201Sp22 Exam 1 Name [Sometimes you are required to choose more than one answer on multiple choice questions] 1. YUP-5'53"?\" Katelyn likes to swim, and swimming is a normal good for her. Her demand for swim sessions at a pool is P = 10 (1/10) Qd, Where Qd is the number of times she swims in a year. A local swimming pool charges $200 per year to belong to their swim club, and it charges $2 for each time that you go there to swim. If she joins, then how many times per year will she swim? ANS In #1, how much will she spend in the first year, including the $200 up front money? If the pool in #1 charged 5300 to belong to the swim club, and if everything else is the same as in #1, then how many times each year will she swim? ANS If Katelyn's demand for swim sessions changes to P =1 5 (1/10) Qd, then what could have caused this? Her income went up, and swimming is a normal good. Her income went down and swimming is a normal good. She learned that swimming too much causes skin problems, i.e., the skin gets old looking. Her boyfriend moved to an apartment complex that has a pool where she can swim for free. None of the above 5 7 require you to choose one OR MORE of the following that is or are related to the situation. a.) Marginal Cost b.) Marginal Benefit c. Sunk cost d. Opportunity cost e. none of these 5. When making a decision a person should never consider: 6. You paid $50 for a ticket to a concert, but you are sick, and cannot sell the ticket. What should you consider when deciding to go or to stay home? 6. You paid $50 for a ticket to a concert, but you are sick, and cannot sell the ticket. What should you consider when deciding to go or to stay home? 7. You have frequent flyer miles on Delta Airlines that will give you one free trip. You want to fly to Florida for spring break, but if you do then you will not be able to fly to California for your sister's wedding. 8. The USA and Mexico have the prices for good X and good Y given below. Who has an absolute advantage in good X? WHY? (Give numbers for "why\".} ANS because Good X Good Y Mexico 520 $5 USA 510 $2 9. Which country has a comparative advantage in good )1? WHY? (Give numbers for 'why\".] ANS because 10. Scott and Lisa can make one pizza or one loaf of bread in the time given below. Who has an absolute advantage in making bread? WHY? (Give numbers for \"why\".) ANS because Time for 1 Pizza Time for 1 Loaf of Bread Scott 10 minutes 30 minutes Lisa 15 minutes 60 minutes 11. Who has a comparative advantage in making pizza in #10? Why? [Give numbers for \"why".] ANS: because 12. If Scott and Lisa each spend 2 hours making pizza and 2 hours making bread, then how much of each product will they in total produce? ANS: Total pizza = Total Bread = 13. Now assume that Scott and Lisa each work 4 hours producing their comparative advantage product. Now, how much of each product will get produced? ANS: Total pizza = Total Bread = 14. In #10 Scott and Lisa are told to make 4 loaves of bread, and each can work for a total of 4 hours. How much pizza can they make if they specialize along comparative advantage lines? ANS 15. The demand for icecream cones at a county fair is given by P = 500 2C1d, where the 500 refers to 500 cents. The supply is P = 100 + 3Qs, where the 100 refers to 100 cents. What is the equilibrium price {in cents] and quantity for icecream cones at this county fair? ANS 16. What is Total Expenditure, TE, on icecream in #15? ANS 17. What is the most (approximately) that anyone would pay {in cents) for an icecream cone? 18. If the sellers of icecream in #15 charge 190 cents for each cone, then what is the situation in the market? ANS: There is a {circle one] surplus f shortage that is equal to 19. What will be the Total Expenditure, TE, on icecream in #18? ANS 20. Now assume that a rich person buys all of the icecream available in #18, and then resells it in a black market. What will be the black market price? Ans 21. Next assume that the icecream making machine malfunctions and it can make only 20 cones in a day. What will be total expenditure, TE, on icecream? Ans: 22. This time assume that the demand for icecream is the same as in #15, but this time assume that the county fair gives away ice-cream cones for free. How many cones should the people who run the county fair be prepared to give away? ANS 23. Assume, finally, that the demand for icecream cones at the country fair changes from P = 500 2Qd to P = 600 2Qd. What could have caused this? a Incomes decreased and icecream cones are an inferior good. b The price of milkshakes went down. c. The price of milkshakes went up. d Incomes decreased and icecream cones are a normal good e People have learned that icecream is good for your health. 24. In an economy the price of shoes decreased and people bought fewer shoes. What one event could have caused this? a. D increased b. D decreased c. 5 increased d. 5 decreased 25. In another economy, the price of beef increased and people bought more beet. What could have caused this? a. Incomes decreased and beef is a normal good. b. The cost of raising cattle went down. c. The price of chicken went down. d. Workers in the beef industry became more productive e. Buyers expected the price of beef to increase in the nearfuture 26. In still another economy, wages decrease in the X industry and people learn that good X is good for your health. What will happen to P}: and to Got? a. They both rise for sure b. They both fall for sure c. P): rises and Ox falls for sure d. P): falls and Cot rises for sure e. None of the above 27. Fred has an apple orchard and his apples sell for $5 per bushel. He can pick apples each day as much as he desires. The total bushels of apples he picks as he works more hours is given in the table below. He also has an uncle who owns a grocery store and will pay him a wage rate of $12 per hour. He can work as much as he wants to in this store. What is the marginal product of his 5th hour of picking apples? Hours Picking 0 1 2 3 4 5 6 Total Bushels 0 6 11 15 18 20 21 28. What is the marginal benefit of his 3rd hour of picking apples? 29. How many hours per day should he pick apples? 30. Fred's uncle gives him a raise. Because of this, Fred's optimum number of hours per day to pick apples becomes 3. What is Fred's new hourly wage rate