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					(60)Using the midpoint formula, what would be the price elasticity of demand for a kidney transplant if the number of transplants
decreased from 6,000 to 4,000 per week after its price increased from $6,000 to $10,000?
(a)0.84
(b)0.56
(c)0.80
(d)None of the above

(61)What is the mature of the price elasticity of demand for kidney transplants in Q#60 above?
(a)Unitary elastic
(b)Elastic
(c)Inelastic
(d)Perfectly inelastic

(62)Suppose the chairman of the board of a supermarket chain proposes that a 12 percent increase in the prices of their breakfast cereals
will cause revenues for the supermarket chain to decrease. It can be inferred that the chairman thinks that the demand for breakfast
cereals is:
(a)Inelastic
(b)Elastic
(c)Inelastic, but not perfectly inelastic
(d)Elastic, but not perfectly elastic

(63)Which of the following statements about the elasticity of demand for Dell computers and Gateway computers by college students is
false?
(a)These goods have a cross elasticity of demand that is greater than zero
(b)These goods have a demand curve that is negatively sloped
(c)These goods are substitutes
(d)All of the above

(64)Which of the following statements is true about complements and false about substitutes given ceteris paribus?
(a)Complements are goods with positively sloped demand curves and substitutes are goods with negatively sloped demand curves
(b)Complements are goods with cross elasticity of demand greater than zero and substitutes are goods with cross elasticity of demand less than
zero
(c)Complementary goods have a joint decrease in their demand whenever the price of one complementary good decreases and substitutes are
goods that have an inverse movement in their demand whenever there is a price change
(d)None of the above

(65)Which of the following statements is false?
(a)Consumers with an elastic demand for a service will not bear the burden of a tax if the suppliers of a good have an inelastic supply
(b)Suppliers with an inelastic supply for a service will not bear the burden of a tax if the consumers of a good have an elastic demand
(c)Suppliers with an inelastic demand for a service will bear the burden of a tax if the consumers of a good have a perfectly elastic demand
(d)Consumers with an inelastic demand for a service will share the burden of a tax if the suppliers of a good have an inelastic supply

(66)Which of the following statements does not correctly represent who bears the burden of a tax incidence in a market?
(a)Suppliers have a steep supply curve for a service and consumers have a flat demand curve for the service
(b)Consumers have a steep demand curve for a service and suppliers have a flat supply curve for the service
(c)Consumers have a horizontally sloped demand curve for a service and suppliers have a horizontally sloped supply curve for the service
(d)Suppliers have a vertically sloped supply curve for a service and consumers have a flat demand curve for the service

(67)If Sydney, the natural juice man, lowers the price of his natural juice from $6 to $5 and finds that sales increase from 400 to 600
bottles of juices per week, then the demand for Sidney’s juices in this range is:
(a)Cross price elastic
(b)Price inelastic
(c)Perfectly elastic
(d)None of the above




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(68)Which of the demand curves in Figure#1 above accurately represents the demand curve for Sydney’s natural juices referenced in
Q#67 above?
(a)D1D1
(b)D2D2
(c)D3D3
(d)D4D4

(69)Which of the following statements provides a rationale for the best answer in Q#68 above?
(a)The consumers of Sydney’s juices are not responsive to the changes in the prices of his juices
(b)The consumers of Sydney’s juices are highly responsive to the changes in the prices of his juices
(c)The consumers of Sydney’s juices are totally responsive to the smallest changes in the prices of his juices
(d)None of the above

(70)Suppose you are a member of a local soccer club. The goal of your soccer club is to increase the amount of revenue earned from
ticket sales in the local competition. Two executives of the soccer club, Evadney and Felix suggest that the solution is to increase ticket
prices. Are Evadney and Felix correct?
(a)They are correct if the demand for tickets is price elastic
(b)They are correct if the demand for tickets is unitary elastic
(c)They are correct if the demand for tickets is price inelastic
(d)They are incorrect if the demand for tickets is price inelastic`

 (71)The minimum point on the marginal cost curve corresponds to the:
(a)Minimum point on the total cost curve
(b)Inflection point on the total variable cost curve
(c)Midpoint of the total cost curve
(d)Maximum point on the average total cost curve

(72)The--------------------------is the situation in which the marginal product of labor is greater than zero and declining as more labor is
hired.
(a)The law of supply
(b)The law of diminishing returns
(c)The law of returns to scale
(d)The law of diminishing marginal utility

(73)American Airlines makes numerous nonstop flights from Chicago’s O’Hare Airport to the airport at Dallas-Fort Worth. The distant
between those two cities is 1,000 miles. The only variable cost, fuel, costs $.08 for each passenger-mile it flies. Mazuka, on her way to an
emergency meeting, buys a ticket in coach class for $1,300 at the very last minute. The marginal cost of flying Mazuka from Chicago to
Dallas-Forth is:
(a)$1,220
(b)$1,380
(c)$0.80
(d)None of the above


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(74)When the cost curves are U-shaped, at the point where marginal cost equals average total cost:
(a)Marginal cost is falling
(b)Average total cost is at its minimum
(c)Average variable costs is falling
(d)There is no total cost

(75)Which of the following statements is true?
Profit maximization means that:
(a)The MC curve of a profit maximizing firm must increase and cuts its MR curve from above at the firm’s maximum output
(b)The MC curve of a profit maximizing firm lies below its MR curve then rises and cuts its MR curve from below at its profit maximizing price
and output levels
(c)The MC curve of a profit maximizing firm must decline and cuts its MR curve from above at the firm’s profit maximizing output level
(d)None of the above

(76)Economic profit is:
(a)Always less than zero
(b)Never less than accounting profit
(c)Less than accounting profit if implicit costs are greater than zero
(d)Less than accounting profit if implicit costs are zero

(77)Economic profit equals accounting profits minus:
(a)Explicit costs
(b)Fixed costs
(c)Implicit costs
(d)Variable costs

(78)A firm’s technical efficiency is:
(a)Its ability to produce its highest level of output at minimum cost
(b)Its ability to produce a given level of output with a feasible combination of factor inputs
(c)The same as its equilibrium level of output
(d)None of the above

(79)The short-short run is a period of time in which a firm employs:
(a)Fixed and variable factors of production
(b)Variable factors of production only
(c)Fixed factors of production only
(d)Marginally fixed factors of production

(80)Cash payments to a lumber mill for lumber used in production would be an example of:
(a)Sunken costs
(b)Fixed costs
(c)Implicit costs
(d)None of the above

(81)Which of the following statements is true?
Decreasing returns to scale:
(a)Is another name for diminishing marginal returns
(b)Means that a doubling of a firm’s factor resources causes a tripling of its output
(c)Occurs in the short run
(d)None of the above

(82)Which of the following statements is false?
Economies of scale:
(a)Is a long run phenomenon
(b)Results when an industry’s long run average variable costs rise as its output increases and vice versa
(c)Results when an industry’s long run average variable costs decrease as its output increases and vice versa
(d)May result from an optimal relationship between those who are supervised and those who are supervisors in an industry

(83)Which of the following statements is false?
The long run is a period of time in which:
(a)All factor inputs of a firm are variable
(b)A firm’s total cost is equal to its total fixed costs
(c)A firm may experience increasing or decreasing returns to scale
(d)A firm may vary its plant size

(84)Which of the following statements is false?
The short-run is a period of time in which:
(a)A firm incurs only variable costs
(b)A firm incurs only fixed cost
(c)A firm experiences constant returns to scale


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(d)All of the above

(85)Which of the following statements is false?
In the short-short run a firm:
(a)Incurs only fixed costs
(b)Its average costs are its average fixed costs
(c)Its marginal costs are also fixed
(d)Its total costs are its total fixed costs

(86)Sydney and Felix are carpenters who own a small workshop where beds are made. At the end of a given month, they have 250 beds.
Their expenses for the first month are $2,000 for rent, $6,000 for wages, $1,500 for lumber and varnish, and $500 for electricity. Their
total variable costs for the month are:
(a)$10,000
(b)$8,000
(c)$7500
(d)$32 per bed

(87)Sydney and Felix also pay a monthly insurance premium of $850 for their insured assets in their workshop and a monthly interest
payment of $650 on a bank loan. Their total fixed costs for the month are:
(a)$1500
(b)$3,500
(c)$11,000
(d)$6,500

(88)Which of the following is the monthly average total cost of the workshop cited in Q#86 and Q#87 above?
(a)$12
(b)$46
(c)$22
(d)$35

(89)Which of the following statements about the workshop in Q#86 above is false?
(a)The monthly average variable cost is equal to $32
(b)The monthly average fixed cost is equal to $14
(c)It operates in the long run
(d)Its total cost is equal to $11500

(90)Which of the following statements is true if total variable cost is rising?
(a)Marginal cost is declining
(b)Average variable cost is falling
(c)Marginal cost is rising
(d)Average fixed cost is rising

 (91)Freddie quits his job as an airline pilot and opens his own pilot training school. He was earning $40,000 as a pilot. He withdraws
$10,000 from his savings where he was earning 6 percent interest and uses the money in his new business. He uses a building he owns as a
hanger and could rent it out for $5,000 per year. He rents a computer for $1,200, buys office supplies for $500, rents an airplane for
$6,000, pays $1,300 for fuel and maintenance, and hires one worker for $30,000. Freddie’s total revenue from pilot training classes
equaled $90, 400, Freddie’s implicit costs for this year are equal to:
(a)$55,000
(b)$84,400
(c)$39,000
(d)None of the above

(92)Freddie’s explicit costs in Q#91 above are equal to:
(a)$65,450
(b)$45.600
(c)$39,000
(d)$76,850

(93)If a shoes firm has atotal revenue of $60 million, explicit costs of $15 million, and implicit costs of $32 million, its economic profit is:
(a)$20m
(b)$45m
(c)$13m
(d)$28m

(94)Suppose the explicit and implicit costs of the firm in Q#93 increase by 40 percent, a microeconomist who concludes that the firm
would:
(a)Make normal profit is correct
(b)Make an accounting loss is incorrect
(c)Make an economic profit is correct
(d)None of the above


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(95)Suppose the shoes firm has a total revenue of $200 million, explicit costs of $190 million. Suppose its owners now have invested $100
million in the company at an opportunity cost of 20 percent interest rate per year. The firm’s economic profit is:
(a)$0m
(b)-$10m
(c)$35m
(d)-$28m

                    Table#2-Cost Schedule for Producing Vegan Pizzas
Vegan Pizzas             Fixed Cost               Variable Cost                     Total Cost           Marginal Cost
0                        $                         $                                $                    $
1                                                                                    108
2                          100                                                       114

(96)Which of the following statements is true?
The total cost and total variable cost of producing zero vegan pizzas according to the cost data in Table#2 above are:
(a)$120 and $135
(b)$100 and $5
(c)$100 and $32
(d)None of the above

(97)The average variable cost of producing one vegan pizza according to the cost data in Table#2 above is equal to:
(a)$10
(b)$7
(c)$8
(d)$12

(98)The total fixed costs for the two (2) pizzas recorded in Table#2 is equal to:
(a)$55
(b)$120
(c)$100
(d)$50

(99)The average cost of producing two vegan pizzas according to the cost data in Table#2 above is equal to:
(a)$50
(b)$57
(c)$65
(d)$84

                                        Table#3-Workers and Production Data
                                       Laborers                         Total Product
                                           0                                   0
                                           1                                   8
                                           2                                   20
                                           3                                   25
                                           4                                   28
                                           5                                   29


(100)In Table#3, diminishing returns set in when the ------------worker is hired.
(a)1st
(b)2nd
(c)3rd
(d)4th




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