You are in browse mode. You must login to use MEMORY

level: Level 1 of exam 2

Questions and Answers List

level questions: Level 1 of exam 2

Question	Answer
1. In order to understand how the price of a good is determined in the free market, one must account for A) the desires of demanders exclusively. B) the desires of suppliers exclusively. C) the desires of governmental agencies exclusively D) the desires of lobbyists exclusively. E) the desires of demanders and suppliers.	E) the desires of demanders and suppliers.
2. The quantity of Revlon nail polish demanded by Jen decreased after the price of Revlon nail polish increased. Jen decides to find a cheaper brand of nail polish. This is called A) substitution effect of a price change D) increase in buyer's reservation price B) income effect of a price change E) shift in the supply curve C) decrease in buyer's reservation price	A) substitution effect of a price change
3. If the price elasticity of demand for pineapple is 0.75, a 4% increase in the price of pineapple will lead to a A) 3% decrease in the quantity demanded of pineapple B) 3% increase in the quantity demanded of pineapple C) 4% decrease in the quantity demanded of pineapple D) 3/16% increase in the quantity demanded of pineapple E) 16/3% decrease in the quantity demanded of pineapple	A) 3% decrease in the quantity demanded of pineapple
4. The scarcity principle applies to A) all decisions. B) only market decisions, e.g., buying a car. C) only non-market decisions, e.g., watching a sunset. D) only the poor. E) only the wealthy.	A) all decisions.
Use the following to answer questions 5-6: Number of Apples / Total Utility 1 20 2 35 3 45 4 50 5 45 5.The marginal utility of consuming the 2nd apple is A) 10 B) 15 C) 20 D) 35 E) 45	B) 15
6.The marginal utility of consuming the 5th apple is A) -5 B) 0 C) 5 D) IO E) 15	A) -5
7. Which of the following factors of production is likely to be variable in the short run? A) The location of the finn. B) The number of employee-hours. C) The size of the fim1's plant or office. D) The amount of specialized machinery used. E) The number of features in a custom designed software application the finn uses.	B) The number of employee-hours.
Use the following to answer questions 8-10: In the town of SoccerBorough, the equilibrium price for soccer balls is $12 each and the quantity exchanged at that price is 200 balls. 8.If the price is $10 each, the quantity exchanged in the market of SoccerBrough will be A) more than 200 balls D) about 240 balls B) exactly 200 balls E) zero C) less than 200 balls	A) more than 200 balls
9.Ifthe price is $10, the quantity sold will be an amount that A) buyers wish to buy B) sellers offer C) is reached in equilibrium D) the local government wants the seller to sell E) is more than equilibrium quantity	E) is more than equilibrium quantity
10.Ifthe price is $15, the quantity sold will be an amount that A) buyers wish to buy B) sellers offer C) is reached in equilibrium D) the local government wants the seller to sell E) is more than equilibrium quantity	A) buyers wish to buy
11. Suppose all firms in a perfectly competitive industry are experiencing economic profits. One can hypothesize that A) market price will fall. D) the number of foms will not change. B) market supply will decrease. E) market demand will decrease. C) market demand will increase.	A) market price will fall.
12. Market power measures the firm's ability to A) under cut its competitors. B) resist union wage demands. C) raise its price without losing all of its sales. D) influence the price its competitors charge. E) force consumers to pay higher prices.	C) raise its price without losing all of its sales.
13. Constant returns to scale occur when a doubling of all inputs A) doubles the price of outputs. B) more than doubles output. C) less than doubles the price of the inputs. D) exactly doubles output. E) less than doubles output.	D) exactly doubles output.
14. Given the total cost function, TC=l20+12Q, the average cost function is A) 12Q+l2/Q. B) 120/Q +12. C) 120Q+l2Q2. D) 120*Q+12. E) impossible to calculate with the infom1ation provided.	B) 120/Q +12
15. Assume that reading economics produces a positive externality. It will be the case that the _____ than the socially optimal amount. A) supply curve for reading will be greater B) price of reading will be greater C) supply curve for reading will be less D) demand curve for reading will be greater E) demand curve for reading will be less	C) supply curve for reading will be less
16. A 65% chance of winning $10 and a 35% chance of losing $5 would be classified as a(n) A) better than fair gamble. D) fair gamble. B) worse than fair gamble. E) expected value. C) trivial gamble.	A) better than fair gamble
17.The marginal product of the fomih worker is A) 110. B) 130. C) 140. D) 145. E) 150	B) 130
18.If each case sells for $5 more than the cost of the materials used in producing it, then the value marginal product for the 2nd worker is A) $150 B) $310 C) $315 D) $750 E) $775	D) $750
19.If each case sells for $7 more than the cost of the materials used in producing it, then the value marginal product for the 3rd worker is A) $450 B) $980 C) $ I 050 D) $1085 E) $1 120	B) $980
20.lf each case sells for $3 more than the cost of the materials used in producing it, then the most Sam would pay the 5th worker is A) $330 B) $360 C) $390 D) $700 E) $70	B) $360