1.The price elasticity of demand for grape soda is 1.14. If a grocery store wants to increase the revenue it gets from selling grape soda, what should it do?

A. Increase its price of grape soda

B. Decrease its price of grape soda

C. Decrease the number of workers in the store

D. Decrease the size of the store

2.Suppose the price of a candy bar is $1.25, the price of a bag of chips is $1.75, and the budget is $17.50. Candy Bars are on the x-axis and bags of chips are on the y-axis. If the price of a candy bar decreases to $0.99, what happens to the Budget Line?

A. The budget lines rotates outward

B. The budget lines rotates inward

C. The budget line undergoes a parallel shift outward

D. The budget lines undergoes a parallel shift inward

3.In economics, what determines the short-run?

A.A specific period of time like 1 month that is the same across all industries and firms

B.The time period in which all inputs in production are variable inputs

C.The time period during which a firm produces a limited quantity of output

D.The time period in which at least one input in production is fixed

4.Suppose you can either operate in the snack foods industry or the carbonated beverage industry. If you operate in the snack foods industry, you earn a Total Revenue of $2.8 million and your Explicit Costs are $1.8 million. If you operate in the carbonated beverage industry, you earn a Total Revenue of $5.7 million and your Explicit Costs are $3.6 million. What is the Accounting Profit (or Loss) of operating in the snack foods industry?

A. $1 million

B. $1.8 million

C. $2.1 million

D. $2.8 million

5.Suppose the price of a candy bar is $1.25, the price of a bag of chips is $1.75, and the budget is $17.50. If candy bars are on the x-axis and bags of chips are on the y-axis, what is the x-intercept for the Budget Line?

A.17.50

B. 14

C. 1.4

D. 1.25

6.If the Total Cost function is TC = 6.5Q^3 - 35Q^2 + 96Q + 3,000, what are the Fixed Costs (FC)?

A. FC = 6.5Q^3

B. FC = 6.5

C. FC = 3,000

D. FC = 96

7.Consider the bundle of (8 Apples, 6 Bananas) on an Indifference Curve. If Apples are on the x-axis, Bananas are on the y-axis, the Marginal Utility of Apples for that bundle is 5, and the Marginal Utility of Bananas for that bundle is 4, what is the Marginal Rate of Substitution of Apples for Bananas at that point?

A. 0.75

B. 1.25

C. 4

D. 5

8.Suppose the production function is Q = 13L + 77K where Q is the quantity of output, L is the quantity of labor used in production, and K is the quantity of capital used in production. What can be said about this production function?

A. It has Decreasing Returns to Scale

B. It has Constant Returns to Scale

C. It has Increasing Returns to Scale

D. There isn't enough information to determine the Returns to Scale for this production function

9.If the Total Cost function is TC = 6.5Q^3 - 35Q^2 + 96Q + 3,000, what is the Variable Cost (VC) function?

A. VC = 3,000

B. VC = 6.5Q^3

C. VC = 6.5Q^3 - 35Q^2 + 96Q

D. VC = 6.5Q^2 - 35Q + 96 + 3,000/Q

10.Suppose the price of a candy bar is $1.25, the price of a bag of chips is $1.75, and the budget is $17.50. If candy bars are on the x-axis and bags of chips are on the y-axis, what is the y-intercept for the Budget Line?

A.17.50

B. 10

C. 1.75

D. 1.4

11.If a good is an Inferior Good and its price increases, what are the directions of the Substitution Effect and the Income

Effect?

A. Both are decreases

B. Both are increases

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

12.The price elasticity of demand for bourbon is 0.23. If a liquor store wants to increase the revenue it gets from selling bourbon, what should it do?

A. Increase its price of bourbon

B. Decrease its price of bourbon

C. Increase the number of workers in the store

D. Increase the size of the store

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

A. mmigration leads to an increase in the number of workers

B.The amount of capital firms have increases

C. An improvement in technology increases the productivity of workers

D. Leisure is a normal good and the income effect occurs when wages increase

14.Suppose the price of a candy bar is $1.25, the price of a bag of chips is $1.75, and the budget is $17.50. If candy bars are on the x-axis and bags of chips are on the y-axis, what is the slope of the Budget Line?

A. 1.75

B. 1.4

C. 1.25

D. 0.714

15.If the Total Cost function is TC = 6.5Q^3 - 35Q^2 + 96Q + 3,000, what is the Average Total Cost (ATC) function?

A. ATC = 3,000

B. ATC = 6.5Q^2

C. ATC = 6.5Q^3 - 35Q^2 + 96Q

D. ATC = 6.5Q^2 - 35Q + 96 + 3,000/Q

16.Suppose when the price of Apples is $12.50, the price of Bananas is $10.00, and the budget is $50. 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.0.8

B.1.25

C.12.5

D.Not enough information to determine

17.Suppose you can either operate in the snack foods industry or the carbonated beverage industry. If you operate in the snack foods industry, you earn a Total Revenue of $2.8 million and your Explicit Costs are $1.8 million. If you operate in the carbonated beverage industry, you earn a Total Revenue of $5.7 million and your Explicit Costs are $3.6 million. What are the Implicit Costs of operating in the snack foods industry?

A. $1 million

B. $1.8 million

C. $2.1 million

D. $5.7 million

18.Suppose the price of a candy bar is $1.25, the price of a bag of chips is $1.75, and the budget is $17.50. Candy Bars are on the x-axis and bags of chips are on the y-axis. If the price of a candy bar increases to $1.99, what happens to the Budget Line?

A.The budget lines rotates outward

B.The budget lines rotates inward

C.The budget line undergoes a parallel shift outward

D.The budget lines undergoes a parallel shift inward

19.If the Total Cost function is TC = 6.5Q^3 - 35Q^2 + 96Q + 3,000, what is the Average Variable Cost (AVC) function?

A. AVC = 6.5Q^2

B. AVC = 6.5Q^3 - 35Q^2 + 96Q

C. AVC = 6.5Q^2 - 35Q + 3,000/Q

D. AVC = 6.5Q^2 - 35Q + 96

20.Which of the following would increase the demand for labor?

A.There is a technological improvement which increases worker productivity

B. There's an increase in the number of workers

C..The substitution effect makes leisure more expensive as wages increase

D.Leisure is a normal good and the income effect occurs when wages change

21.Suppose you can either operate in the snack foods industry or the carbonated beverage industry. If you operate in the snack foods industry, you earn a Total Revenue of $2.8 million and your Explicit Costs are $1.8 million. If you operate in the carbonated beverage industry, you earn a Total Revenue of $5.7 million and your Explicit Costs are $3.6 million. What is the Economic Profit (or Loss) of operating in the snack foods industry?

A. $1.1 million

B. $1 million

C. $1.8 million

D. $2.1 million

22.Suppose the price of a candy bar is $1.25, the price of a bag of chips is $1.75, and the budget is $17.50. Candy Bars are on the x-axis and bags of chips are on the y-axis. If the budget is increased to $26.25, what happens to the Budget Line?

A.The budget lines rotates outward

B.The budget lines rotates inward

C.The budget line undergoes a parallel shift outward

D.The budget lines undergoes a parallel shift inward

23.For a Giffen Good, what is the relationship between the Substitution Effect and the Income Effect?

A.Substitution Effect = Income Effect

B.Substitution Effect > Income Effect

C.Substitution Effect < Income Effect

D.There is not enough information to determine the relationship between the Substitution Effect and the Income Effect for a Giffen Good

24.Suppose the production function is Q = 0.9LK where Q is the quantity of output, L is the quantity of labor used in production, and K is the quantity of capital used in production. What can be said about this production function?

A. It has Decreasing Returns to Scale

B. It has Constant Returns to Scale

C. It has Increasing Returns to Scale

D. There isn't enough information to determine the Returns to Scale for this production function

25.What is the relationship between the Total Product Function and the Total Cost Function?

A. The Total Product Function is always increasing while the Total Cost Function is always decreasing

B. The Total Production Function is always decreasing while the Total Cost Function is always increasing

C. When the Total Production Function is steeper, the Total Cost Function is steeper, and when the Total Production Function is flatter, the Total Cost Function is flatter

D. When the Total Production Function is steeper, the Total Cost Function is flatter, and when the Total Production Function is flatter, the Total Cost Function is steeper