1.Suppose when the price of Apples is $7.75, the price of Bananas is $12.50, and the budget is $72. If Apples are on the x-axis and Bananas are on the y-axis, what is the slope of the Indifference Curve at the Utility Maximizing point?

A.0.62

B.1

C.1.613

D.Not enough information to determine

2.Suppose you can either make computer chips or smartphone chips. If you produce computer chips, you earn a Total Revenue of $20 million and your Explicit Costs are $15 million. If you produce smartphone chips, you earn a Total Revenue of $25 million and your Explicit Costs are $21 million. What are the Implicit Costs of producing computer chips?

A.$4 million

B.$5 million

C.$15 million

D.$21 million

3.Suppose a 5% increase in income causes a 2% increase in the quantity demanded of tacos. The price of orange soda increases by 3%. What is the income elasticity of tacos?

A.2.5

B.1.667

C.0.667

D.0.4

4.The price elasticity of demand for diapers is 0.47. If a grocery store wants to increase the revenue it gets from selling diapers, what should it do?

A.Increase its price of diapers

B.Decrease its price of diapers

C.Increase the number of workers in the store

D.Decrease the size of the store

5.Which of the following would increase the supply of labor?

A.There's a decrease in the number of workers

B.The amounts of capital firms have increases

C.The productivity of workers increases

D.Immigration increases the number of workers

6.Consider a firm in a Perfectly Competitive industry. Suppose the price in this industry is $22. The total cost (TC) function for each firm is TC = 0.1q^2 + 120. If the marginal cost (MC) function for the firm is MC = 0.2q, what is the profit for the firm at the profit maximizing point?

A.$0

B.$110

C.$1,090

D.$2,420

7.In the market for cars, the equilibrium price increases and the equilibrium quantity increases. Which of the following situations would cause that effect?

A.The price of aluminum used to make cars decreases

B.The number of people driving cars decreases

C.Cars are a Normal Good, and people's incomes increase

D.The price of car insurance, a complementary good, increases

8.Suppose dining chairs are on the x-axis and lounge chairs are on the y-axis. If a person's income increases, how does this affect the budget line?

A.The budget line undergoes a

parallel shift outward

B.The budget lines undergoes a

parallel shift inward

C.The budget lines rotates outward

D.The budget lines rotates inward

9.Suppose a market under Perfect Competition is initially at the Long-Run equilibrium. Then, an increase in market demand occurs which increases the market price. In the Short-Run, what happens to firms' economic profit in the market?

A.Firms' economic profit becomes

negative

B.There is no change in firms'

economic profit in the Short-Run

C.Firms' economic profit becomes

positive

D.There's isn't enough information

to determine the impact on firms' economic profit

10.The price of guacamole, a complement for tacos, increases. What happens in the market for tacos?

A.Supply decreases

B.Supply increases

C.Demand decreases

D.Demand increases

11.Suppose you can either make computer chips or smartphone chips. If you produce computer chips, you earn a Total Revenue of $20 million and your Explicit Costs are $15 million. If you produce smartphone chips, you earn a Total Revenue of $25 million and your Explicit Costs are $21 million. What is the Economic Profit (or Loss) of producing computer chips?

A.$0

B.$1 million

C.$4 million

D.$5 million

12.How does Perfect Price Discrimination compare to a Single-Price Monopoly?

A.The economic efficiency under

Perfect Price Discrimination is higher than the economic efficiency under a

Single-Price Monopoly

B.The economic efficiency under

Perfect Price Discrimination is lower than the economic efficiency under a

Single-Price Monopoly

C.There is NO difference in

economic efficiency between Perfect Price Discrimination and a Single-Price

Monopoly

D.The comparison of economic

efficiency between Perfect Price Discrimination and a Single-Price Monopoly

depends on the marginal cost of producing the good

13.In the market for computers, the number of computer producers increases. At the same time, people's income increase, and computers are a Normal Good. What would you predict happens to the equilibrium price and quantity in the market for computers?

A.The equilibrium price decreases,

and the change in equilibrium quantity is ambiguous

B.The equilibrium price increases,

and the change in equilibrium quantity is ambiguous

C.The change in equilibrium price

is ambiguous, and the equilibrium quantity decreases

D.The change in equilibrium price

is ambiguous, and the equilibrium quantity increases

14.Consider a Monopoly. Suppose the Demand function for the industry is Q = 12,000 900P. The total cost (TC) function for the firm is TC = 0.11Q^2 + 3,300. The marginal revenue (MR) function is then MR = 13.333 - 0.0022Q. If the marginal cost (MC) function for the firm is MC = 0.22Q, what is the price the Monopoly will charge?

A.$13.27

B.$60.00

C.$900

D.$3,300

15.In the market for hats, demand decreases and supply increases. If you know nothing else about happens in the market for hats, what would you predict would happen to the equilibrium price?

A.The equilibrium price decreases

B.The equilibrium price stays the

same

C.The equilibrium price increases

D.There is not enough information

to determine how the equilibrium price will change

16.If a good is a Normal Good and its price decreases, what are the directions of the Substitution Effect and the Income Effect?

A.Both are increases

B.Both are decreases

C.The Substitution Effect is an

increase while the Income Effect is a decrease

D.The Substitution Effect is a

decrease while the Income Effect is an increase

17.In the avocados market in Fort Worth, suppose the local government is debating the implementation of a price ceiling on avocados because of high prices. The proposal the city council is discussing is a price ceiling of $2.49. Furthermore, suppose the equilibrium price in the market is $3.58. If the Fort Worth local government implements the proposed price ceiling, what will be the effect on the market?

A.The price ceiling will have no

effect on the market for avocados in Fort Worth

B.The price ceiling will create a

surplus of avocados in Fort Worth

C.The price ceiling will create a

shortage of avocados in Fort Worth

D.The price ceiling will shift

demand to the left

18.Suppose, under Monopolistic Competition, firms are earning an economic profit in the Short-Run. What will happen in the Long-Run?

A.Economic profit will increase to

0 as some firms leave the market

B.Economic profit will increase as

more firms enter the market

C.The firm will continue to make

the same amount of economic profit in the long-run

D.Economic profit will decrease as

firms enter the market