ECON 3310

1.Which of the following situations would cause a decrease in supply in the market for computers?

a.The price of computer chips, an input to produce computers, increases

b.The price of computers decreases

c.Computers are a Normal Good and people's income increases

d.Printers are a complementary good and the price of printers decreases

2.If the Total Cost function is TC = 33Q^3 - 17Q^2 + 65Q + 30,000, what is the Variable Cost (VC) function?

A. VC = 33Q^2 - 17Q + 65 + 30,000/Q

B. VC = 33Q^3

C. VC = 33Q^3 - 17Q^2 + 65Q

D. VC = 30,000

3.Suppose the price of a kayak rental is $55, the price of a fishing license is $70, and the budget is $770. If kayak rentals are on the x-axis and fishing licenses are on the y-axis, what is the x-intercept for the Budget Line?

A.11

B.14

C.55

D.770

4.In the market for donuts, the price elasticity of demand is 1.27. If the price of textbooks increases by 10%, what is the percent change in the quantity demanded?

A.8.73%

B.7.87%

C.12.7%

D.Not enough information to determine

5.Suppose the production function is Q = 8L + 15K 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?

Group of answer choices

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

6.Suppose the demand function is QD = 60,000 - 2,000P, and the supply function is QS = 4,000P - 6,000. What is the market clearing price?

A.$0

B.$6

C.$11

D.$2,000

7.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 Accounting Profit (or Loss) of producing computer chips?

A.$0

B.$1 million

C.$4 million

D.$5 million

8.Suppose the Market Demand function is Q = 6,700 840P. The two firms in the market compete under Bertrand Competition. The Marginal Cost (MC) for the two firms are MC = $11.90. What is the market price at the Nash Equilibrium?

A.$11.90

B.$23.80

C.$840

D.$6,700

9.The Price Elasticity of Demand for a good is 1.32. Which of the following describes the Price Elasticity of Demand?

A.Elastic

B.Inelastic

C.Unit elastic

D.Perfectly elastic

10.Suppose the price of a kayak rental is $55, the price of a fishing license is $70, and the budget is $770. If kayak rentals are on the x-axis and fishing licenses are on the y-axis, what is the y-intercept for the Budget Line?

A.11

B.14

C.70

D.770

11.The price of popsicles, a substitute for ice cream, increases. What happens in the market for ice cream?

A.Supply decreases

B.Supply increases

C.Demand decreases

D.Demand increases

12.If the Total Cost function is TC = 33Q^3 - 17Q^2 + 65Q + 30,000, what are the Fixed Costs (FC)?

A.FC = 30,000

B.FC = 33

C.FC = 65

D.FC = 33Q^3

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

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

B.The price of the output good increases

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

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

A.Firms will enter the industry in the Long-Run

B.There will be no change in the number of firms in the industry in the Long-Run

C.Some firms will exit the industry in the Long-Run

D.There isn't enough information to determine what will happen in the Long-Run

15.You're dreaming of what to do during a nice summer day. You could mow the lawn which you would pay someone $15 to do for you. You could go for a walk which you value at $11. You could also take a nap and ignore everyone and everything else which you would pay $29 to do. If you to take a nap, what is your opportunity cost?

A.$29

B.$26

C.$15

D.$11

16.Suppose sunscreen is on the x-axis and sunglasses are on the y-axis. If the price of sunscreen decreases, 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

17.If people expect the price of houses to increase next month, what happens to the demand for houses this month?

A.Demand increases

B.Demand does not change

C.Demand decreases

D.Not enough information to determine

18.Consider the bundle of (5 Apples, 4 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 2.5, and the Marginal Utility of Bananas for that bundle is 4, what is the slope of the Indifference Curve at that point?

A.1

B.0.8

C.0.625

D.Not enough information to determine

19.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 maximizing quantity for the firm to produce?

A.0

B.22

C.110

D.120

20.The Price Elasticity of Demand for a good is 0.76. Which of the following describes the Price Elasticity of Demand?

A.Elastic

B.Inelastic

C.Unit elastic

D.Perfectly elastic

21.Suppose the price of a donut is $2.50, the price of a cinnamon roll is $3.20, and the budget is $50. Donuts are on the x-axis and cinnamon rolls are on the y-axis. If the price of a donut increases to $3.30, what happens to 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

22.Suppose the production function is Q = 0.015LK 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

23.Suppose when a person's income increases, his or her demand for mac and cheese decreases. What is the relationship between mac and cheese and income?

A.Mac and cheese are Substitutes

B.Mac and cheese are a Normal good

C.Mac and cheese are an Inferior good

D.Mac and cheese are unaffected by changes in income

24.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 profit maximizing quantity for the firm to produce?

A.0

B.60

C.3,300

D.12,000

25.Which of the following would cause an increase in demand in the market for yoga pants?

A.The price of jeans, a substitute good, decreases

B.The price of synthetic fibers, an input used to make yoga pants, decreases

C.The price of yoga pants decreases

D.The price of yoga mats, a complementary good, decreases

26.If the Total Cost function is TC = 33Q^3 - 17Q^2 + 65Q + 30,000, what is the Average Total Cost (ATC) function?

A. ATC = 30,000/Q

B. ATC = 33Q^2 - 17Q + 65 + 30,000/Q

C. ATC = 33Q^2

D. ATC = 33Q^3 - 17Q^2 + 65Q

27.The price elasticity of demand for ice cream is 1.11. If a grocery store wants to increase the revenue it gets from selling ice cream, what should it do?

A.Increase its price of ice cream

B.Decrease its price of ice cream

C.Decrease the amount of milk used to produce ice cream

D. Decrease the size of the store

28.Suppose the price of a donut is $2.50, the price of a cinnamon roll is $3.20, and the budget is $50. Donuts are on the x-axis and cinnamon rolls are on the y-axis. If the budget is decreased to $40, what happens to 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

29.Suppose the demand function is QD = 60,000 - 2,000P, and the supply function is QS = 4,000P - 6,000. What is the equilibrium quantity?

A.6,000

B.38,000

C.54,000

D.60,000

30.If the Total Cost function is TC = 33Q^3 - 17Q^2 + 65Q + 30,000, what is the Average Variable Cost (AVC) function?

A. AVC = 33Q^2

B. AVC = 33Q^2 - 17Q + 30,000/Q

C.AVC = 33Q^3 - 17Q^2 + 65Q

D.AVC = 33Q^2 - 17Q + 65

31.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

32.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

33.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

34.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

35.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

36.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

37.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

38.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

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

40.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

41.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

42.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

43.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

44.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

45.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

46.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

47.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

48.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