1) Bonnie is debating whether to take a job as a professional therapist or a orist. She will earn $40,0[l a year as a therapist or $224100 a year as a orist. If she chooses to be a therapist, the opportunity cost is a: $40,000. B} 522,000. C} 51 3,1100. D) unable to determine. 2) Let us suppose that if Oprah Winfrey was net a superstar she would have been a Judge making $100,001} per year. If she makes 5&3 million dollars this year, her opporhmity cost is A) $63.!) million. s} 553.1 million. :3} $100,000. D] $62.9 million. 3) The disadvantages of proprietorships include A) limited liability for the owner. B} double taxation of business prots. (3} the fact that the proprietorship can continue even after the owner dies. D] the fact that the proprietor is solely responsible for all the rms debts. 4) In a partnership, debts accumulated by one partner A) are the responsibility of that partner only. B} are the responsibility of the other partners as well. (3} are the responsibility of all the employees of the partnership, regardless of whether those employees are partners. D) are the responsibility of the other partners only up to the amount each partner initially invested in the partnership. 5] Suppose the best investment you could make with $l, in cash is to purchase a government bond that pays 14 percent interest per year. If you decide to invest the money in your own business instead of buying the government bond, the opportunity cost of this nancial capital is A) $1,4 per year. E} $100,001} per year. (3} $14,110!) per year. D) zero, because you already had the $l,. 0) In an inationary atmosphere that everyone anticipates will persist, lenders will A] desire a lower nominal interest rate to increase the real rate. B} desire a higher nominal interest rate to protect against the ination. C} tend to see the real rate of interest increase, particularly if the ination is unforeseen. D] have the real rate of interest guaranteed by the Federal Reserve Board. 1') A star baskediall player signs a contract that newspaper reports indicate is worth $10 million. The player receives $2 million upon signing, and $2 mlion every year for four years. The contract is worth A) less than $10 million since the present value of $2 million received one or more years from now is less than $2 million. B} more than $10 million since the present value of $2 million received one or more years from now is more than $2 million. C} 510 million as reported in the press. D) some amount around $10 mlion. To determine whether it is more or less than $10 million we need to know whether the interest the player can earn is more or less than the market rate of interest. 3) Given a discount rate of 10 percent, the present value of receiving $10,000 two years in the future is A) $12,000. B} 511,000. C} $3,264.46 D) $12,100. Average Physical Labor Output Product Marginal Product 10 12 WN 15 52 9) Using the above table, the total product and average physical product when 3 workers are employed are A) 36 and 12, respectively. B) 39 and 13, respectively. C) 37 and 27, respectively. D) 40 and 10, respectively. 10) Suppose that a firm is currently producing 500 units of output. At this level of output, TVC =$1,000 and TFC = $2,500. What is the firms ATC? A) $2 B) $5 C) $7 D) $10 11) When output is 100 units, the firm's total fixed cost is $500. What will this firm's total fixed cost be if output doubles to 200 units? A) $1,000 B) $500 C) $250 D) Can't tell from the information provided12) In the alarm-re gure, if the rm is facing demand curve d2, than ta maximize prots it will produce at output level A] A. B} B. C} c. D] D. MC ATC Demand . MR Price 10 12 Quantity 13) In the above figure, what is the profit-maximizing output and price? A) 8, $7 B) 10, $8 C) 12, $10 D) 10, $10 14) A perfectly competitive firm will not earn an economic profit in the long run, because A) it is a "price-maker.' B) it faces a perfectly inelastic demand curve. C) there are no barriers to entry into the industry. D) it produces differentiated products.15) For a perfect competitor, marginal revenue equals A) the slope of the demand curve. B) average revenue divided by price. C) price divided by average revenue. D) the market price. 16) "Higher prices always yield higher revenues." Do you agree or disagree? Why? 17. The price of a loaf of bread is $1.50, the price of a gallon of milk is $3.00, the price of a pound of butter is $2.40. The price of a loaf of bread relative to a gallon of milk is while the price of a gallon of milk relative to a pound of butter is 18. What is the market quantity demanded of DVDs at $12 in figure below? And Total Revenues. Can you tell if this is equilibrium? How? Price Quantity Demanded Per DVD Buyer 1 Buyer 2 Buyer 3 Buyer 4 $20 18 16 14 DI AONEO 12 6 10 10 13 1519) "As an individual consumes more units of a good, her total utility falls because of the law of diminishing marginal utility." Do you agree or disagree? Explain. (2 Points) Quantity of Total Utility Total Utility Movies Mary John 100 190 140 250 170 300 190 340 200 370 210 390 210 405 200 415 190 420