1. Suppose there is an electric bike shop that faces the following demand function

Q = 250 - .25p + 4ps, where Q is the quantity of e-bikes, p is the price of an e-bike, and ps is the price of a scooter. How much of a change in p must occur for Q to increase by one?

A) fall by 25

B) fall by $4

C) increase by 25

D) fall by $4.25

2. Suppose there is a market for electronic bikes that is currently at equilibrium. If the demand curve were to shift right, this would cause

A) an increase in price but a decrease in quantity.

B) a decrease in price but an increase in quantity.

C) an increase in both price and quantity.

D) a decrease in both price and quantity.

3. Suppose there is a market for electronic bikes that is currently at equilibrium. If the consumers of electronic bikes had an increase in income which resulted in a rightward parallel shift of the demand for electronic bikes, then at any given price, the price elasticity of demand will have

A) increased in absolute terms.

B) decreased in absolute terms.

C) remained unchanged.

D) increased, decreased or stayed the same. It cannot be determined.

4. Suppose Bob consume goods "x" and "y" and his preferences for both goods are represented by convex indifference curves. This implies that Bob is willing to

A) give up more "y" to get an extra "x" the more "x" they have.

B) give up more "y" to get an extra "x" the less "x" they have.

C) settle for less of both "x" and "y".

D) acquire more "x" only if they do not have to give up any "y".

5. Suppose Bob has a marginal utility of electronic bikes equal to 1000 and his marginal utility of scooters equal to 200, then we know that

A) his indifference curves are convex.

B) his indifference curves are L-shaped.

C) his indifference curves are linear.

D) his indifference curves are downward sloping.

6. Suppose Bob has an income of $500, the price of a bike bell is $2, and the price of bike light is $100. Which of the following bundles is in Bob's opportunity set?

A) 50 bike bells, five bike lights

B) 200 bike bells, two bike lights

C) 100 bike bells, one bike lights

D) 150 bike bells, three bike lights

7. Suppose Bob and Rob consume e-bikes and scooters. Bob and Rob face the same prices and both claim to be in equilibrium. Therefore, we know that

A) they both have the same marginal utility for e-bikes.

B) they both have the same marginal utility for scooters.

C) they both have the same MRS of e-bikes for scooters.

D) All of the above.

8. Suppose Bob consumes e-bikes and scooters. If Bob's income and prices of both goods increase by the same percentage,

A) Bob will buy more of both goods.

B) Bob will buy more of both goods if they are both normal goods.

C) Bob will buy less of both goods if they are both inferior goods.

D) Bob's utility maximizing bundle stays the same.

9. Suppose Bob spends his entire income on e-bikes and scooters. Every month he spends half of his income on each of these goods. Bob's income elasticity of demand for e-bikes is -.75. What is the income elasticity of demand for scooters?

A) 2.75

B) 0.36

C) -2.75

D) Unknown with the information provided

10. When the price of a good changes, the total effect of the price change on the quantities purchased can be found by comparing the quantities purchased

A) on the old budget line and the new budget line.

B) on the original indifference curve when faced with the original prices and when faced with the new prices.

C) on the new budget line and a hypothetical budget line that is a parallel shift back to the original indifference curve.

D) on the new indifference curve.

11. If the marginal product of labor is constant for all levels of output, then the average product of labor

A) is constant.

B) equals the marginal product of labor.

C) Both A and B above.

D) Either A or B above but not both.

12. At any given point on the curve, the slope of the total product curve always equals

A) the ratio of the marginal product and the average product.

B) the change in input divided by the change in output.

C) the average product of the input.

D) the marginal product of the input.

13. One way to explain the convexity of isoquants is to say that

A) as labor increases and capital decreases, MP_L rises while MP_k falls.

B) as labor increases and capital decreases, MP_L falls while MP_k rises.

C) as labor increases and capital decreases, MP_L and MP_k both fall.

D) as labor increases and capital decreases, MP_L and MP_k both rise.

14. Suppose that electric bikes are produced according to the following production function: q = L^0.4 K^0.4. The firm currently produces units. If all inputs doubled, the new level of

output will equal

A) 2^0.4 q1.

B) 2^0.8 q1.

C) 0.8 q1.

D) 1.6 q1.

15. The company E-bikes R US has increased production efficiency by

A) producing output with fewer inputs.

B) expanding the amount of inputs used.

C) outsourcing production.

D) relying on decreasing returns to scale.

16. A firm's marginal cost can always be thought of as the change in total cost if A) the firm produces one more unit of output.

B) the firm buys one more unit of capital.

C) the firm's average cost increases by $1.

D) the firm moves to the next highest isoquant.

17. When E-bikes R US produces 1000 e-bikes fenders with total cost of $2000 and fixed cost of $1000, what is the average variable cost?

A) $2

B) $1

C) $0.50

D) $0.20

18. The point in the production process at which diminishing marginal returns to capital begin is the point at which the marginal cost curve

A) peaks.

B) bottoms out.

C) is flat.

D) is downward sloping.

19. Suppose each mechanic must use only one wrench to fix the car, and wrenches are useless by themselves. In the short run, an increase in the price of wrenches will result in

A) fewer wrenches being purchased.

B) more mechanics being hired.

C) a decrease in the number of cars fixed.

D) no change in the number of cars fixed.

20. Suppose the company E-bikes R US has an isocost line that crosses the isoquant twice. To cost minimize, E-bikes R US will

A) use a different isocost line to select the bundle of inputs.

B) use the input bundle associated with the intersection on the higher point of the isoquant.

C) use the input bundle associated with the intersection on the lower point of the isoquant.

D) Both B and C.

21. Suppose the company E-bikes R US has isoquants that are straight lines or L-shaped. To cost minimize, E-bikes R US will

A) not be able to minimize costs.

B) find the lowest isocost line touching the relevant isoquant.

C) find the highest isocost line touching the relevant isoquant.

D) choose not to produce any output.