ECO 306 quiz 1

Which of the following topics is related to microeconomics?

 Explanations of why recessions occur.

 Determining how much output a firm should produce.

 The rate of unemployment.

 The rate of economic growth.

In a ______ economy, the allocation of resources is governed by voluntary trading among businesses and consumers.

  capitalist

 communist

 socialist

 traditional

Positive economic questions

 involve value judgments.

 address what ought to happen.

  are potentially testable.

 cannot be tested.

A useful theory must

 apply to every conceivable situation.

  be broadly applicable.

 be agreed upon by all economists.

 not be able to be refined.

In a natural experiment,

 similar people face very different circumstances.

the circumstances of otherwise identical people differ entirely by chance.

 the circumstances of one group of people is compared to a "control" group of people.

  similar people face very similar circumstances.

Suppose the demand function for cable TV service is given by QCTV = 15 - 0.25 × PCTV + 0.0005 × M + 0.3 × PSTV, QCTV is the quantity of cable TV demanded (thousands of households), PCTV is the price of cable TV, M is income and PSTV is the price of satellite TV service. Suppose consumers' income is $50,000 and the price of satellite TV service is $90. At what price would the demand for cable TV services be equal to 55,000 households?

 $67

  $48

 $12

 There is not enough information to answer the question.

A product's ________ shows how much sellers of a product want to sell at each possible price, holding all other factors fixed.

 supply function

  supply curve

 production function

 total product curve

 Which of the following is a factor that affects both the supply of and demand for a good?

 Technology

 Price of inputs

 Consumers' income

  Government regulations

Consider the relationship given by QCars = 100 + 4 × PCars - 2 × PSteel - 0.2 × PWorkers, where QCars is the quantity of cars supplied (in thousands), PCars is the price of cars (in thousands of dollars), PSteel is the price of steel, and PWorkers is the wage earned by autoworkers. If the price of steel is $10 per unit and the price of workers (the wage) is $20, how many cars will be supplied if the price of cars is $20,000?

 96,000

  156,000

 204,000

 960,000

If the demand for a good increases at the same time the supply of the good decreases, what happens to equilibrium price and quantity?

 Equilibrium quantity increases, but the effect on equilibrium price is ambiguous.

 Equilibrium quantity decreases, but the effect on equilibrium price is ambiguous.

  Equilibrium price increases, but the effect on equilibrium quantity is ambiguous.

 Equilibrium price decreases, but the effect on equilibrium quantity is ambiguous.

Total benefits minus total cost equals:

 gross benefit.

 marginal benefit.

  net benefit.

 incremental benefit.

Refer to Table 3.1. Suppose that you have a house that you rent out. If you keep the lawn maintained, you can charge a higher monthly rent for the house. Suppose your hourly wage from your job at the mall is $10, what is the net benefit of spending 12 hours per week maintaining the lawn of the house?

Table 3.1

$120

 $210

 $320

 $330

Refer to Table 3.2, which shows some costs and benefits of having your car repaired. What is the marginal benefit of the 4th hour spent on repairs?

Table 3.2

$450

 $375

 $295

 $920

Refer to Table 3.2, which shows some costs and benefits of having your car repaired. Suppose you use your car to deliver pizzas. If you earn $10 per hour delivering pizzas, what is the net benefit of 3 hours of car repairs?

Table 3.2

 $875

 $1540

$905

 There is not enough information to determine the net benefits.

Suppose that you can schedule a worker for up to 10 hours per day. The total benefit and total cost functions are B(H) = 1200 × √H and C(H) = 200H. The corresponding formulas for marginal benefit and marginal cost are MB(H) = 600/√H and MC(H) = 200. How many hours should you schedule the worker?

 9 hours

8 hours

4 hours

0 hours