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Material Type: Exam; Professor: Kheirandish; Class: Principles of Microeconomics; Subject: Economics; University: Clayton State University; Term: Spring 2007;
Typology: Exams
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Multiple Choice Identify the letter of the choice that best completes the statement or answers the question. ____ 1. If quantity demanded is completely unresponsive to changes in price, demand is a. inelastic. b. unit elastic. c. elastic. d. perfectly elastic. e. perfectly inelastic. ____ 2. If Cassandra bought 16 blouses last year when her income was $40,000 and she buys 24 blouses this year her when income is $35,000, then blouses are a. an inferior good. b. a normal good. c. a substitute good. d. a complementary good. e. There is not enough information to answer this question. Exhibit 5- ____ 3. Refer to Exhibit 5-2. The market for good X is initially in equilibrium at $5. The government then places a per-unit tax on good X as shown by the shift of S 1 to S 2. What is an expression for the tax revenue raised? a. $2.25 x Q 2 b. $1.25 x Q 2 c. $1.00 x Q 2 d. ($1.00 x Q 2 ) + ($1.25 x [Q 1 - Q 2 ]) e. $2.25 x (Q 1 - Q 2 )
____ 4. If the demand for a good is unit elastic and the price of the good increases, a. total revenue increases. b. total revenue decreases. c. total revenue is not affected. d. the direction of the change in total revenue cannot be determined from the information given. Exhibit 5- Price of Good A Quantity Demanded of Good A Quantity Supplied of Good A $5.50 5 55 $4.50 15 45 $3.50 25 35 $2.50 35 25 $1.50 45 15 $0.50 55 5 ____ 5. Refer to Exhibit 5-3. When price decreases from $5.50 to $4.50, the coefficient of price elasticity of supply is a. 0. b. 0.1. c. 0.5. d. 1.0. e. 5.0. ____ 6. In order for an individual to achieve consumer equilibrium through the consumption of two goods, A and B, that individual must fulfill the condition a. TUA = TUB. b. TUA/PA = TUB/PB. c. MUA = MUB. d. MUA/PA = MUB/PB. e. MUB/PB = MUB/PA.
____ 7. Refer to Exhibit 6-3. Assume that the price of oranges increases to $2, while the price of apples remains at $1, and Linda allocates $5 of the weekly food budget to purchasing apples and oranges. If Linda wants to maximize her utility, her new consumption bundle will consist of a. 1 apple and 2 oranges. b. 3 apples and 1 orange. c. 5 apples and no oranges. d. none of the above
____ 16. Refer to Exhibit 8-1. Diminishing marginal returns set in with the addition of which unit of the variable input? a. the fourth b. the fifth c. the sixth d. the second ____ 17. If the average variable cost curve is rising, a. the MC curve must be below it. b. marginal cost is greater than average variable cost. c. the MC curve is necessarily falling. d. the MC curve is necessarily horizontal (neither rising nor falling).
____ 18. Refer to Exhibit 8-11. Average fixed cost at two units of output is a. $25. b. $50. c. $100. d. $150. e. indeterminable from the information given. ____ 19. Refer to Exhibit 8-11. Average variable cost at two units of output is a. $ b. $ c. $ d. $ ____ 20. Marginal utility is defined as the a. change in marginal utility a person derives from the consumption of a good. b. change in total utility a person derives from the consumption of a good divided by the price of that good. c. change in total utility a person derives from the consumption of a good divided by the change in the quantity of the good consumed. d. sum of the amounts of satisfaction a person receives from consuming a good. e. change in total utility a person derives from the consumption of a good divided by the value in use of that good.