

rise

If you drop a course after the refund date, the tuition that you have paid and cannot recover is:

sunk cost

If you were not studying economics, you could be doing one of the following: sleeping in (which you value at $5), playing cards with your friends (which you value at $10), or working (you would have earned an extra $8). The opportunity cost of studying economics is therefore?

$10

You work as a tutor for ECON 102. You sell your services at $12/hr. If you did not tutor, you could work as a bar tender and make $12/hr. Assuming you do not have any other operating costs, each hour you work as a tutor accounting profits are ______ and economic profits are ______.

$12, $0

If you are willing to sell an old bicycle for $100, but someone offers you $130 for it, the result of the transaction would yield:

$30 worth of producer surplus and unknown consumer surplus

Admission prices to Dollywood are $50 for a one day ticket, $80 for a two day ticket, and $100 for an annual pass. What are the marginal costs for going days 2, 3, and 4?

$30, $20, $0

If the price elasticity of X is -2.1, a 45% change in the price will change the quantity demanded for X by _____ %

95

A government that imposes a price floor above the equilibrium price of a good will cause:

A surplus of supply

Suppose in the market for iPhones, the following two changes take place: (1) the cost of making iPhones rises and (2) customers begin to prefer androids over iPhones. What happens to the equilibrium price and the equilibrium quantity?

Price is indeterminate, quantity falls

Summer rentals tend to be a relatively price-elastic demand good (demand is more price elastic than supply). Say the City government imposes an excise tax on every summer rental in the City, to be paid by renters when they reserve the place. The burden of this tax will probably fall more heavily on:

Rental Owners (Sellers)

Which question is not an example of involving marginal analysis?

Should Kmart rebrand all of its stores to use the Sears name?

Which of these goods would tend to have a more price elastic demand?

Tangerine Oranges

Suppose the market for good x has an effective price floor. Then market supply suddenly rises. What impact does this have on the dead weight loss (social cost) caused by the price floor in the market, ceteris paribus?

The dead weight loss will be greater

Suppose in the market for widgets, the following two changes take place: (1) the cost of making widgets falls, and (2) customers begin to prefer wadgets (a substitute of widgets) over widgets. What happens to the equilibrium price and equilibrium quantity?

The equilibrium price falls, but the equilibrium quantity is indeterminate.

if a firms minimum point on the ATC curve is $15 and on the AVC curve is $10, what is the firm's optimal strategy in the short run if the market price is $12 and it is producing where MR = MC

The firm should continue producing where MR = MC to limit its losses

Sujata has a stopover in Iceland and can choose one of three tours. What is her opportunity cost if she chose the Northern lights.

The value of visiting the thermal springs if that was her 2nd choice after the Northern Lights

Hitting your snooze alarm before you get out of bed is an example of?

Thinking at the Margin

Choosing to work an extra hour of overtime is an example of.

Thinking at the margin