(Nie) Econ Final Review

Elastic

10. If the absolute value of the slope of the demand curve is 0.25, price is $8 per unit, and quantity demanded is 12 units, then demand for this good is:

1; 4

11. Refer to the accompanying figure. When the price is equal to 8, the price elasticity of demand for the demand curve D1 is _____ and for D2 the price elasticity of demand is _____

2

1. The accompanying table below shows how total donations, average donations, total labor costs and average labor cost vary depending

eA > eB

12. Refer to the accompanying figure. Assume the slopes of the two demand curves are the same. Let eA denote the price elasticity of demand at point A, and let eB denote the price elasticity of demand at point B.

is perfectly inelastic

13. The championship game will be held next weekend in your college's 40,000-seat stadium. The supply of tickets to the game:

Increased

14. During Thanksgiving, you participated in a pumpkin-pie eating contest. You really enjoyed the first two pies, the third one was okay, but as soon as you ate the fourth one you became ill and lost the contest. You got total utility ______ with the first three pies you ate.

There is evidence of diminishing marginal utility. Since the fourth cup was smaller than the third cup it reflects diminishing marginal utility.

15. If the marginal utility of the 3rd cup of coffee is 23 and the marginal utility of the 4th cup is 15, then:

Buy less tea and more scones

16. Suppose a cup of tea costs $0.60 and a scone costs $1.20. If Edith spends all of her income on these two goods, and at her current level of consumption, she receives a marginal utility of 6 utils from the last cup of tea she buys and a marginal utility of 24 utils from the last scone she buys, then Edith should:

Increase; 1.5

17. Refer to the accompanying figure. If Laura and Chris are the only two consumers in this market, then when the price of hamburger decreases from $2.50 to $2.00 per pound, the quantity demanded in the market will _____ by _____ pound(s) per week.

$5 / pound

18. Refer to the accompanying figure. What is the equilibrium price of bananas in this market?

Spinach and potatoes are substitutes.

19. Refer to the accompanying figure. Suppose that Jame's initial budget constraints shifts from BC1 to BC2, and as a result, his best affordable bundle moves from point A to point B. According to this figure:

$8

2. Refer to the accompanying table below. The marginal cost of the 4th unit of activity is:

Increase

20. For a given seller, the accompanying figure shows the relationship between the number of units produced and the opportunity cost of producing an additional unit of output. As the market price of this good increases, the quantity produced by this seller will ______

$2

21. The accompanying table describes the relationship between the number of workers hired by a call center each hour and the number of calls the call center can make each hour. The call center has only 1 telephone. The telephone costs the firm $5/hour (regardless of how many calls are made), and each worker is paid $10 per hour. Given the information in the table above, what is the call center's marginal cost when it goes from making 6 to 16 calls an hour?

profit; $64

22. Suppose a firm uses workers and office space to produce output. The firm is locked into a year-long lease on its office space, but it can easily vary the number of employee-hours it uses each day. The accompanying table describes the relationship between the number of employee hours the firm uses each day and the firm's daily output. Each unit of output sells for $2, the hourly wage rate is $14, and the rent on the office space is $50 per day. When the firm uses 9 employee-hours per day, it earns a daily ______ of ______

profit; $8

23. Refer to the accompanying figure. If the market for doughnuts is perfectly competitive, and the price of a doughnut is 25 cents, then at this firm's profit maximizing level of output, the firm will earn an economic ______ of _____ per day.

$100

24. Suppose Sarah owns a small company that makes wedding cakes. The accompanying table shows how Sarah's total cost varies depending on the number of wedding cakes she makes each day. Sarah's fixed cost is ______ per day.

Curve A above curve C

25. The accompanying graph shows the cost curves for Moe's mushroom gathering business, which is perfectly competitive. Moe's short run supply curve is:

decrease producer surplus

26) Refer to the accompanying figure. Suppose law is passed requiring restaurants to charge no more than $25 per meal. This law would:

$40,000

27) Last year Christine worked as a consultant. She hired an assistant for $15,000 per year and rented office space (utilities included) for $3,000 per month. Her total rev. for the year was $100,000. If Christine hadn't worked as a consultant, she would have worked at a real estate firm earning $40,000 a year. Christines opportunity cost (what you give up) of working as a consultant last year was:

Lead to an increase in

28) Suppose farmers in a given market can either grow soy beans or corn on their land. In addition, suppose an increase in the demand for corn causes the price of corn increase. In the long run, this increase in the demand for corn is likely to _______ the price of soy beans.

Exit the market, leading the market supply curve to shift back to S2.

29) Assume that all firms in this industry have identical cost curves, and that the market is perfectly competitive. If the market supply curve is given by S3, then in the long run firms will:

Pat should drive if saving half an hour $0.50 or more

3. Pat can either drive to work, which takes half an hour and uses $1.50 worth of gas, or take the bus, which takes an hour and costs $1.00. How should Pat get to work?

Her economic rent will be $2 per hour (Economic rent is the part of the payment for a factor of production that exceeds owners res. price).

30) Mary Jane is willing to babysit for $6/hour. Her neighbor has asked her to babysit for $8/hour. Assuming Mary Jane accepts the offer:

Purchase the ticket because doing so will make her $5 better off (price= less than reservation price).

31) Tickets for "Mama Mia!" are $60. Ingrids reservation price is $75, but when she goes to buy a ticket they are sold out. Ingrid decides to buy a ticket from a scalper, who is willing to sell for $70. She should:

There are more resources available to achieve our goals.

32) Efficiency is an important goal because when markets are efficient:

$16

33) If this market is unregulated the economic surplus received by consumers is:

$16

34) If this market is unregulated, the economic surplus received by producers is:

$20

35) If the price ceiling were imposed at $4, consumer surplus would be:

$4

36) If the price ceiling were imposed at $4, producer surplus would be:

$24; $8

37) If a price ceiling were imposed at $4, total economic surplus would be _______, which is ______ less than when the market is unregulated market.

$22

4. You have two options for how to spend the afternoon. You can either go see a movie with your roommate or work as a tutor for the Math Department. From experience, you know that going to see a movie gives you $20 worth of enjoyment, and with your student discount, a movie ticket only costs $12. If you spend the afternoon working as a math tutor, you will get paid $45. On a typical day, you wouldn't be willing to spend the afternoon working as a math tutor for less than $35. What is your opportunity cost of seeing a movie this afternoon?

Dan should specialize in sandwiches, and tracy should specialize in smoothies

5. Suppose it takes Dan 5 minutes to make a sandwich and 15 minutes to make a smoothie, and it takes Tracy 6 minutes to make a sandwich and 12 minutes to make a smoothie. Which of the following statements is correct?

Lou has a comparative advantage over Alex in cleaning.

6. Lou and Alex live together and share a household chores. They like to cook some meals ahead of time and eat leftovers. The accompanying table shows the number of rooms they can each clean and the number of meals they can cook in an hour. Which of the following is true?

Take it all from Middle Drift

7. Earth Movers & Shakers operate 3 iron ore mines. The accompanying table shows each mine's total daily production and the current number of miners at each mine. All miners work for the same wage, and each miner in any given mine produces the same number of tons per day as every other miner in that mine. Suppose Earth Movers & Shakers needs to fill an order for 60 tons of ore in a single day. If it has no other orders for that day, it should:

Less than the increase in

8. Moe divides his time between studying Physics and studying Economics. His production possibilities curve for his final grade in each class is shown in the accompanying figure. If Moe moves from Point A to point C, his grade in Physics will go down by _____ his grade in economics.

Increase because the internet offers more substitutes

9. Suppose that there is only one small clothing store in the remote village of Green Acres, and until recently the townspeople bought their shirts there. As more people in Green Acres become connected to the internet, the price elasticity of demand for shirts at the Green Acres store will: