MICRO EXAM 3
Eco Energy is a monopolistically competitive producer of a sports beverage called Power On. The table to the right shows the firm's demand and cost schedules. What is the most output (Q) that Eco Energy can produce that will maximize profit and what is the price (P) charged?
P=$50; Q=6 cases
Keegan has $30 to spend on Pita Wraps and Bubble Tea. The price of a Pita Wrap is $6 and the price of a glass of Bubble Tea is $3. The table to the right shows his total utility from different quantities of the two items. What is Keegan's optimal consumption bundle?
3 pita wraps and 4 bubble teas
Suppose ham is a normal good. How will consumers adjust their buying decisions if the price of ham changes? If the price of ham increases, then consumers will demand: Answer A Instead, suppose ham is an inferior good. : Answer B
A: less ham due to the income effect because their purchasing power decreases and less ham due to the substitution effect because the opportunity cost of consuming ham is higher. B: If the price of ham increases, then consumers will demand more ham due to the income effect and less ham due to the substitution effect.
Suppose you have a monthly entertainment budget that you use to rent movies and purchase CDs. You currently use your income to rent 5 movies per month at a cost of $5.00 per movie and to purchase 5 CDs per month at a cost of $10.00 per CD. Your marginal utilityLOADING... from the fifth movie is 20 and your marginal utility from the fifth CD is 44. Are you maximizing utility? You are: Answer A B: What could you do to increase utility?
A: not maximizing utility because the marginal utility per dollar spent on movies is not equal to the marginal utility per dollar spent on CDs. B: You could increase utility by consuming more CDs and fewer movies.
Which of the following equations is correct?
AFC + AVC = ATC
The delivery of first−class mail by the U.S. Postal Service is an example of
a monopoly.
You have 6 hours to study for 2 exams tomorrow. The relationship between the time studying and test scores is shown below
a. Use the rule for determining optimal purchases to decide how many hours you should study each subject. Treat each point on an exam like 1 unit of utility and assume you are equally interested in doing well in economics and psychology. You should study economics for 4 hours and psychology for 2 hours. b. Suppose now that you are a psychology major and that you value each point you earn on a psychology exam as being worth three times as much as each point you earn on an economics exam. Now how many hours will you study each subject? You should study economics for 2 hours and psychology for 4 hours.
Refer to the table to the right. The table shows 1 $7.50 $7.50 2 7.00 14.00 3 6.50 19.50 4 6.00 24.00 5 5.50 27.50 6 5.00 30.00
an elastic segment of the demand schedule.
If a perfectly competitive firm's price is above its average total cost, the firm
is earning a profit.
Assume the price of CDs is $14 and the price of DVDs is $26. At those prices, Isabel consumes 15 CDs and 19 DVDs. Her marginal utility from the last CD consumed is 174 and her marginal utility from the last DVD consumed is 245. Without changing the combined amount spent on CDs and DVDs, Isabel can increase her utility by consuming
more CDs and fewer DVDs.
A monopolistically competitive firm faces a downward−sloping demand curve because
of product differentiation.
What role does utility play in the economic model of consumer behavior? When modeling consumer behavior, utility
reflects the satisfaction a consumer receives from consuming a particular set of goods and services.
Which of the following is an implicit cost of production?
rent that could have been earned on a building owned and used by the firm.
If Marlowe obtains 9 units of utility per dollar spent on apples and 6 units of utility per dollar spent on oranges, then Marlowe
should buy more apples and fewer oranges.
What is behavioral economics?
the study of situations in which people act in ways that are not economically rational
If a consumer receives 20 units of utility from consuming two candy bars, and 25 units of utility from consuming three candy bars, the marginal utility of the second candy bar is
unknown as more information is needed to determine the answer.
Golda Rush quit her job as a manager for Home Depot to start her own hair dressing salon, Goldilocks. She gave up a salary of $40,000 per year, invested her savings of $30,000 (which was earning 5 percent interest) and borrowed $10,000 from a close friend, agreeing to pay 5 percent interest per year. In her first year, Golda spent $18,000 to rent a salon, hired a part-time assistant for $12,000 and incurred another $15,000 in expenses on equipment and hairdressing material. Based on this information, what is the amount of her explicit costs for the first year?
$45,500
