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ECON 203 Final Exam

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ECON 203 Final Exam;Final Exam ECON 203;Name;I.;MULTIPLE CHOICE (40 questions, 2 points each). Choose the one alternative that best completes the;statement or answers the question.;1) The opportunity cost of going to college;1);A) includes wages you lose by going to school instead of working.;B) is equal to the cost of tuition, room and board, and other expenses.;C) is zero if your parents pay your tuition.;D) is the same for all students at a particular school who pay full tuition.;2) If a consumer can buy four DVDs for $44 and five DVDs for $50, then the marginal cost of the fifth DVD is;A) $50. B) $6.;2);C) $10. D) $11.;3) Judy demands more peanuts as her income increases. From this, we can conclude that, for Judy;A) peanuts are a complementary good. B) peanuts are a normal good.;C) peanuts are a substitute good.;D) peanuts are an inferior good.;3);4) When Mary's income increases, she purchases fewer hamburgers. We can conclude that for Mary, hamburger is a(n);good. 4);A) normal;B) complementary;C) substitute;D) inferior;5) Flour is used to produce bread. If the price of flour increases: 5);A) the supply of bread decreases.;B) the demand for bread decreases.;C) the demand for bread increases.;D) the supply of bread increases.;6) If the price of crude oil (an input to the production of gasoline) increases, then we will expect to see;A) a movement along the supply curve for gasoline downwards.;B) a shift in the supply of gasoline to the left.;C) a shift in the supply of gasoline to the right.;D) a movement along the supply curve for gasoline upwards.;7) A decrease in the tuition (i.e., price) that a public university charges would result in;A) a shift in the supply of college classes to the right.;B) an downward movement along the supply curve for college classes.;C) a shift in the supply of college classes to the left.;D) an upward movement along the supply curve for college classes.;6);7);8) A telephone company wants to increase the consumption of telephone by 12%. The price elasticity of demand for;telephone is 0.6. The telephone company should: 8);A) raise the price of telephone by 0.4%. B) lower the price of telephone by 25.0%.;C) lower the price of telephone by 2.0%. D) lower the price of telephone by 20.0%.;9) One of the main differences between the long run and the short run is that;9);A) there are no diminishing returns in the long run.;B) the firm can earn a profit.;C) the firm can operate at a loss.;D) there are no diminishing returns in the short run.;10) A firm will choose to operate rather than shut down as long as;A) total revenue is greater than or equal to variable cost.;B) average fixed cost is greater than average variable cost.;C) it earns a positive profit.;D) total revenue is greater than or equal to fixed cost.;10);11) The price elasticity of demand for strawberries is 1.2 during the summer. If a drought causes the price of strawberries;to increase 15%, farmers can expect quantity demanded to;11);A) decrease by 18%.;C) increase by 18%.;B) decrease by 12.5%.;D) increase by 12.5%.;12) If a firm spends $200 to produce 20 units of output and spends $440 to produce 40 units of output, then the marginal;cost of increasing output is;12);A) $20. B) $22. C) $12. D) $10.;13) Refer to Figure 10.3. If this firm is producing the profit-maximizing quantity and selling it at the profit-maximizing;price, the firm's profit will be: 13);A) $80. B) $132. C) $84. D) $88.;14) Refer to Figure 10.3. The profit-maximizing level of output for this monopolist is ________ units of output.;A) 20;B) 26;C) 24;D) 22;14);15) Refer to Figure 11.2. In the long run the monopolistic competitor would generate total revenue equal to the area;15);A) 0BGD.;B) 0AFD.;C) AHE0.;D) AFGB.;16) Refer to Figure 17.2. If the equilibrium wage $12 and a new minimum wage is set at $15, then ________ hours of labor;will be employed.;16);A) 25,000;B) 36,000;C) 30,000;D) none of these;Figure 2.2;17) Figure 2.2 presents a production possibilities curve for a country that can either produce highways or provide people;with medical care in a given year. The opportunity cost of the second new highway built in a year is;17);A) 40,000 people provided with medical care.;B) 50,000 people provided with medical care.;C) 500,000 people provided with medical care.;D) 30,000 people provided with medical care.;Figure 2.4;18) Joe runs a business and needs to decide how many hours to stay open. Figure 2.4 illustrates his marginal benefit of;staying open for each additional hour. Suppose that Joe's marginal cost of staying open per hour is $32. How many hours;should Joe stay open? 18);A) 5 hours;B) 6 hours;C) 4 hours;D) 7 hours;Figure 4.1;19) Refer to Figure 4.1 that shows Mary and Tom's individual demand curves for meals per week at Fratelli's Italian;Restaurant. Assuming Mary and Tom are the only consumers in the market, what is the market quantity demanded at a;price of $10?;19);A) 6;B) 8;C) 2;D) 4;Figure 4.3;20) Figure 4.3 illustrates the supply and demand for blue jeans. If the actual price of blue jeans is $30, there is;A) excess demand of 50 pairs of blue jeans.;C) excess demand of 40 pairs of blue jeans.;20);B) excess supply of 50 pairs of blue jeans.;D) excess supply of 40 pairs of blue jeans.;Figure 4.4;21) Figure 4.4 illustrates the demand for guitars. An increase in the demand for guitars is represented by the movement;from: 21);A) D1 to D2.;B) point B to point C.;C) point B to point A.;D) D1 to D0.;22) Figure 4.4 illustrates the demand for guitars. A decrease in price of guitars would bring about a movement from;22);A) D1 to D2.;B) point B to point A.;C) point B to point C.;D) D1 to D0.;23) Figure 4.4 illustrates the demand for guitars. Assume guitars are an inferior good. An increase in income would bring;about a movement from;23);A) D1 to D2.;B) D1 to D0.;C) point B to point A.;D) point B to point C.;24) Refer to Figure 5.1. Using the initial-value method, if the price of a hamburger is decreased from $10 to $8, the price;elasticity of demand equals;24);A) 1.0. B) 1.5. C) 5.0. D) 2.0.;25) Refer to Figure 6.1. If the price of a donut is $.75, consumer surplus is;A) $1.50.;B) $1.75.;C) $.75. D) $.50.;25);26) Refer to Figure 6.3. If the price of one hour of tutoring is $20, then producer surplus is;A) $20. B) $10. C) $30. D) $40.;26);27) Refer to Figure 6.6. If the government will not allow landlords to charge more than $400 for an apartment, the;deadweight loss will be equal to;27);A) 200. B) 750. C) 250. D) 500.;28) Figure 6.8 shows the market for taxicab services in a small town. If the government limits taxicab services to 20 per;day, then the deadweight loss is equal to;28);A) $20. B) $7.50.;C) $3.75.;D) $15.;29) Refer to Figure 7.3. The total utility from consuming 4 slices of pie is:. 29);A) 8. B) 15. C) 17. D) 2.;30) Refer to Figure 8.7. If six microwave ovens are produced, Micro Oven's average total costs are;A) $1200.;B) $200.00.;C) $116.67.;D) $700.;30);31) Refer to Figure 9.3. This farmer's profit-maximizing level of output is ________ units of output.;A) 1,400.;B) 700 C) 1,000 D) 200;32) Refer to Figure 9.5. If this farmer is maximizing profits, his total revenue will be;A) $135.;B) $90. C) $240. D) $180.;31);32);33) Refer to Figure 9.5. This farmer's fixed costs are;33);A) $24.;B) $0.;C) $45.;D) indeterminate unless we know the level of output the firm is producing.;34) Refer to Figure 9.5. If this farmer is maximizing his profits, his total variable cost is;A) $24. B) $255. C) $42. D) $108.;34);35) Refer to Figure 9.5. If this farmer is maximizing profits, his total costs will be: 35);A) $66. B) $132. C) $11. D) $90.;36) Refer to Figure 9.5. For this farmer to maximize profits he should produce ________ bushels of wheat. 36);A) 16;B) 12;C) 6;D) 9;Table 2.1;37) A group of people has formed a house cleaning and yard maintenance business. The number of houses or yards that;they can clean or maintain in any given day is depicted in Table 2.1. The opportunity cost of cleaning the second house in;a day is;37);A) 2 yards maintained. B) 3 yards maintained.;C) 1 yard maintained. D) 18 yards maintained.;Table 2.2;38) Julianne runs a business and needs to decide how many hours to stay open. Table 2.2 illustrates her marginal costs of;staying open for each additional hour. Suppose that Julianne's marginal benefit of staying open per hour is $16. If she is;following the marginal principle, how many hours should Julianne stay open? 38);A) 5 hours;B) 3 hours;C) 7 hours;D) 4 hours;Table 3.1;39) Table 3.1 illustrates Willy and Blythe's hourly production for apples and carrots. Based on the table, Willy's;opportunity cost of 1 apple is: 39);A) 4 carrots.;B) 1 carrot.;C) 2/3 carrot.;D) 6 carrots.;Table 7.1;40) Refer to Table 7.1. The marginal utility of the third donut per day is: 40);A) 60. B) 75. C) 20. D) 15.;II. SHORT ANSWER (5 questions, 4 points each). Write the phrase that best completes each statement or;answers the question.;41) A major freeze in Florida has reduced the orange yield this winter. What will be the effect of this freeze on the price;and quantity in the orange market and also in the peach market? (Assume that oranges and peaches are substitutes.);41);42) As a result of advances in technology, cellular telephones have become cheaper to produce. Illustrate the effect of this;change on the market for cellular telephones.;42);43) Explain the effect of higher gasoline prices on the demand for large SUVs. What is the relationship between gasoline;and SUVs?;43);44) Suppose the widget industry is perfectly competitive and faces constant returns to scale. A monopoly purchases all;widget producers in the market. List three ways in which the market outcome under monopoly will differ from the;market outcome under perfect competition.;44);45) Explain why the demand for high-skilled workers has increased in the U.S. during the past three decades.;45)

 

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