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ECN 212, HOMEWORK #4 - MICROECONOMIC PRINCIPLES

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Question

Multiple Choice: Answer each of these questions by darkening the bubble on your scantron sheet, as if you

 

were taking an exam in class. Hand in only the scantron sheet. Make sure you have darkened in your name and 10-digit ASU Affiliate ID number on the scantron sheet. YOU MUST USE THE (8 1/2 INCH BY 11 INCH)

 

 

1. Which of the following is most likely to cause an increase in the demand for personal

 

computers?

 

A) An increase in the number of computer manufacturers, other things equal.

 

B) An increase in the cost of computer paper.

 

C) An increase in the supply of personal computers, other things equal.

 

D) A requirement by universities that all students buy personal computers.

 

E) A reduction in the price of personal computers, other things equal.

 

2. To answer questions 2, 8, 22, and 24, refer to Figure 10-2, from Lecture 10, which was Dr.

 

Filer\'s daily demand curve for candy bars. Assume the price of candy bars is $.70 each. What is

 

the own-price coefficient of elasticity of demand at that point on the demand curve?

 

A) - 3/7.

 

B) - 7/3.

 

C) Not enough information given to answer the question.

 

D) 7/3.

 

E) 3/7.

 

Use the following to answer questions 3-7:

 

Total Output

 

0

 

2

 

4

 

6

 

8

 

10

 

 

Total Cost

 

$100

 

$196

 

$212

 

$310

 

$430

 

$570

 

 

3. In the table above, assume the marginal cost of the fifth and sixth units are the same. That value

 

is

 

A) $98.

 

B) $310.

 

C) $80.

 

D) $261.

 

E) $49.

 

 

Page 1

 

 

4. In the table above, total fixed costs are equal to

 

A) $100.

 

B) $53.

 

C) Cannot be determined from the information provided.

 

D) $98.

 

E) $10.

 

5. In the table above, if the production of 2 extra units (units 11 and 12) increases total cost by

 

$162, then

 

A) the thirteenth unit will have to go up in price.

 

B) the average variable cost of producing 11 units is $732.

 

C) the marginal cost of the twelfth unit will be $162.

 

D) the total cost of producing 12 units will be $894.

 

E) the average total cost of producing 12 units is $61.

 

6. In the table above, the average fixed cost of the first unit of output is

 

A) Cannot be determined from the information given.

 

B) $100.

 

C) $96.

 

D) $48.

 

E) $98.

 

7. In the table above, the average variable cost of producing two units of output is

 

A) $98.

 

B) $50.

 

C) $96.

 

D) $100.

 

E) None of the above.

 

8. Assume the price of candy bars is $.30 each. What is the own-price coefficient of elasticity of

 

demand at that point on the demand curve?

 

A) 7/3.

 

B) - 7/3.

 

C) - 3/7.

 

D) Not enough information given to answer the question.

 

E) 3/7.

 

9. If the demand curve for product J shifts to the left as the price of product K increases, then

 

A) goods J and K are not related.

 

B) J and K are substitute goods.

 

C) J and K are complementary goods.

 

D) the number of consumers of product K has increased.

 

E) the income of consumers of product K has increased.

 

 

Page 2

 

 

Use the following to answer questions 10-13:

 

Combination

 

A

 

B

 

C

 

D

 

E

 

 

Production of Sweden

 

Pounds of Chocolate

 

0

 

2

 

4

 

6

 

8

 

 

Plates of Caviar

 

15

 

14

 

12

 

8

 

0

 

 

10. Refer to the table above. If Sweden is using combination C and it wants 2 more pounds of

 

chocolate, it must give up

 

A) nothing.

 

B) 4 plates of caviar.

 

C) 6 plates of caviar.

 

D) 8 plates of caviar.

 

E) 2 pounds of chocolate.

 

11. According to the table above, Sweden can make

 

A) 3 pounds of chocolate or 16 plates of caviar.

 

B) 8 pounds of chocolate and 15 plates of caviar.

 

C) 4 pounds of chocolate and 12 plates of caviar.

 

D) Both B and C.

 

E) Both A and C.

 

12. Refer to the table above. The opportunity cost of the fifth and sixth pounds of chocolate is

 

A) Opportunity cost don\'t apply because chocolate is a luxury good.

 

B) 12 plates of caviar.

 

C) 4 plates of caviar.

 

D) 6 plates of caviar.

 

E) 8 plates of caviar.

 

13. According to the table above, to produce 6 pounds of chocolate and 14 pounds of caviar,

 

A) the PPC of Sweden must shift out.

 

B) the PPC of Sweden must shift in.

 

C) the PPC of Sweden must not change.

 

D) Sweden must leave some resources idle.

 

E) None of these; Sweden will never be able to produce such quantities.

 

 

Page 3

 

 

Use the following to answer questions 14-16:

 

Number of Workers

 

0

 

1

 

2

 

3

 

4

 

5

 

 

Output per Hour

 

0

 

7

 

12

 

15

 

17

 

18

 

 

Price of the Product

 

$3

 

$3

 

$3

 

$3

 

$3

 

$3

 

 

14. According to the preceding table, the marginal-revenue product of the

 

A) first worker is $3.

 

B) fourth worker is $68.

 

C) second worker is $12.

 

D) fifth worker is $3.

 

E) third worker is $3.

 

15. According to the preceding table, if the wage rate is $9 per hour, how many workers should this

 

firm hire?

 

A) 3.

 

B) 4.

 

C) 5.

 

D) 1.

 

E) 2.

 

16. According to the preceding table, if the wage rate is $6 per hour, how many workers should this

 

firm hire?

 

A) 2.

 

B) 5.

 

C) 4.

 

D) 3.

 

E) 1.

 

 

Page 4

 

 

Use the following to answer questions 17-21:

 

 

Total Revenue (dollars)

 

 

60

 

Total Revenue

 

Curve

 

 

50

 

40

 

30

 

20

 

10

 

 

10

 

 

0.30

 

 

30

 

 

40

 

 

50

 

 

60

 

 

A

 

B

 

 

0.25

 

Price (dollars)

 

 

20

 

 

C

 

 

0.20

 

 

D

 

 

0.15

 

E

 

 

0.10

 

 

F

 

 

0.05

 

 

10

 

 

20

 

 

30

 

 

40

 

 

50

 

 

Demand

 

Curve

 

 

60

 

 

Quantity

 

 

17. In the figure above, increasing the price of the product by $.05 when the current price is $.15

 

would

 

A) decrease total revenue.

 

B) leave total revenue unchanged.

 

C) increase total revenue.

 

D) increase demand for the product.

 

E) decrease the quantity demanded to 40.

 

18. In the figure above, if the producer increases price within the section of the demand curve from

 

D to F,

 

A) total revenue will be $30.

 

B) there will be a decrease in profit.

 

C) there will be no change in quantity demanded.

 

D) there will be an increase in demand.

 

E) there will be an increase in total revenue.

 

19. In the figure above, the section of the demand curve from D to F is

 

A) the perfectly inelastic range of the demand curve.

 

Page 5

 

 

B)

 

C)

 

D)

 

E)

 

 

the elastic range of the demand curve.

 

the inelastic range of the demand curve.

 

the perfectly elastic range of the demand curve.

 

the unit-elastic part of the demand curve.

 

 

20. In the figure above, which section of the demand curve has an elasticity of demand greater than

 

1?

 

A) D to F.

 

B) A to C.

 

C) C to F.

 

D) A to D.

 

E) C to D.

 

21. Refer to the figure above. If the producer\'s price currently corresponds with the elastic section of

 

the demand curve, how could the producer increase total revenue?

 

A) Increase price, but not above point D.

 

B) Increase price, but not above point C.

 

C) Increase price, but not above point B.

 

D) Decrease price, but not below point D.

 

E) Decrease price, but not below point B.

 

22. Assume the price of candy bars is $.10 each. How much is Dr. Filer\'s consumer surplus each

 

day, from consuming candy bars?

 

A) $3.70.

 

B) $5.00.

 

C) $4.60.

 

D) $4.90.

 

E) $3.60.

 

23. If a price increase from $20 to $40 causes quantity demanded to decrease from 100 units to 50

 

units, one can conclude that demand for the product is

 

A) unit-elastic.

 

B) perfectly inelastic.

 

C) infinitely elastic.

 

D) inelastic.

 

E) elastic.

 

24. Assume the price of candy bars falls from $.70 each to $.30 each. What is the own-price

 

coefficient of elasticity of demand over that price range?

 

A) - 7/3.

 

B) - 1.

 

C) - 3/7.

 

D) 1.

 

E) None of the above.

 

 

Page 6

 

 

25. If a decrease in the demand for product X causes the demand curve for product Y to shift to the

 

right, then X and Y are most likely to be which of the following?

 

A) Butter and margarine.

 

B) Cars and gasoline.

 

C) Knives and forks.

 

D) Tennis balls and tennis rackets.

 

E) Shoes and laces.

 

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