+ marks) If the price elasticity of demand is 0.15, and the price is doubled, this will lead to a in the quantity demanded. a. 30 percent increase. b. 15 percent decrease. c. 0.30 percent increase. d. 0.15 percent decrease. Question 15 (4 maths) Which of the following statements is NOT true regarding the production function and the production possibilities curve? a. Both the production function and the production possibilities curve maximise the amount of output attainable. b. The production function describes the capacity of a single firm, whereas the production possibilities summarises the output capacity of the entire economy. c. A production function tells us the maximum amount of output attainable from the use of all resources. d. The production possibilities curve expresses the ability to produce various combinations of goods given the use of all resources. Question 16 (4 malls) The average physical product of four units of labour in Figure 1.4 Figure 1.4 50 48 Total output 28 Output (units per day) 12 6 Labor Input (workers per day) 40 units per dayFigure 1.4 Total output 28 Output (units per day) 12 Labor Input (workers per day) a. 40 units per day b. 10 units per day c. 12 units per day d. 4 units per day Question 17 (4 marks) Which of the following is always upward-sloping? a. The marginal cost curve when it is below the average total cost curve. b. The marginal cost curve when it is above the average total cost curve. c. The average fixed cost curve when it is below the marginal cost curve d. The average total cost curve when it is above the marginal cost curve. Question 18 (4 margs) Assuming that the apple farmer could earn $2, 000 as an employee elsewhere, then the total economic profit/loss in Table 1.2 is... Table 1.2 Assume an apple farmer incurs the following costs and revenue Fertilizer $200 Seeds $75 Water $250 Wages $750 Property taxes $600 Interest payments on borrowed funds $1,200 Sales of apples $4,000 a. $925 b. -$75 C. -$2, 000 14 C Sunnyb. -$75 C. -$2, 000 d. -$1, 075 Question 19 4 mars) If the market price for the perfectly competitive firm represented in Figure 1.5 is $4... Figure 1.5 PRICE OR COST a. The firm should produce 13 units. b. The firm should shut down. c. The firm will make an economic loss in the long-run. d. The firm should continue to produce though it will not recover its variable costs. Question 20 (4 marks) It was reported that General Motors planned to essentially quit making cars and trucks in the United States for nine weeks from mid-May through July 2009 and Omaha Power planned to close one of its nuclear plants permanently. Based on these particular news reports, what is the difference between GM's and Omaha Power's decisions? a. Omaha Power was trying to get rid of excess inventory, and GM was trying to become more efficient. b. GM was trying to maximise profits while Omaha Power was trying to minimise losses. c. GM's decision to idle plants was a short-run shutdown decision. Omaha Power, by contrast, made a long-run decision to exit a specific market. d. There is no difference between GM's and Omaha Power's decisions; both were trying to get rid of excess inventory