Question 1

Consider a tax on a good known as "Nalls". If the tax is changed from being on the sellers to being on the buyers, what is the effect on the tax burden?

Buyers will now pay more of the tax

Sellers will now pay more of the tax

No effect

Unclear

Question 2

For the good "Nalls" mentioned in the previous problem, suppose the PED is -0.5 and the PES is 1.95. If a tax was applied in this market, what could we say about the tax burden?The tax burden will fall completely on the sellers

The tax burden will fall equally on the buyers and sellers

The tax burden will fall mostly on the buyers

The tax burden will fall mostly on the sellers

Question 3

Suppose this good's demand became more elastic. What effect would this change have on the effect of a tax applied on this market?

Increased tax burden on the buyers

Increased tax burden on the sellers

Not enough information

None of the above

Question 4

Consider community college education. During recessions, the enrollment at these schools tends to increase. When the economy is doing well, the enrollment at these schools tends to decrease. What can we infer about the IED for this good?

It is less than zero

It is greater than zero

It equals zero

It is greater than zero but less than one

Question 5

Consider the following items: marijuana and crystal meth. Meth is a very dangerous drug while marijuana is not. One issue is whether people will take marijuana instead of meth. Suppose the CPED for these two items is -0.2. This statistic would be evidence for which argument?

Marijuana should remain legal

Marijuana should not be legal

Marijuana should not only remain legal but be encouraged

Marijuana should be used for the common cold

Question 6

Suppose you have two unrelated goods: a flash drive and a dog collar. What would be the CPED for these two items?

It is less than zero

It is greater than zero

It equals zero

It is greater than 100

Question 7

What is the definition of Behavioral Economics?

The study of decision making of how to allocate scarce resources at the national level

The study of how any form of human behavior is due to being rational

The study of how to maximize tax revenue in any situation

The branch of economics that incorporates psychology into economic models

Question 8

Think about the following concerning your instructor. When I played video games a lot, I would have thought that I was an above average player. However, I did not have any data (like comparisons with other players' stats) to back up my claim.

My belief may be an example of what cognitive bias?

Framing bias

Availability bias

Planning fallacy

Overconfidence bias

Question 9

Consider the following statement:

"Crime must be increasing. I just heard last month that a house down my street suffered a burglary. That has never happened before."

This statement is an example of what flaw in human reasoning?

Availability bias

Framing bias

Planning fallacy

Confirmation bias

Question 10

Suppose you have another friend who has concluded that "Gay men are more financially successful than heterosexual men." You try to tell your friend that several studies show that is not the case as only more affluent gays are willing to be open about their sexuality. Your friend pays no attention to your response. What cognitive bias might be relevant here?

Overconfidence bias

Framing bias

Confirmation bias

Availability bias

Question 11

Your instructor was recently charged $20 for being late to pick up his sons from school. If asked why, he would admit he always underestimates how long it takes to get ready and drive to his sons' school. What type of bias does your silly instructor suffer from?

Overconfidence bias

Planning fallacy

Availability bias

Framing bias

Question 12

According to what was said in class, which of the following is true concerning Behavioral Economics?

It shows certain situations where traditional economics is not realistic

It assumes people are rational

It tries to explain how people are just plain silly and never make rational decisions

Its supporters believe behavioral economics should completely replace traditional economics

Question 13

Behavioral Economics can be used to help push people into decisions that could be in their long run self-interest without depriving them of individual choice.

True

False

Question 14

Suppose AVC=$75, FC=$1,500 and TC=$39,000. What is the ATC?

$40

$78

$87

$97.50

Question 15

Consider the following information. Assume FC=$11,850. Also, assume when q=19 that AVC=$950 and when q=20 then ATC=$1,500.

What is MC for the 20thunit?

$50

$100

$200

$500

Question 16

Assume FC=$11,850. Also, assume that when q=19 that AVC=$950 and when q=20 then ATC=$1,500. If the firm decides to make 20 units (q=20), what is the MR at q=20?

$50

$100

$200

Not enough information

Question 17

Suppose a company called Jorge B. Inc. is selling a product known as "Peter's Giant Birthday Candles". The company has the following table:

qPTRTCProfitMRMCProfit

0124---------

1117

2108

393

485

5731

What is the quantity produced?

0

2

4

5

Question 18

Again, suppose a company called Jorge B. Inc. is selling a product known as "Peter's Giant Birthday Candles". As shown above, the company has the following table:

qPTRTCProfitMRMCProfit

0124---------

1117

2108

393

485

5731

Given this information, what is the FC?

4

8

12

Not enough information

Question 19

Suppose we have a market where there are 100 firms and the economic profit to each firm is $10,000. If the market is competitive, what we do know will happen in the long run?

Five firms will exit the market

There will be more than 100 firms in this market

The market price will increase

The quantity produced by each firm will not change

Question 20

Suppose a firm in the competitive market faces the following cost and revenue conditions: MC=$10; MR=$12. The firm should...

change nothing.

increase output.

increase price.

decrease output.