X Exam2 Microeconomics... Exam 2 Name_ 1) The theory of consumer behavior assumes that A) marginal utility is constant. B) consumers do not know how much marginal utility they obtain from successive units of various products. C) consumers behave rationally, attempting to maximize their satisfaction. D) consumers have unlimited money incomes. 2) The price elasticity of demand for vital medicine is A) relatively inelastic. B) perfectly inelastic. C) relatively elastic. D) perfectly elastic. 3) What is a good with a positive income elasticity of demand defined as? A) Normal Good. B) Substitute Good. C) Inferior Good. D) Complementary Good. 4) If a firm can sell 3,000 units of product A at $10 per unit and 5,000 at $8, then A) the price elasticity of demand is 0.44. B) the price elasticity of demand is 2.25. C) A is an inferior good. D) A is a complementary good. 5) What characteristic is assoicated with a positive cross elasticity of demand? A) Inferior. B) Normal. C) Complement. D) Substitute. 6) Answer the question on the basis of the following two schedules, which show the amounts of additional satisfaction (marginal utility) that a consumer would get from successive quantities of products J and K. MUK 32 28 24 LAWN 20 12 6 10 8 has a money income of $52 and the prices of J and K are $8 and $4, respectively? A) 156 utils B) 124 utils C) 276 utils D) 36 utils 7) age Product Marginal ProductX Exam2 Microeconomics... 7) Marginal Product Marginal and Average Product Average Product Q1 Q2 Q 3 Inputs of Labor In the diagram, the range of diminishing marginal returns is A) Q2. B) Q1Q3. C) Q3. D) Q1Q2. 8) Which of the following statements is false? A) In the long run, firms would not continue operating at a loss. B) The short run refers to a period of less than one year. C) In the long run, all inputs can vary in quantity. D) Variable costs remain variable in the long run. 9) Based on the following items' income elasticity of demand, which of the following will increase in quantity the most when consumer income increases? A) Salt (+0.2). B) Train tickets (-0.75). C) Restaurant Meals (+4.00). D) Bicycles (-1.00). N 10)X Exam2 Microeconomics... Ill 15) 0 Output In the figure, curves 1, 2, 3, and 4 represent the A) MC, ATC, AVG. and AFC curves, respectively. B) MC, AFC, AVG. and ATC curves, respectively. C] ATC, AVG, AFC, and MC curves, respectively. D] ATC, MC, AFC, and AVG curves, respectively. 17) Assume hot dogs and hot dog buns have a cross elasticity that is negative. If the price of hot dogs increases, the quantity demanded for hot dog buns will A] Increase. B) Decrease. C) Remain Constant. D) None of the above. 13) Which of the following costs decreases as more output being produced, but does not go below zero? A] Total Variable Costs. B) Total Fixed Costs. C) Average Fixed Costs. D) Average Variable Costs. 19) What is the primary determinant for elasticity of supply? A] Time. B) The amount of substitutes. C] Luxury vs Necessity of the good, D) All the above. 20) Answer the question on die basis of the following two schedules, which show the amounts of additional satisfaction {marginal utility] that a consumer would get from successive quantities of products J and K. Wu '1 AD "I '30 X Exam2 Microeconomics... Ill 13) Which of the following is considered when calculating Economic Profit, but NOT for Accounting Prot? A] Opportunity Cost. B) Variable Costs. (2] Fixed Casts. D) Land Costs. 14) When considering the long-run costs of production, at what point does a rm experience diseconomies of scale? A) When the firms supply is depleted. B] Once coordination problems occur. C) When employees begin to strike. D) Once the government imposes constraints. 15) Units Consumed Total Utility Marginal Utility Refer to the data. The value for X is A] 1:]. B] 15. C) 55. D] 5. is) X Exam2 Microeconomics... 10) Product 2 Variable Input The diagram suggests that A) when marginal product is zero, total product is at a minimum. B) when marginal product lies below average product, average product is rising. C) when marginal product lies above average product, average product is rising. D) when total product is at a maximum, so are marginal product and average product. 11) Which of the following is most likely to be a fixed cost? A) shipping charges B) expenditures for raw materials C) wages for unskilled labor D) taxes 12) Use the following data to answer the question. Inputs of Labor Total Product 0 0 8 W N - 18 25 4 30 5 33 34 32 Diminishing returns begin to occur with the hiring of the unit of labor. A) first B) third C) seventh D) second 3 13) Which of the following is considered when calculating Economic Profit, but NOT for Accounting Profit? A) Opportunity Cost. B) Variable Costs. C) Fixed Costs. D) Land Costs. 14) When considering the long-run costs of production, at what point does a firm experience diseconomies of scale