Question 1<\/p>\n
Let QD= -5P + 54 and QS= P – 6. Equilibrium can be found at<\/p>\n
Answer<\/p>\n
Q = 4; P = 10<\/p>\n
Q = 6; P = 10<\/p>\n
P = 6; Q = 0<\/p>\n
Q =; P = 2<\/p>\n
5 points<\/p>\n
Question 2<\/p>\n
Suppose a production possibilities frontier can be expressed as 9X2+ Y2= 81 what is the opportunity cost of going from 1 unit of X to 2 units of X (in terms of units of Y)?<\/p>\n
Answer<\/p>\n
a. 45 <\/p>\n
b. sqrt of 45 <\/p>\n
c. sqrt of 72 – sqrt of 45 <\/p>\n
d. 1<\/p>\n
5 points<\/p>\n
Question 3<\/p>\n
The Ricardian notion that of diminishing returns implies that<\/p>\n
Answer<\/p>\n
As more input is used more output will be made.<\/p>\n
As more input is used less output will be made.<\/p>\n
As more input is used the increase in output will increase.<\/p>\n
As more input is used the increase in output will decrease.<\/p>\n
5 points<\/p>\n
Question 4<\/p>\n
Suppose the equilibrium quantity is<\/p>\n
Answer<\/p>\n
2<\/p>\n
3<\/p>\n
4<\/p>\n
5<\/p>\n
5 points<\/p>\n
Question 5<\/p>\n
If the production possibilities frontier can be expressed as 4X2+ Y2= 16 then the point X = 1; Y = 4 is<\/p>\n
Answer<\/p>\n
outside the production possibilities frontier<\/p>\n
on the production possibilities frontier<\/p>\n
inside the production possibilities frontier<\/p>\n
in the wrong quadrant to be on the graph<\/p>\n
5 points<\/p>\n
Question 6<\/p>\n
If society is producing a combination of goods on its production possibilities frontier<\/p>\n
Answer<\/p>\n
it must be employing all available resources.<\/p>\n
it must be growing.<\/p>\n
it is using all the available natural resources but may not be using all available labor resources.<\/p>\n
Both a and b.<\/p>\n
5 points<\/p>\n
Question 7<\/p>\n
Suppose right (R) and left (L) shoes are only useful if produced in equal proportion and societal happiness is expressed as min(R,L). The contour lines would be<\/p>\n
Answer<\/p>\n
downward sloping lines <\/p>\n
upward sloping lines <\/p>\n
L-shaped<\/p>\n
backward L-shaped<\/p>\n
5 points<\/p>\n
Question 8<\/p>\n
IfY=X2+Z2, the contour lines<\/p>\n
Answer<\/p>\n
are concentric circles.<\/p>\n
are parabolas.<\/p>\n
are hyperbolas.<\/p>\n
intersect whenever either X or Z is zero.<\/p>\n
5 points<\/p>\n
Question 9<\/p>\n
Suppose you can write generic supply and demand curves such that QS= A + BP and QD= D + CP. Equilibrium price is given by<\/p>\n
Answer<\/p>\n
5 points<\/p>\n
Question 10<\/p>\n
The underlying reason early economists believed a (short-run) supply curve would be upward sloping is because of<\/p>\n
Answer<\/p>\n
decreasing average costs <\/p>\n
increasing average cost <\/p>\n
decreasing marginal costs<\/p>\n
increasing marginal costs<\/p>\n
5 points<\/p>\n
Question 11<\/p>\n
If an individual has a constant MRS of shoes for sneakers of 3\/4 (that is, he or she is always willing to give up 3 pairs of sneakers to get 4 pairs of shoes) then, if sneakers and shoes are equally costly, he or she will<\/p>\n
Answer<\/p>\n
buy only sneakers.<\/p>\n
buy only shoes.<\/p>\n
spend his or her income equally on sneakers and shoes.<\/p>\n
wear sneakers only 3\/4 of the time.<\/p>\n
5 points<\/p>\n
Question 12<\/p>\n
Suppose a cup of coffee at the campus coffee shop is $2.50 and a cup of hot tea is $1.25. Suppose a student\u2019s beverage budget is $20 per week. What is the algebraic expression of the budget?<\/p>\n
Answer<\/p>\n
5 points<\/p>\n
Question 13<\/p>\n
If bundles of goods A and B lie on the same indifference curve, one can assume the individual<\/p>\n
Answer<\/p>\n
prefers bundle A to bundle B.<\/p>\n
prefers bundle B to bundle A.<\/p>\n
enjoys bundle A and B equally.<\/p>\n
bundle A contains the same goods as bundle B.<\/p>\n
5 points<\/p>\n
Question 14<\/p>\n
The X-intercept of the budget constraint represents<\/p>\n
Answer<\/p>\n
how much of good Y can be purchased if no good X is purchased and all income is spent.<\/p>\n
how much of good X can be purchased if no good Y is purchased and all income is spent.<\/p>\n
total income divided by the price of X.<\/p>\n
a and c.<\/p>\n
5 points<\/p>\n
Question 15<\/p>\n
Suppose an individual\u2019s MRS (of steak for beer) is 2:1. That is, at the current consumption choices he or she is willing to give up 2 beers to get an extra steak. Suppose also that the price of a steak is $1 and a beer is 25\u00a2. Then in order to increase utility the individual should<\/p>\n
Answer<\/p>\n
buy more steak and less beer.<\/p>\n
buy more beer and less steak.<\/p>\n
continue with current consumption plans.<\/p>\n
Not enough information to answer the question.<\/p>\n
5 points<\/p>\n
Question 16<\/p>\n
If an individual\u2019s indifference curve map does not obey the assumption of a diminishingMRS, then<\/p>\n
Answer<\/p>\n
the individual will not maximize utility.<\/p>\n
the individual will buy none of good X.<\/p>\n
tangencies of indifference curves to the budget constraint may not be points of utility maximization.<\/p>\n
the budget constraint cannot be tangent to an appropriate indifference curve.<\/p>\n
5 points<\/p>\n
Question 17<\/p>\n
An increase in an individual\u2019s income without changing relative prices will<\/p>\n
Answer<\/p>\n
rotate the budget constraint about the X-axis.<\/p>\n
shift the indifference curves outward.<\/p>\n
shift the budget constraint outward in a parallel way.<\/p>\n
rotate the budget constraint about the Y axis.<\/p>\n
5 points<\/p>\n
Question 18<\/p>\n
Suppose a teenager has $20 and likes both rap music (R) and country music (C) with a set of preferences so that U = C1\/2R1\/2. Suppose that the iTunes price of a rap music song isand the price of a country music song is. Which level of utility is affordable?<\/p>\n
Answer<\/p>\n
9 <\/p>\n
16<\/p>\n
25<\/p>\n
5 points<\/p>\n
Question 19<\/p>\n
The point of tangency between a consumer\u2019s budget constraint and his or her indifference curve represents<\/p>\n
Answer<\/p>\n
complete satisfaction for the consumer.<\/p>\n
the equivalence of prices the consumer pays.<\/p>\n
constrained utility maximization for the consumer.<\/p>\n
the least he or she can spend.<\/p>\n
5 points<\/p>\n
Question 20<\/p>\n
Suppose a cup of coffee at the campus coffee shop is $2.50 and a cup of hot tea is $1.25. Suppose a student\u2019s beverage budget is $20 per week. Suppose the student simply prefers more caffeine to less and that the tea sold has the same amount of caffeine as the coffee. The student will buy<\/p>\n
Answer<\/p>\n
all tea. <\/p>\n
all coffee. <\/p>\n
a mix of coffee and tea.<\/p>\n
there is insufficient information to know.<\/p>\n","protected":false},"excerpt":{"rendered":"