eco mcqs

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1. Gas prices recently increased by 25%. In response, purchases of gasoline decreased by 5%. Based on this data, the price elasticity of demand for gas is:

      [removed] 5
      [removed] 2
      [removed] 0.5
      [removed] 0.2

2. Sometimes airlines raise ticket prices as the flight departure date approaches in the hope of increasing revenue. The airlines raise their prices on the assumption that:

      [removed] consumer demand becomes more price-elastic as departure time approaches
      [removed] consumer demand becomes less price-elastic as departure time approaches
      [removed] consumers are not aware of airline prices
      [removed] consumer demand is unrelated to prices

3. If your income increases and your consumption of bagels increases, other things equal, bagels are considered:

      [removed] an inferior good
      [removed] a substitute good.
      [removed] a normal good.
      [removed] a positive good.

4. The demand for textbooks is price inelastic. Which of the following would explain this?

      [removed] Many alternative textbooks can be used as substitutes
      [removed] Students have a lot of time to adjust to price changes
      [removed] Textbook purchases consume a large portion of most students' income
      [removed] Textbooks are a necessity

5. An attorney supplies 40 hours of work per week when her fee is $100 per hour but supplies 60 hours of work per week when her fee rises to $120 per hour. Using the midpoint formula, her elasticity of supply is equal to:

      [removed] 1
      [removed] 0.8
      [removed] 2.2
      [removed] 0.45

6. Yovanka has diabetes and she will pay any amount of money to buy the insulin she needs to stay alive. Yovanka's demand for insulin is:

      [removed] income-inelastic
      [removed] price-elastic
      [removed] perfectly price-inelastic
      [removed] perfectly price-elastic

.7. You own a small deli that sells sandwiches, salads, and soup to the community. Which of the following is an implicit cost of the business?

      [removed] wages paid to part-time employees
      [removed] your monthly utility bill
      [removed] bread, meat, and vegetables used to produce the items on your menu
      [removed] the job offer you did not accept at a local catering service

.8. Suppose a local hardware store has explicit costs of $2 million per year and implicit costs of $44,000 per year. If the store earned an economic profit of $50,000 last year, this means that the store's accounting profit equaled:

      [removed] $94,000
      [removed] $6,000
      [removed] $2,050,000
      [removed] $2,044,000

9. To maximize her grade in Physics, Stacey should study until

      [removed] her marginal cost of studying begins to increase
      [removed] her marginal benefit of studying begins to decrease
      [removed] her marginal benefit of studying equals her marginal cost of studying
      [removed] her marginal cost of studying reaches zero.

10. Table: Marginal Analysis of Sweatshirt Production II:

Quantity of shirts	Total Benefit (in dollars)	Total Cost (in dollars)
0	$0	$0
1	16	9
2	32	20
3	48	33
4	64	48
5	80	65

Given the information above, the optimal quantity of sweatshirts that will be produced is. [Hint: Find out the MB and MC.] (Points : 2)

      [removed] 2
      [removed] 3
      [removed] 4
      [removed] 5

11. The price of good X is $60 and its marginal utility is 100 points; the price of good Y is $20 and its marginal utility is 40 points; the price of good Z is $10 and its marginal utility is

To maximize the satisfaction from a $120 expenditure, a person should buy;

      [removed] 6 units of good Y
      [removed] 2 units of good X
      [removed] 12 units of good Z
      [removed] 1 unit of good X plus 3 units of good Y

12. The ability of pumpkin pie to satisfy a want is referred to as its:

      [removed] utility
      [removed] usefulness
      [removed] worthiness
      [removed] necessity

13. The principle of diminishing marginal utility means that when Sarah eats pizza, her satisfaction from the second slice of pizza is probably:

      [removed] greater than that from the first
      [removed] equal to that from the first
      [removed] less than that from the first
      [removed] not comparable to that from the first

14. The Utility of Pecan Rolls

Number of Pecan Rolls	Total Utility in Utils
0	0
1	20
2	35
3	45
4	50
5	50
6	45
7	35

Referring to the table of The Utility of Pecan Rolls, what is the marginal utility for the fifth roll?

      [removed] 15
      [removed] 10
      [removed] 5
      [removed] 0

15. Implicit costs are also called

      [removed] fixed cocts
      [removed] variable costs
      [removed] opportunity cost
      [removed] payments made to acquire factors of production such as labor and machinery.

16. At a price of $25, 8 units of a product are sold, and at a price of $24, 9 units of the product is sold. The marginal revenue from the ninth unit is;

      [removed] $1.00
      [removed] $16
      [removed] - $1.00
      [removed] $24.00

17. The production function provides information about:

      [removed] a firm's profit level.
      [removed] the transformation of inputs into output.
      [removed] the location of the firm's production.
      [removed] a firm's market structure.

18. Sasha buys a warm soda and a slice of cold pizza. The marginal utility from a soda is 40, and the price of the soda is $1. The marginal utility from a slice of pizza is 80. Since Sasha always chooses the utility-maximizing choice, we know the price of a slice of pizza must be:

      [removed] $20
      [removed] $2
      [removed] $1
      [removed] $0.50

19. In Sammy's fast food restaurant, she produces sandwiches, soups, and other items for customers in her town. Which of the following is a fixed input for the production function at Sammy's restaurant?

      [removed] the employees hired to help make the food.
      [removed] the loaves of bread used to make sandwiches.
      [removed] the cans of tomato sauce used to make soups.
      [removed] the dining room where customers eat their meals

20. Table: Production of Cabinets:

Quantity of Labor (workers)	Quantity of cabinets, Q	Marginal Product of Labor (Cabinets/worker)
0	0
1	5	5
2	11	6
3	16	5
4	20	4
5	23	3
6	25	2
7	26	1
8	25	-1

Look at the table The Production of Cabinets. If each cabinet-maker could be hired at no cost, how many workers would your firm employ?

      [removed] 2 workers.
      [removed] 6 workers.
      [removed] 7 workers.
      [removed] 8 workers.

21. Table: Production of Cabinets:

Quantity of Labor (workers)	Quantity of cabinets, Q	Marginal Product of Labor (Cabinets/worker)
0	0
1	5	5
2	11	6
3	16	5
4	20	4
5	23	3
6	25	2
7	26	1
8	25	-1

Look at the table The Production of Cabinets. The table shows how many cabinets your firm can make with different numbers of workers. After which worker does the firm begin to experience diminishing returns to labor?

      [removed] first worker.
      [removed] second worker.
      [removed] third worker.
      [removed] fourth worker.

22. In economics, the short run is defined as:

      [removed] less than 1 year
      [removed] less than 6 months
      [removed] period in which some inputs are considered to be fixed in quantity
      [removed] period in which some inputs are fixed, but it cannot exceed 1 year

23. As defined in the text, the long run is a planning period:

      [removed] that is at least 5 years in length
      [removed] in which a firm can adjust all resources
      [removed] during which the firm must experience an increase in sales in order to stay in business
      [removed] in which variable resources become fixed

24. Use the table below to answer the following question.

Units of	Total Fixed	Total Variable
Output	Cost (dollars)	Cost (dollars)
1	1,000	1,200
2	1,000	2,400
3	1,000	3,600
4	1,000	5,000
5	1,000	6,600

What is the average total cost (ATC) at an output level of four units?

      [removed] $1,200
      [removed] $1,400
      [removed] $1,500
      [removed] $2,000

25. Use the table below to answer the following question.

Units	Total Fixed Cost	Total Variable
of Output	(dollars)	Cost (dollars)
1	150	25
2	150	48
3	150	70
4	150	100

What is the marginal cost (MC) of producing the fourth unit of output?

      [removed] $22
      [removed] $30
      [removed] $75
      [removed] $100

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