Micro economics multiple choice

Where necessary please show all computations in" rel="nofollow">in order to get full credit for your answer 1. Use the above table. The in" rel="nofollow">income elasticity of artisan bread is A) 1.285. B) 0.780. C) 0.012. D) 8.330. 2. Use the above table. Based on the in" rel="nofollow">information in" rel="nofollow">in the table, artisan bread is a(n) A) normal good. B) necessary good. C) in" rel="nofollow">inferior good. D) negative good. 3. In the above table, the cross price elasticity of demand for good X with good Y when PY falls from $20 to $18 is A) -2. B) 0. C) +1. D) -1. 4. In the above table, the cross price elasticity of demand for good Y with good X when PX rises from $10 to $12 is A) +0.29. B) +1.83. C) +0.58. D) -0.58. 5a. Refer to the above table. What is the absolute price elasticity of demand if a price falls from $7 to $6.50? A) 0.85 B) 1.08 C) 1.17 D) 0.92 5b. Refer to the above table. What is the absolute price elasticity of demand if a price falls from $7.50 to $7? A) 10 B) 1.38 C) 0.724 D) 0.1 Quantity of Movies Total Utility Mary Total Utility John 3 100 190 4 140 250 5 170 300 6 190 340 7 200 370 8 210 390 9 210 405 10 200 415 11 190 420 6a. Accordin" rel="nofollow">ing to the above table, Maryʹs margin" rel="nofollow">inal utility from watchin" rel="nofollow">ing the 6th movie is A) 190 units of utility. B) 40 units of utility. C) 10 units of utility. D) 20 units of utility. 6b. Accordin" rel="nofollow">ing to the above table, Johnʹs margin" rel="nofollow">inal utility from watchin" rel="nofollow">ing the 9th movie is A) 405 units of utility. B) 0 units of utility. C) 15 units of utility. D) 10 units of utility. 7. For good A and good B, the consumer maximizes personal satisfaction when A) MUA/PA = PB/MUB. B) PA/MUA = PB/MUB. C) MUA/PA = MUB/PB. D) MUA/MUB = PA/PB. Bobʹs Margin" rel="nofollow">inal Utility for consumin" rel="nofollow">ing beer and pizza with $8.00 in" rel="nofollow">in in" rel="nofollow">income Quantity of Pizza Margin" rel="nofollow">inal Utility Quantity of Beer Margin" rel="nofollow">inal Utility 1 45 1 40 2 40 2 40 3 30 3 35 4 15 4 10 5 -5 5 0 8a. In the above table, how much beer and pizza will Bob consume if the price of a piece of pizza is $2.00 and the price of a beer is $2.00? A) 1 piece of pizza and 3 beers B) 2 pieces of pizza and 2 beers C) 2 pieces of pizza and 3 beers D) 3 pieces of pizza and 1 beer 8b. Referrin" rel="nofollow">ing to the above table, suppose Bobʹs ratios of margin" rel="nofollow">inal utility of beer to the price of beer and the margin" rel="nofollow">inal utility of pizza to the price of pizza are equal. If the price of beer in" rel="nofollow">increases A) Bob will probably consume more beer and less pizza. B) Bob will probably consume less beer and less pizza. C) Bob will probably consume less beer and more pizza. D) Bob will still consume the same amount of beer and pizza. 9. Suppose the auto in" rel="nofollow">industry has several in" rel="nofollow">investment projects with an expected rate of return of 15 percent, the alumin" rel="nofollow">inum in" rel="nofollow">industry has projects with an expected return of over 20 percent, the publishin" rel="nofollow">ing in" rel="nofollow">industry projects with an expected return of 10 percent, the steel in" rel="nofollow">industry has projects with an expected return of 7 percent and the rubber in" rel="nofollow">industry projects with an expected return of 5 percent. The current market rate of in" rel="nofollow">interest is 7 percent. A reduction in" rel="nofollow">in the supply of funds causes in" rel="nofollow">interest rates to rise to 11 percent. The effect is to A) cause the firms in" rel="nofollow">in the steel and publishin" rel="nofollow">ing in" rel="nofollow">industries to cancel their projects, which would have been funded at the old in" rel="nofollow">interest rate. B) cause the firms in" rel="nofollow">in the steel and the rubber in" rel="nofollow">industries to go ahead with their projects. C) force the firms in" rel="nofollow">in the automobile in" rel="nofollow">industry and the publishin" rel="nofollow">ing in" rel="nofollow">industry to rely on fundin" rel="nofollow">ing their projects through other means. D) make the projects of the alumin" rel="nofollow">inum in" rel="nofollow">industry and the steel in" rel="nofollow">industry unprofitable; the firms in" rel="nofollow">in these in" rel="nofollow">industries will not borrow the funds or make the in" rel="nofollow">investments. 10. What is the present value of $100 three years from now at an in" rel="nofollow">interest rate of 6%? A) $83.96 B) $82 C) $94.34 D) $119.10 11. In the above figure, the market price charged by this profit-maximizin" rel="nofollow">ing, perfectly competitive firm is A) $5 per unit of output. B) $10 per unit of output. C) $8 per unit of output. D) $14 per unit of output. 12. In the above figure, at the profit-maximizin" rel="nofollow">ing rate of production for the perfectly competitive firm total revenue is A) $100. B) $70. C) $30. D) $130. 13. In the above figure, at the profit-maximizin" rel="nofollow">ing rate of production for the perfectly competitive firm total cost is A) $100. B) $70. C) $30. D) $130. 14. Refer to the above table. This firm operates in" rel="nofollow">in a perfectly competitive market in" rel="nofollow">in which the market price is $10 per unit. What is its profit-maximizin" rel="nofollow">ing rate of production? A) 104 units B) 106 units C) 108 units D) 110 units 15. Under what condition are profits maximized? A) at the rate of output at which margin" rel="nofollow">inal revenue equals margin" rel="nofollow">inal cost B) at the output rate where margin" rel="nofollow">inal cost is greater than margin" rel="nofollow">inal revenue C) at the poin" rel="nofollow">int at which the difference between total revenues and total costs is negative D) at the poin" rel="nofollow">int at which the difference between price and quantity demanded is greatest 16. Refer to the above figure. Which of the followin" rel="nofollow">ing statements is true about the demand curves for an in" rel="nofollow">individual firm in" rel="nofollow">in a perfectly competitive in" rel="nofollow">industry and a monopoly? A) Panel A is the demand curve for a perfectly competitive firm and panel B is the demand curve for a monopoly. B) Panel C is the demand curve for a perfectly competitive firm and panel A is the demand curve for a monopoly. C) Panel C is the demand curve for a perfectly competitive firm and panel B is the demand curve for a monopoly. D) Panel B is the demand curve for a perfectly competitive firm and panel A is the demand curve for a monopoly. 17. What does the demand curve facin" rel="nofollow">ing a monopoly look like? Why? 18. A monopoly will maximize profits at the level of output at which A) MR = MC. B) MR = AFC. C) MC = ATC. D) MC = P. 19. As a price searcher, a monopoly firm A) must only determin" rel="nofollow">ine the price it charges. B) must determin" rel="nofollow">ine its optimal price-output combin" rel="nofollow">ination. C) must determin" rel="nofollow">ine its output level and then accept the market price for its product. D) must determin" rel="nofollow">ine the prices it pays for its in" rel="nofollow">inputs and accept the market price for its output. The short-run production function for a manufacturer of flash memory drives is shown in" rel="nofollow">in the table below. Based on this in" rel="nofollow">information, answer the followin" rel="nofollow">ing questions. Input of Labor (workers per week) Total Output of Flash Memory Drives 0 0 1 25 2 60 3 85 4 105 5 115 6 120 20a. Calculate the average product at each quantity of labor. 20b. Calculate the margin" rel="nofollow">inal product of labor at each quantity of labor. 20c. At what poin" rel="nofollow">int does margin" rel="nofollow">inal product begin" rel="nofollow">in to dimin" rel="nofollow">inish?