Review For Midterm

Review Questions for Midterm-1
Multiple Choice
Identify the choice that best completes the statement or answers the question.
____
1. An increase in quantity demanded

a. results in a movement downward and to the right along a demand curve.
b. results in a movement upward and to the left along a demand curve.
c. shifts the demand curve to the left.
d. shifts the demand curve to the right.
Table 4-1
Price
$5
$4
$3
$2
$1
$0
Quantity Demanded
by Michelle
5
6
7
8
9
10
Quantity Demanded
by Laura
4
6
8
10
12
14
Quantity Demanded
by Hillary
11
13
15
17
19
21
____
2. Refer to Table 4-1. If the market consists of Michelle, Laura, and Hillary and the price falls by $1, the
quantity demanded in the market increases by
a. 2 units.
b. 3 units.
c. 4 units.
d. 5 units.
____
3. Refer to Table 4-1. If the market consists of Michelle and Laura only and the price falls by $1, the quantity
demanded in the market increases by
a. 2 units.
b. 3 units.
c. 4 units.
d. 5 units.
Figure 4-4
Price
Demand A
Demand B
Demand C
Quantity
____
4. Refer to Figure 4-4. Which of the following would cause the demand curve to shift from Demand C to
Demand A in the market for DVDs?
a. an increase in the price of DVDs
b. a decrease in the price of DVD players
c. a change in consumer preferences toward watching movies in movie theaters rather than at
home
d. an expectation by buyers that their incomes will increase in the very near future
Figure 4-5
10
Price
10
Panel 1
Price
Panel 2
3
B
1
Demand 2
1
Demand 1
7
Quantity
Demand 1
1
Quantity
____
5. Refer to Figure 4-5. Suppose that the federal government is concerned about obesity in the United States.
Congress is considering two plans. One would require junk food producers to include warning labels on
all junk food. The other would impose a tax on all products considered to be junk food. If the warning
labels are successful, we could illustrate the plan as producing a movement from
a. Point A to Point B in Panel 1.
b. Point B to Point A in Panel 1.
c. Point A to Point C in Panel 2.
d. Point C to Point A in Panel 2.
____
6. Two goods are substitutes when a decrease in the price of one good
a. decreases the demand for the other good.
b. decreases the quantity demanded of the other good.

c. increases the demand for the other good.
d. increases the quantity demanded of the other good.
____
7. Two goods are complements when a decrease in the price of one good
a. decreases the quantity demanded of the other good.
b. decreases the demand for the other good.
c. increases the quantity demanded of the other good.
d. increases the demand for the other good.
Figure 4-7
Panel (a)
Panel (b)
price
price
P'
P
Q'
____
D'
quantity
D
quantity
8. Refer to Figure 4-7. The graphs show the demand for cigarettes. In Panel (a), the arrows are consistent
with which of the following events?
a. The price of marijuana, a complement to cigarettes, increased.
b. Mandatory health warnings were placed on cigarette packages.
c. Several foreign countries banned U.S. cigarettes in their countries.
d. A tax was placed on cigarettes.
Table 4-8
A country club usually only allows members to purchase tickets for its celebrity golf tournament, but the club
is considering allowing non-members to purchase tickets this year. The demand and supply schedules are as
follows:
Price
Quantity Demanded
Quantity Demanded
Quantity Supplied
by Members
by Non-members
$10
1000
500
600
$15
800
400
600
$20
600
300
600
$25
400
200
600
$30
200
100
600
____
9. Refer to Table 4-8. If only members are allowed to purchase tickets to this year's celebrity golf tournament,
then what will be the equilibrium price?
a. $10
b. $15
c. $20
d. $25
____ 10. Refer to Table 4-8. If both members and non-members are allowed to purchase tickets to this year's
celebrity golf tournament, then what will be the equilibrium price?
a. $10
b. $15
c. $20
d. $25
Figure 4-15
50
price
45
40
35
30
25
20
15
10
100 200 300 400 500 600 700 800
quantity
____ 11. Refer to Figure 4-15. Equilibrium price and quantity are, respectively,
a. $15 and 200 units.
b. $25 and 600 units.
c. $25 and 400 units.
d. $35 and 200 units.
____ 12. Refer to Figure 4-15. At the equilibrium price,
a. 200 units would be supplied and demanded.
b. 400 units would be supplied and demanded.
c. 600 units would be supplied and demanded.
d. 600 units would be supplied, but only 200 would be demanded.
Figure 4-21
Price
Supply 1
Supply 2
D
A
C
B
Demand 1
Demand 2
Quantity
____ 13. Refer to Figure 4-21. Which of the following movements would illustrate the effect in the market for golf
balls of an increase in green fees?
a. Point A to Point B
b. Point C to Point B
c. Point C to Point D
d. Point A to Point D
Figure 4-22
Panel (a)
Panel (b)
price
price
Pe'
Pe
Pe
Pe'
Qe
Qe'
Panel (c)
D'
quantity
D'
Qe'
Qe
Panel (d)
D
quantity
price
price
S'
S'
Pe
Pe'
Pe'
Pe
D
Qe
Qe'
D
quantity
Qe'
Qe
quantity
____ 14. Refer to Figure 4-22. Panel (a) shows which of the following?
a. an increase in demand and an increase in quantity supplied
b. an increase in demand and an increase in supply
c. an increase in quantity demanded and an increase in quantity supplied
d. an increase in quantity demanded and an increase in supply
____ 15. Refer to Figure 4-22. Panel (b) shows which of the following?
a. a decrease in demand and a decrease in quantity supplied
b. a decrease in demand and a decrease in supply
c. a decrease in quantity demanded and a decrease in quantity supplied
d. a decrease in quantity demanded and a decrease in supply
____ 16. In general, elasticity is a measure of
a. the extent to which advances in technology are adopted by producers.
b. the extent to which a market is competitive.
c. how firms profits respond to changes in market prices.
d. how much buyers and sellers respond to changes in market conditions.
____ 17. When consumers face rising gasoline prices, they typically
a. reduce their quantity demanded more in the long run than in the short run.
b. reduce their quantity demanded more in the short run than in the long run.
c. do not reduce their quantity demanded in the short run or the long run.
d. increase their quantity demanded in the short run but reduce their quantity demanded in
the long run.
____ 18. Which of the following is not a determinant of the price elasticity of demand for a good?
a. the time horizon
b. the steepness or flatness of the supply curve for the good
c. the definition of the market for the good
d. the availability of substitutes for the good
____ 19. The greater the price elasticity of demand, the
a. more likely the product is a necessity.
b. smaller the responsiveness of quantity demanded to a change in price.
c. greater the percentage change in price over the percentage change in quantity demanded.
d. greater the responsiveness of quantity demanded to a change in price.
____ 20. Suppose that Juan Carlos is filling out a survey that he received in the mail. The survey asks him what he
would do if the price of his favorite toothpaste increased. Juan Carlos reports that he would switch to a
different brand. The survey asks what he would do if the price of all toothpastes increased. Juan Carlos
reports that he must use toothpaste, so he would have to adjust his spending elsewhere. These examples
illustrate the importance of
a. changes in total revenue in determining the price elasticity of demand.
b. a necessity versus a luxury in determining the price elasticity of demand.
c. the definition of a market in determining the price elasticity of demand.
d. the time horizon in determining the price elasticity of demand.
____ 21. If the price elasticity of demand for a good is 0.25, then a 20 percent decrease in price results in a
a. 0.0125 percent increase in the quantity demanded.
b. 4 percent increase in the quantity demanded.
c. 5 percent increase in the quantity demanded.
d. 80 percent increase in the quantity demanded.
____ 22. When the price of a good is $5, the quantity demanded is 100 units per month; when the price is $7, the
quantity demanded is 80 units per month. Using the midpoint method, the price elasticity of demand is about
a. 0.22.
b. 0.67.
c. 1.33.
d. 1.50.
____ 23. When the price of a good is $5, the quantity demanded is 120 units per month; when the price is $7, the
quantity demanded is 100 units per month. Using the midpoint method, the price elasticity of demand is about
a. 0.55.
b. 1.83.
c. 2.
d. 10.
____ 24. When the price of a bracelet was $25 each, the jewelry shop sold 20 per month. When it raised the price to
$35 each, it sold 14 per month. Using the midpoint method, the price elasticity of demand for bracelets is
about
a. 1.66.
b. 1.06.
c. 0.94.
d. 0.60.
____ 25. Which of the following expressions is valid for the price elasticity of demand?
a.
Price elasticity of demand =
.
b.
c.
d.
____ 26. The case of perfectly elastic demand is illustrated by a demand curve that is
a. vertical.
b. horizontal.
c. downward-sloping but relatively steep.

d. downward-sloping but relatively flat.
____ 27. In the case of perfectly inelastic demand,
a. the change in quantity demanded equals the change in price.
b. the percentage change in quantity demanded equals the percentage change in price.
c. infinitely-large changes in quantity demanded result from very small changes in the price.
d. quantity demanded stays the same whenever price changes.
Figure 5-2
Price
Pa
Pb
D1
D3
D2
Quantity
____ 28. Refer to Figure 5-2. As price falls from Pa to Pb, which demand curve represents the most elastic demand?
a. D1
b. D2
c. D3
d. All of the above are equally elastic.
____ 29. Suppose that when the price of wheat is $2 per bushel, farmers can sell 10 million bushels. When the price of
wheat is $3 per bushel, farmers can sell 8 million bushels. Which of the following statements is true? The
demand for wheat is
a. income inelastic, so an increase in the price of wheat will increase the total revenue of
wheat farmers.
b. income elastic, so an increase in the price of wheat will increase the total revenue of wheat
farmers.
c. price inelastic, so an increase in the price of wheat will increase the total revenue of wheat
farmers.
d. price elastic, so an increase in the price of wheat will increase the total revenue of wheat
farmers.
____ 30. A city wants to raise revenues to build a new municipal swimming pool next year. The mayor suggests that
the city raise the price of admission to the current municipal pools this year to raise revenues. The city
manager suggests that the city lower the price of admission to raise revenues. Who is correct?
a. the mayor
b. the city manager
c. The answer depends on the price elasticity of demand.
d. The answer depends on the costs of construction of the new municipal swimming pool.
____ 31. A city wants to raise revenues to build a new municipal swimming pool next year. The mayor suggests that
the city raise the price of admission to the current municipal pools this year to raise revenues. The city
manager suggests that the city lower the price of admission to raise revenues. Who is correct?
a. Both the mayor and city manager would be correct if demand were price elastic.
b. Both the mayor and city manager would be correct if demand were price inelastic.
c. The mayor would be correct if demand were price elastic; the city manager would be
correct if demand were price inelastic.
d. The mayor would be correct if demand were price inelastic; the city manager would be
correct if demand were price elastic.
____ 32. Which of the following could be the price elasticity of demand for a good for which a decrease in price would
increase revenue?
a. 0
b. 0.2
c. 1
d. 2.1
____ 33. Which of the following could be the price elasticity of demand for a good for which an increase in price
would increase revenue?
a. 0.2
b. 1
c. 1.5
d. All of the above could be correct.
____ 34. Total revenue
a. always increases as price increases.
b. increases as price increases, as long as demand is elastic.
c. decreases as price increases, as long as demand is inelastic.
d. remains unchanged as price increases when demand is unit elastic.
Figure 5-4
A
Price
Demand
C
Quantity
____ 35. Refer to Figure 5-4. Suppose the point labeled B is the halfway point on the demand curve and it
corresponds to a price of $5.00. Then, between prices of $4.99 and $5.01, the price elasticity of demand is
a. less than 1 but greater than zero.
b. equal to 1.
c. greater than 1.
d. equal to zero.
Figure 5-5
60
Price
54
48
42
36
30
24
18
12
6
Demand
3
12
15
18
21
24
27
30
33
Quantity
____ 36. Refer to Figure 5-5. Using the midpoint method, demand is unit elastic between prices of
a. $18 and $24.
b. $24 and $30.
c. $24 and $36.
d. $30 and $36.
____ 37. Refer to Figure 5-5. Using the midpoint method, between prices of $12 and $18, price elasticity of demand is
a. 0.33.
b. 0.67.
c. 1.33.
d. 1.89.
Figure 5-12
Price
P2
P1
D
Demand
Q2
Q1
Quantity
____ 38. Refer to Figure 5-12. Total revenue when the price is P1 is represented by the area(s)
a. B + D.
b. A + B.
c. C + D.
d. D.
____ 39. Refer to Figure 5-12. Total revenue when the price is P2 is represented by the area(s)
a. B + D.
b. A + B.
c. C + D.
d. D.
Table 5-6
Income
$30,000
$40,000
Quantity of Good X
Purchased
2
6
Quantity of Good Y
Purchased
20
10
____ 40. Refer to Table 5-6. Using the midpoint method, what is the income elasticity of demand for good X?
a. -3.5
b. -0.29
c. 0.29
d. 3.5
____ 41. For which of the following goods is the income elasticity of demand likely highest?
a. natural gas
b. doctors visits
c. hamburgers
d. boats
____ 42. If an increase in income results in a decrease in the quantity demanded of a good, then for that good, the
a. cross-price elasticity of demand is negative.
b. price elasticity of demand is elastic.
c. income elasticity of demand is negative.
d. income elasticity of demand is positive.
____ 43. To determine whether a good is considered normal or inferior, one could examine the value of the
a. income elasticity of demand for that good.
b. price elasticity of demand for that good.
c. price elasticity of supply for that good.
d. cross-price elasticity of demand for that good.
____ 44. You and your college roommate eat three packages of Ramen noodles each week. After graduation last
month, both of you were hired at several times your college income. You still enjoy Ramen noodles very
much and buy even more, but your roommate plans to buy fewer Ramen noodles in favor of foods she prefers
more. When looking at income elasticity of demand for Ramen noodles, yours would
a. be negative, and your roommate's would be positive.
b. be positive, and your roommate's would be negative.
c. be zero, and your roommate's would approach infinity.
d. approach infinity, and your roommate's would be zero.
____ 45. Suppose that when the price of good X falls from $10 to $8, the quantity demanded of good Y rises from 20
units to 25 units. Using the midpoint method, the cross-price elasticity of demand is
a. -1.0, and X and Y are complements.
b. -1.0, and X and Y are substitutes.
c. 1.0, and X and Y are complements.
d. 1.0, and X and Y are substitutes.

____ 46. Which of the following expressions represents a cross-price elasticity of demand?
a. percentage change in quantity demanded of bread divided by percentage change in
quantity supplied of bread
b. percentage change in quantity demanded of bread divided by percentage change in price of
butter
c. percentage change in price of bread divided by percentage change in quantity demanded of
bread
d. percentage change in quantity demanded of bread divided by percentage change in income
____ 47. If the cross-price elasticity of two goods is negative, then the two goods are
a. necessities.
b. complements.
c. normal goods.
d. inferior goods.
____ 48. If the cross-price elasticity of demand for two goods is -4.5, then
a. the two goods are substitutes.
b. the two goods are complements.
c. one of the goods is normal while the other good is inferior.
d. one of the goods is a luxury while the other good is a necessity.
____ 49. The price elasticity of supply measures how responsive
a. equilibrium price is to equilibrium quantity.
b. sellers are to a change in buyers' income.
c. sellers are to a change in price.
d. consumers are to the number of substitutes.
____ 50. A key determinant of the price elasticity of supply is the time period under consideration. Which of the
following statements best explains this fact?
a. Supply curves are steeper over long periods of time than over short periods of time.
b. Buyers of goods tend to be more responsive to price changes over long periods of time
than over short periods of time.
c. The number of firms in a market tends to be more variable over long periods of time than
over short periods of time.
d. Firms prefer to change their prices in the short run rather than in the long run.
____ 51. If the price elasticity of supply is 1.5, and a price increase led to a 1.8% increase in quantity supplied, then the
price increase is about
a. 0.67%.
b. 0.83%.
c. 1.20%.
d. 2.70%.
____ 52. If the price elasticity of supply is 1.5, and a price increase led to a 3% increase in quantity supplied, then the
price increase is about
a. 0.2%.
b. 0.5%.
c. 2.0%.
d. 4.5%.
Figure 5-17
Price
SupplyA
Price
Price
Supply C
Price
Supply B
Supply D
Quantity
Quantity
Quantity
Quantity
____ 53. Refer to Figure 5-17. Which of the following statements is not correct?
a. Supply curve A is perfectly inelastic.
b. Supply curve B is perfectly elastic.
c. Supply curve C is unit elastic.
d. Supply curve D is more elastic than supply curve C.
____ 54. Economists assume that the goal of the firm is to maximize total
a. revenue.
b. profits.
c. costs.
d. satisfaction.
____ 55. Total revenue equals
a. price x quantity.
b. price/quantity.
c. (price x quantity) - total cost.
d. output - input.
____ 56. Trevors Tire Company produced and sold 500 tires. The average cost of production per tire was $50. Each
tire sold for a price of $65. Trevors Tire Companys total costs are
a. $7,500.
b. $25,000.
c. $32,500.
d. $67,500.
____ 57. A certain firm manufactures and sells computer chips. Last year it sold 2 million chips at a price of $10 per
chip. For last year, the firm's
a. accounting profit was $20 million.
b. economic profit was $20 million.
c. total revenue was $20 million.
d. explicit costs was $20 million.
____ 58. Total cost is the
a. amount a firm receives for the sale of its output.
b. fixed cost less variable cost.
c. market value of the inputs a firm uses in production.
d. quantity of output minus the quantity of inputs used to make a good.
____ 59. Profit is defined as
a. net revenue minus depreciation.
b. total revenue minus total cost.
c. average revenue minus average total cost.
d. marginal revenue minus marginal cost.
____ 60. Billys Bean Bag Emporium produced 300 bean bag chairs but sold only 275 of the units it produced. The
average cost of production for each unit of output produced was $100. The price for each of the 275 units sold
was $95. Total profit for Billys Bean Bag Emporium would be
a. -$3,875.
b. $26,125.
c. $28,500.
d. $30,000.
____ 61. Wiladee used to work as an office manager, earning $25,000 per year. She gave up that job to start a tailoring
business. In calculating the economic profit of her tailoring business, the $25,000 income that she gave up is
counted as part of the tailoring firm's
a. total revenue.
b. opportunity costs.
c. explicit costs.
d. marginal costs.
____ 62. John has decided to start his own lawn-mowing business. To purchase the mowers and the trailer to transport
the mowers, John withdrew $1,000 from his savings account, which was earning 3% interest, and borrowed
an additional $2,000 from the bank at an interest rate of 7%. What is John's annual opportunity cost of the
financial capital that has been invested in the business?
a. $30
b. $140
c. $170
d. $300
____ 63. Gloria has decided to start her own snow removal business. To purchase the necessary equipment, Gloria
withdrew $2,000 from her savings account, which was earning 3% interest, and borrowed an additional
$4,000 from the bank at an interest rate of 7%. What is Gloria's annual opportunity cost of the financial
capital that has been invested in the business?
a. $60
b. $280
c. $340
d. $660
____ 64. Zach has decided to start his own photography studio. To purchase the necessary equipment, Zach withdrew
$10,000 from his savings account, which was earning 3% interest, and borrowed an additional $5,000 from
the bank at an interest rate of 8%. What is Zach's annual opportunity cost of the financial capital that has been
invested in the business?
a. $300
b. $400
c. $700
d. $1,650
____ 65. Explicit costs
a. require an outlay of money by the firm.
b. include all of the firm's opportunity costs.
c. include the value of the business owners time.
d. Both b and c are correct.
____ 66. Which of the following is an example of an implicit cost?
(i)
the owner of a firm forgoing an opportunity to earn a large salary working for a Wall
Street brokerage firm
(ii)
(iii)
a.
b.
c.
d.
interest paid on the firm's debt

rent paid by the firm to lease office space
(ii) and (iii) only
(i) and (iii) only
(i) only
(iii) only
____ 67. Walter used to work as a high school teacher for $40,000 per year but quit in order to start his own painting
business. To invest in his painting business, he withdrew $20,000 from his savings, which paid 3 percent
interest, and borrowed $30,000 from his uncle, whom he pays 3 percent interest per year. Last year Walter
paid $25,000 for supplies and had revenue of $60,000. Walter asked Tyler the accountant and Greg the
economist to calculate his painting businesss profit.
a. Tyler says his profit is $25,900, and Greg says his profit is $66,500.
b. Tyler says his profit is $35,000, and Greg says he lost $5,900.
c. Tyler says his profit is $34,100, and Greg says he lost $6,500.
d. Tyler says his profit is $34,100, and Greg says his profit is $34,100.
____ 68. Katherine gives piano lessons for $15 per hour. She also grows flowers, which she arranges and sells at the
local farmers market. One day she spends 5 hours planting $50 worth of seeds in her garden. Once the
seeds have grown into flowers, she can sell them for $150 at the farmers market. Katherines accounting
profits are
a. $100, and her economic profits are $25.
b. $100, and her economic profits are $75.
c. $25, and her economic profits are $100.
d. $75, and her economic profits are $125.
____ 69. A production function is a relationship between inputs and
a. quantity of output.
b. revenue.
c. costs.
d. profit.
Figure 13-1
Output
TP2
TP1
Inputs
____ 70. Refer to Figure 13-1. Suppose the production function shifts from TP1 to TP2. Such a shift in the total
product curve is most likely due to an increase in the firm's
a.
b.
c.
d.
costs of production.
productivity.
product price.
market share.
____ 71. Refer to Figure 13-1. Suppose the production function shifts from TP2 to TP1. Such a shift in the total
product curve is most likely due to a decrease in the firm's
a. costs of production.
b. product price.
c. market share.
d. productivity.
____ 72. The marginal product of labor is equal to the
a. incremental cost associated with a one unit increase in labor.
b. incremental profit associated with a one unit increase in labor.
c. increase in labor necessary to generate a one unit increase in output.
d. increase in output obtained from a one unit increase in labor.
Table 13-1
Number of Workers
0
1
2
3
4
5
Total Output
0
Marginal Product
-30
40
50
40
30
____ 73. Refer to Table 13-1. What is total output when 2 workers are hired?
a. 10
b. 40
c. 70
d. 120
____ 74. Refer to Table 13-1. What is total output when 3 workers are hired?
a. 10
b. 40
c. 70
d. 120
Table 13-2
Number of
Workers
0
1
2
3
4
Total
Output
0
200
450
600
650
Marginal
Product
--
____ 75. Refer to Table 13-2. What is the marginal product of the first worker?
a. 250 units
b. 200 units
c. 150 units
d. 50 units
____ 76. Refer to Table 13-2. What is the marginal product of the second worker?
a. 250 units
b. 200 units
c. 150 units
d. 50 units
____ 77. On a 100-acre farm, a farmer is able to produce 3,000 bushels of wheat when he hires 2 workers. He is able to
produce 4,400 bushels of wheat when he hires 3 workers. Which of the following possibilities is consistent
with the property of diminishing marginal product?
a. The farmer is able to produce 5,600 bushels of wheat when he hires 4 workers.
b. The farmer is able to produce 5,800 bushels of wheat when he hires 4 workers.
c. The farmer is able to produce 6,000 bushels of wheat when he hires 4 workers.
d. Any of the above could be correct.
____ 78. On a 100-acre farm, a farmer is able to produce 3,000 bushels of wheat when he hires 2 workers. He is able to
produce 4,400 bushels of wheat when he hires 3 workers. Which of the following possibilities is consistent
with the property of diminishing marginal product?
a. The farmer is able to produce 5,600 bushels of wheat when he hires 4 workers.
b. The farmer is able to produce 5,400 bushels of wheat when he hires 4 workers.
c. The farmer is able to produce 5,200 bushels of wheat when he hires 4 workers.
Table 13-6
Wooden Chair Factory
Number
of
Workers
Number
of
Machines
Output
(chairs
produced
per hour)
1
2
3
4
5
6
7
2
2
2
2
2
2
2
5
10
20
35
55
70
80
Marginal
Product of
Labor
Cost of
Workers
Cost of
Machines
Total
Cost
____ 79. Refer to Table 13-6. Each worker at the Wooden Chair Factory costs $12 per hour. The cost of each machine
is $20 per day regardless of the number of chairs produced. If the factory produces at a rate of 70 chairs per
hour and operates 8 hours per day, what is the factorys total labor cost per day?
a. $72
b. $112
c. $576
d. $616
is $20 per day regardless of the number of chairs produced. What is the total daily cost of producing at a rate
of 55 chairs per hour if the factory operates 8 hours per day?
a.
b.
c.
d.
$480
$576
$520
$616
is $20 per day regardless of the number of chairs produced. If the factory produces at a rate of 35 chairs per
hour, what is the total labor cost per hour?
a. $40
b. $48
c. $384
d. $424
Figure 13-3
100
Cost
90
80
70
60
50
40
30
20
10
10
12
14
16
Quantity
____ 82. Refer to Figure 13-3. The graph illustrates a typical

a. total-cost curve.
b. production function.
c. production possibilities frontier.
d. fixed-cost curve.
Scenario 13-13
Joan grows pumpkins. If Joan plants no seeds on her farm, she gets no harvest. If she plants 1 bag of seeds,
she gets 500 pumpkins. If she plants 2 bags, she gets 800 pumpkins. If she plants 3 bags, she gets 900
pumpkins. A bag of seeds costs $100, and seeds are her only cost.
____ 83. Refer to Scenario 13-13. Joans production function exhibits
a. increasing marginal product.
b. decreasing marginal product.
c. constant marginal product.
Table 13-7
The Flying Elvis Copter Rides
Quantity Total
Fixed
Variable
Marginal
Average
Average
Average
0
1
2
3
Cost
Cost
Cost
Cost
$50
$150
G
M
$50
A
H
N
$0
B
I
O
-C
$120
P
Fixed
Cost
-D
J
Q
Variable
Cost
-E
K
$120
____ 84. Refer to Table 13-7. What is the value of A?

a. $25
b. $50
c. $100
d. $200
____ 85. Refer to Table 13-7. What is the value of B?
a. $25
b. $50
c. $100
d. $200
____ 86. Refer to Table 13-7. What is the value of D?
a. $25
b. $50
c. $100
d. $200
____ 87. Refer to Table 13-7. What is the value of E?
a. $25
b. $50
c. $100
d. $150
Table 13-9
Measures of Cost for Very Brady Poster Factory
Quantity
Variable
Total
of Posters
Costs
Costs
0
1
$1
2
$3
$13
3
$6
$16
4
$10
5
$25
6
$21
Fixed
Costs
$10
$10
____ 88. Refer to Table 13-9. The total cost of producing 1 poster is
a. $1.00.
b. $10.00.
c. $11.00.
d. $22.00.
____ 89. Refer to Table 13-9. The marginal cost of producing the 6th poster is
a. $1.00.
Total
Cost
-F
L
R
b. $3.50.
c. $5.00.
d. $6.00.
Table 13-10
Eileens Elegant Earrings produces pairs of earrings for its mail order catalogue business. Each pair is
shipped in a separate box. She rents a small room for $150 a week in the downtown business district that
serves as her factory. She can hire workers for $275 a week. There are no implicit costs.
Number of
Workers
Boxes of
Earrings
Produced per
Week
0
1
2
3
4
5
6
Marginal
Product
of Labor
Cost of
Factory
330
$150
Cost
of
Workers
Total Cost
of
Inputs
0
$275
$425
150
$825
$975
60
10
$1,375
630
890
950
$1,800
____ 90. Refer to Table 13-10. What is the total cost associated with making 890 boxes of earrings per week?
a. $1,250
b. $1,325
c. $1,400
d. $1,575
____ 91. Refer to Table 13-10. During the week of July 4th, Eileen doesn't produce any earrings. What are her costs
during the week?
a. $0
b. $150
c. $275
d. $425
Table 13-11
Teacher's Helper is a small company that has a subcontract to produce instructional materials for disabled
children in public school districts. The owner rents several small rooms in an office building in the suburbs
for $600 a month and has leased computer equipment that costs $480 a month.
Output
(Instructional
Modules
per Month)
0
1
2
3
4
5
6
7
Fixed
Costs
Variable
Costs
Total
Cost
$1,080
$1,080
$ 400
$1,480
$1,350
$1,900
$2,500
Average
Variable
Cost
Average
Total
Cost
Marginal
Cost
$965
$400
$450
$2,430
$475
$216
$4,280
$4,100
Average
Fixed
Cost
$700
8
9
10
$5,400
$7,300
$135
$10,880
$980
____ 92. Refer to Table 13-11. What is the average variable cost for the month if 6 instructional modules are
produced?
a. $180.00
b. $533.33
c. $700.00
d. $713.33
____ 93. Refer to Table 13-11. What is the average fixed cost for the month if 9 instructional modules are produced?
a. $108.00
b. $120.00
c. $150.00
d. $811.11
Figure 13-4
MC
B
Output
____ 94. Refer to Figure 13-4. Which of the above marginal cost curves reflects diminishing marginal product?
a. A
b. B
c. C
d. D
Scenario 13-17
Suppose that a given firm experiences decreasing marginal product of labor with the addition of each worker
regardless of the current output level.
____ 95. Refer to Scenario 13-17. Average fixed cost will be
a. rising at all points.
b. falling at all points.
c. U-shaped.
d. constant.
Figure 13-5
Cost
11
10
9
8
7
6
5
4
3
2
1
A
1
10
11
12 Quantity
____ 96. Refer to Figure 13-5. Curve A represents which type of cost curve?
a. marginal cost
b. average total cost
c. average variable cost
d. average fixed cost
____ 97. Refer to Figure 13-5. Which of the curves is most likely to represent average fixed cost?
a. A
b. B
c. C
d. D
____ 98. Refer to Figure 13-5. Curve C represents which type of cost curve?
a. marginal cost
____ 99. Refer to Figure 13-5. Which curve is most likely to represent average total cost?
a. A
b. B
c. C
d. D
____ 100. Refer to Figure 13-5. Curve D represents which type of cost curve?
a. marginal cost
Figure 13-7
____ 101. Refer to Figure 13-7. Which of the figures represents the marginal cost curve for a typical firm?
a. Figure 1
b. Figure 2
c. Figure 3
d. Figure 4
____ 102. Refer to Figure 13-7. Which of the figures represents the production function for a typical firm?
a. Figure 1
b. Figure 2
c. Figure 3
d. Figure 4
Figure 13-8
Cost
MC
AT C
AVC
Quantity
____ 103. Refer to Figure 13-8. Quantity C represents the output level where the firm
a. maximizes profits.
b. minimizes total costs.
c. produces at the efficient scale.
d. minimizes marginal costs.
____ 104. Refer to Figure 13-8. Quantity B represents the output level where the firm
a. maximizes profits.
b. minimizes average variable costs.
c. produces at the efficient scale.
d. minimizes marginal costs.
____ 105. Which of the following factors is most likely to shift IBM's total cost and marginal cost curves downward?
a.
b.
c.
d.
a technological advance resulting in increased productivity

higher property taxes charged by the municipal government
increased wages to attract additional computer operators
a reduction in subsidies from the state government
____ 106. If marginal cost is equal to average total cost, then

a. marginal cost is minimized.
b. average total cost is minimized.
c. average variable cost is minimized.
d. marginal cost is zero.
____ 107. Which of the following statements is correct?
a. If marginal cost is rising, then average total cost is rising.
b. If marginal cost is rising, then average variable cost is rising.
c. If average variable cost is rising, then marginal cost is minimized.
d. If average total cost is rising, then marginal cost is greater than average total cost.
____ 108. The efficient scale of the firm is the quantity of output that
a. maximizes marginal product.
b. maximizes profit.
c. minimizes average total cost.
d. minimizes average variable cost.
____ 109. The firm's efficient scale is the quantity of output that minimizes
a. average total cost.
b. average fixed cost.
c. average variable cost.
d. marginal cost.
Figure 13-9
The figure below depicts average total cost functions for a firm that produces automobiles.
____ 110. Refer to Figure 13-9. Which of the curves is most likely to characterize the short-run average total cost curve
of the smallest factory?
a.
b.
c.
d.
ATCA
ATCB
ATCC
ATCD
____ 111. Refer to Figure 13-9. Which curve represents the long-run average total cost?
a. ATCA
b. ATCB
c. ATCC
d. ATCD
____ 112. Refer to Figure 13-9. In the long run, the firm can operate on which of the following average total cost
curves?
a. ATCA
b. ATCB
c. ATCC
d. All of the above are correct.
____ 113. Refer to Figure 13-9. The firm experiences economies of scale at which output levels?
a. output levels less than M
b. output levels between M and N
c. output levels greater than N
d. All of the above are correct as long as the firm is operating in the long run.
____ 114. Refer to Figure 13-9. At levels of output less than M, the firm experiences
a. economies of scale.
b. diseconomies of scale.
c. constant returns to scale.
d. both diminishing marginal productivity and coordination problems.
____ 115. Refer to Figure 13-9. The firm experiences constant returns to scale at which output levels?
a. output levels less than M
b. output levels between M and N
c. output levels greater than N
d. All of the above are correct as long as the firm is operating in the long run.
Figure 13-10
____ 116. Refer to Figure 13-10. The firm experiences economies of scale if it changes its level of output from
a. Q1 to Q2.
b. Q2 to Q3.
c. Q3 to Q4.
d. Q4 to Q5.
____ 117. Refer to Figure 13-10. The firm experiences constant returns to scale if it changes its level of output from
a. Q1 to Q2.
b. Q2 to Q4.
c. Q1 to Q3.
d. Q4 to Q5.
____ 118. Refer to Figure 13-10. The firm experiences diseconomies of scale if it changes its level of output from
a. Q1 to Q2.
b. Q2 to Q3.
c. Q3 to Q4.
d. Q4 to Q5.
Review Questions for Midterm-1

Answer Section
MULTIPLE CHOICE
1. ANS:
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14. ANS:
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15. ANS:
A
Analytic
Interpretive
D
Analytic
Analytical
B
Analytic
Analytical
C
Analytic
Applicative
A
Analytic
Applicative
A
Analytic
Definitional
D
Analytic
Definitional
D
Analytic
Applicative
C
Analytic
Applicative
D
Analytic
Applicative
C
Analytic
Applicative
B
Analytic
Applicative
B
Analytic
Applicative
A
Analytic
Applicative
A
PTS: 1
DIF: 2
LOC: Supply and demand
REF: 4-2
TOP: Quantity demanded
PTS: 1
DIF: 2
REF: 4-2
TOP: Market demand
PTS: 1
DIF: 2
REF: 4-2
TOP: Market demand
PTS: 1
DIF: 2
REF: 4-2
TOP: Demand curve
PTS: 1
DIF: 2
REF: 4-2
TOP: Demand curve
PTS: 1
DIF: 1
REF: 4-2
TOP: Substitutes
PTS: 1
DIF: 1
REF: 4-2
TOP: Complements
PTS: 1
DIF: 2
REF: 4-2
TOP: Demand curve
PTS: 1
DIF: 2
REF: 4-4
TOP: Equilibrium
PTS: 1
DIF: 2
REF: 4-4
TOP: Equilibrium | Market demand
PTS: 1
DIF: 2
REF: 4-4
TOP: Equilibrium
PTS: 1
DIF: 2
REF: 4-4
TOP: Equilibrium
PTS: 1
DIF: 2
REF: 4-4
TOP: Equilibrium | Complements
PTS: 1
DIF: 2
REF: 4-4
TOP: Demand | Quantity supplied
PTS: 1
REF: 4-4
DIF:
16.
17.
18.
19.
20.
21.
22.
23.
24.
25.
26.
27.
28.
29.
30.
31.
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ANS:
NAT:
TOP:
MSC:
ANS:
NAT:
MSC:
ANS:
NAT:
MSC:
Analytic
TOP: Demand | Quantity supplied
Applicative
D
PTS: 1
DIF: 1
REF: 5-0
Analytic
LOC: Elasticity
TOP: Elasticity
MSC: Definitional
A
PTS: 1
DIF: 2
REF: 5-0
Analytic
LOC: Elasticity
TOP: Elasticity
MSC: Applicative
B
PTS: 1
DIF: 2
REF: 5-1
Analytic
LOC: Elasticity
TOP: Price elasticity of demand
Interpretive
D
PTS: 1
DIF: 2
REF: 5-1
Analytic
LOC: Elasticity
Interpretive
C
PTS: 1
DIF: 2
REF: 5-1
Analytic
LOC: Elasticity
Applicative
C
PTS: 1
DIF: 2
REF: 5-1
Analytic
LOC: Elasticity
Applicative
B
PTS: 1
DIF: 1
REF: 5-1
Analytic
LOC: Elasticity
TOP: Midpoint method | Price elasticity of demand
Applicative
A
PTS: 1
DIF: 1
REF: 5-1
Analytic
LOC: Elasticity
Applicative
B
PTS: 1
DIF: 2
REF: 5-1
Analytic
LOC: Elasticity
Applicative
B
PTS: 1
DIF: 2
REF: 5-1
Analytic
LOC: Elasticity
Applicative
B
PTS: 1
DIF: 1
REF: 5-1
Analytic
LOC: Elasticity
TOP: Perfectly elastic demand
Interpretive
D
PTS: 1
DIF: 2
REF: 5-1
Analytic
LOC: Elasticity
TOP: Perfectly inelastic demand
Interpretive
A
PTS: 1
DIF: 2
REF: 5-1
Analytic
LOC: Elasticity
Applicative
C
PTS: 1
DIF: 3
REF: 5-1
Analytic
LOC: Elasticity
Midpoint method | Total revenue | Price elasticity of demand
Applicative
C
PTS: 1
DIF: 2
REF: 5-1
Analytic
LOC: Elasticity
TOP: Total revenue | Price elasticity of demand
Interpretive
D
PTS: 1
DIF: 2
REF: 5-1
Analytic
LOC: Elasticity
Interpretive
32. ANS:
NAT:
MSC:
33. ANS:
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MSC:
34. ANS:
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35. ANS:
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36. ANS:
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45. ANS:
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46. ANS:
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MSC:
47. ANS:
NAT:
MSC:
48. ANS:
D
Analytic
Interpretive
A
Analytic
Interpretive
D
Analytic
Applicative
B
Analytic
Interpretive
C
Analytic
Applicative
A
Analytic
Applicative
A
Analytic
Applicative
B
Analytic
Applicative
D
Analytic
Applicative
D
Analytic
Interpretive
C
Analytic
Interpretive
A
Analytic
Interpretive
B
Analytic
Interpretive
A
Analytic
Applicative
B
Analytic
Definitional
B
Analytic
Interpretive
B
PTS: 1
LOC: Elasticity
DIF: 2
REF: 5-1
PTS: 1
LOC: Elasticity
DIF: 2
REF: 5-1
PTS: 1
LOC: Elasticity
DIF: 2
REF: 5-1
PTS: 1
LOC: Elasticity
DIF: 2
REF: 5-1
PTS: 1
LOC: Elasticity
DIF: 2
REF: 5-1
PTS: 1
LOC: Elasticity
DIF: 2
REF: 5-1
PTS: 1
LOC: Elasticity
DIF: 2
REF: 5-1
PTS: 1
LOC: Elasticity
DIF: 2
REF: 5-1
PTS: 1
LOC: Elasticity
DIF: 2
REF: 5-1
TOP: Income elasticity of demand | Midpoint method
PTS: 1
LOC: Elasticity
DIF: 2
REF: 5-1
TOP: Income elasticity of demand
PTS: 1
LOC: Elasticity
DIF: 2
REF: 5-1
PTS: 1
LOC: Elasticity
DIF: 1
REF: 5-1
PTS: 1
LOC: Elasticity
DIF: 2
REF: 5-1
PTS: 1
LOC: Elasticity
DIF: 2
REF: 5-1
TOP: Cross-price elasticity of demand
PTS: 1
LOC: Elasticity
DIF: 1
REF: 5-1
PTS: 1
LOC: Elasticity
DIF: 2
REF: 5-1
PTS: 1
DIF:
REF: 5-1
49.
50.
51.
52.
53.
54.
55.
56.
57.
58.
59.
60.
61.
62.
63.
64.
NAT:
MSC:
ANS:
NAT:
MSC:
ANS:
NAT:
MSC:
ANS:
NAT:
MSC:
ANS:
NAT:
MSC:
ANS:
NAT:
MSC:
ANS:
NAT:
MSC:
ANS:
NAT:
MSC:
ANS:
NAT:
MSC:
ANS:
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MSC:
ANS:
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MSC:
ANS:
NAT:
MSC:
ANS:
NAT:
MSC:
ANS:
NAT:
MSC:
ANS:
NAT:
MSC:
ANS:
NAT:
MSC:
ANS:
NAT:
Analytic
Interpretive
C
Analytic
Definitional
C
Analytic
Interpretive
C
Analytic
Analytical
C
Analytic
Analytical
C
Analytic
Analytical
B
Analytic
Interpretive
A
Analytic
Definitional
B
Analytic
Applicative
C
Analytic
Applicative
C
Analytic
Definitional
B
Analytic
Definitional
A
Analytic
Applicative
B
Analytic
Interpretive
C
Analytic
Analytical
C
Analytic
Analytical
C
Analytic
LOC: Elasticity
PTS: 1
LOC: Elasticity
DIF: 1
REF: 5-2
TOP: Price elasticity of supply
PTS: 1
LOC: Elasticity
DIF: 2
REF: 5-2
PTS: 1
LOC: Elasticity
DIF: 2
REF: 5-2
PTS: 1
LOC: Elasticity
DIF: 2
REF: 5-2
PTS: 1
LOC: Elasticity
DIF: 2
REF: 5-2
PTS: 1
DIF:
LOC: Costs of production
REF: 13-1
TOP: Profit maximization
PTS: 1
DIF:
REF: 13-1
TOP: Total revenue
PTS: 1
DIF:
REF: 13-1
TOP: Total revenue
PTS: 1
DIF:
REF: 13-1
TOP: Total revenue
PTS: 1
DIF:
REF: 13-1
TOP: Total cost
PTS: 1
DIF:
REF: 13-1
TOP: Profit
PTS: 1
DIF:
REF: 13-1
TOP: Profit
PTS: 1
DIF:
REF: 13-1
TOP: Opportunity cost
PTS: 1
DIF:
REF: 13-1
PTS: 1
DIF:
REF: 13-1
PTS: 1
DIF:
REF: 13-1
MSC:
65. ANS:
NAT:
MSC:
66. ANS:
NAT:
MSC:
67. ANS:
NAT:
TOP:
68. ANS:
NAT:
TOP:
69. ANS:
NAT:
MSC:
70. ANS:
NAT:
MSC:
71. ANS:
NAT:
MSC:
72. ANS:
NAT:
MSC:
73. ANS:
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MSC:
74. ANS:
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75. ANS:
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76. ANS:
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MSC:
77. ANS:
NAT:
MSC:
78. ANS:
NAT:
MSC:
79. ANS:
NAT:
MSC:
80. ANS:
NAT:
MSC:
Analytical
A
PTS: 1
DIF:
Analytic
Definitional
C
PTS: 1
DIF:
Analytic
Interpretive
C
PTS: 1
DIF:
Analytic
Economic profit | Accounting profit
A
PTS: 1
DIF:
Analytic
Economic profit | Accounting profit
A
PTS: 1
DIF:
Analytic
Definitional
B
PTS: 1
DIF:
Analytic
Analytical
D
PTS: 1
DIF:
Analytic
Analytical
D
PTS: 1
DIF:
Analytic
Definitional
C
PTS: 1
DIF:
Analytic
Analytical
D
PTS: 1
DIF:
Analytic
Analytical
B
PTS: 1
DIF:
Analytic
Analytical
A
PTS: 1
DIF:
Analytic
Analytical
A
PTS: 1
DIF:
Analytic
Analytical
D
PTS: 1
DIF:
Analytic
Analytical
C
PTS: 1
DIF:
Analytic
Applicative
C
PTS: 1
DIF:
Analytic
Applicative
REF: 13-1
TOP: Explicit costs
REF: 13-1
TOP: Implicit costs
REF: 13-1
MSC: Applicative
REF: 13-1
MSC: Analytical
REF: 13-2
TOP: Production function
REF: 13-2
REF: 13-2
REF: 13-2
TOP: Marginal product
REF: 13-2
REF: 13-2
REF: 13-2
REF: 13-2
REF: 13-2
TOP: Diminishing marginal product
REF: 13-2
REF: 13-2
TOP: Variable costs
REF: 13-2
TOP: Total cost
81. ANS:
NAT:
MSC:
82. ANS:
NAT:
MSC:
83. ANS:
NAT:
MSC:
84. ANS:
NAT:
MSC:
85. ANS:
NAT:
MSC:
86. ANS:
NAT:
MSC:
87. ANS:
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MSC:
88. ANS:
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MSC:
89. ANS:
NAT:
MSC:
90. ANS:
NAT:
MSC:
91. ANS:
NAT:
MSC:
92. ANS:
NAT:
MSC:
93. ANS:
NAT:
MSC:
94. ANS:
NAT:
TOP:
95. ANS:
NAT:
MSC:
96. ANS:
NAT:
MSC:
97. ANS:
B
PTS:
Analytic
LOC:
Applicative
A
PTS:
Analytic
LOC:
Interpretive
B
PTS:
Analytic
LOC:
Analytical
B
PTS:
Analytic
LOC:
Analytical
C
PTS:
Analytic
LOC:
Analytical
B
PTS:
Analytic
LOC:
Analytical
C
PTS:
Analytic
LOC:
Analytical
C
PTS:
Analytic
LOC:
Applicative
D
PTS:
Analytic
LOC:
Applicative
A
PTS:
Analytic
LOC:
Applicative
B
PTS:
Analytic
LOC:
Applicative
B
PTS:
Analytic
LOC:
Applicative
B
PTS:
Analytic
LOC:
Applicative
A
PTS:
Analytic
LOC:
Marginal-cost curve
B
PTS:
Analytic
LOC:
Analytical
D
PTS:
Analytic
LOC:
Interpretive
A
PTS:
1
DIF:
Costs of production
REF: 13-2
TOP: Variable costs
1
DIF:
Costs of production
REF: 13-2
TOP: Total-cost curve
1
DIF:
Costs of production
REF: 13-2
1
DIF:
Costs of production
REF: 13-3
TOP: Fixed costs
1
DIF:
Costs of production
REF: 13-3
TOP: Variable costs
1
DIF:
Costs of production
REF: 13-3
TOP: Average fixed cost
1
DIF:
Costs of production
REF: 13-3
TOP: Average variable cost
1
DIF:
Costs of production
REF: 13-3
TOP: Total cost
1
DIF:
Costs of production
REF: 13-3
TOP: Marginal cost
1
DIF:
Costs of production
REF: 13-3
TOP: Total cost
1
DIF:
Costs of production
REF: 13-3
TOP: Fixed costs
1
DIF:
Costs of production
REF: 13-3
TOP: Average variable cost
1
DIF:
Costs of production
REF: 13-3
TOP: Average fixed cost
1
DIF: 3
Costs of production
| Diminishing marginal product
1
DIF: 2
Costs of production
MSC: Analytical
REF: 13-3
TOP: Cost curves | Average fixed cost
1
DIF:
Costs of production
REF: 13-3
REF: 13-3
DIF:
REF: 13-3
98.
99.
100.
101.
102.
103.
104.
105.
106.
107.
108.
109.
110.
111.
112.
113.
NAT:
MSC:
ANS:
NAT:
MSC:
ANS:
NAT:
MSC:
ANS:
NAT:
MSC:
ANS:
NAT:
MSC:
ANS:
NAT:
MSC:
ANS:
NAT:
MSC:
ANS:
NAT:
cost
MSC:
ANS:
NAT:
MSC:
ANS:
NAT:
MSC:
ANS:
NAT:
MSC:
ANS:
NAT:
MSC:
ANS:
NAT:
MSC:
ANS:
NAT:
MSC:
ANS:
NAT:
MSC:
ANS:
NAT:
MSC:
ANS:
Analytic
Interpretive
B
Analytic
Interpretive
C
Analytic
Interpretive
A
Analytic
Interpretive
A
Analytic
Analytical
D
Analytic
Analytical
C
Analytic
Analytical
B
Analytic
Analytical
A
Analytic
Analytical
B
Analytic
Interpretive
D
Analytic
Interpretive
C
Analytic
Definitional
A
Analytic
Definitional
A
Analytic
Analytical
D
Analytic
Analytical
D
Analytic
Analytical
A
PTS: 1
DIF:
REF: 13-3
TOP: Cost curves | Average total cost
PTS: 1
DIF:
REF: 13-3
TOP: Cost curves | Average total cost
PTS: 1
DIF:
REF: 13-3
TOP: Cost curves | Marginal cost
PTS: 1
DIF:
REF: 13-3
TOP: Cost curves | Marginal cost
PTS: 1
DIF:
REF: 13-3
PTS: 1
DIF:
REF: 13-3
TOP: Efficient scale
PTS: 1
DIF:
REF: 13-3
TOP: Cost curves | Average variable
PTS: 1
DIF:
REF: 13-3
TOP: Cost curves
PTS: 1
DIF:
REF: 13-3
TOP: Cost curves
PTS: 1
DIF:
REF: 13-3
TOP: Cost curves
PTS: 1
DIF:
REF: 13-3
PTS: 1
DIF:
REF: 13-3
PTS: 1
DIF:
REF: 13-4
TOP: Average total cost
PTS: 1
DIF:
REF: 13-4
PTS: 1
DIF:
REF: 13-4
PTS: 1
REF: 13-4
DIF:
114.
115.
116.
117.
118.
NAT:
MSC:
ANS:
NAT:
MSC:
ANS:
NAT:
MSC:
ANS:
NAT:
MSC:
ANS:
NAT:
MSC:
ANS:
NAT:
MSC:
Analytic
Analytical
A
Analytic
Analytical
B
Analytic
Analytical
A
Analytic
Analytical
B
Analytic
Analytical
D
Analytic
Analytical
TOP: Economies of scale
PTS: 1
DIF:
REF: 13-4
PTS: 1
DIF:
REF: 13-4
TOP: Constant returns to scale
PTS: 1
DIF:
REF: 13-4
PTS: 1
DIF:
REF: 13-4
TOP: Constant returns to scale
PTS: 1
DIF:
REF: 13-4
TOP: Diseconomies of scale

Review For Midterm

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Review For Midterm

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Review Questions for Midterm-1

1. An increase in quantity demanded

b. decreases the quantity demanded of the other good.

100 200 300 400 500 600 700 800

Price elasticity of demand =

Price elasticity of demand =

Price elasticity of demand =

c. downward-sloping but relatively steep.

d. 1.0, and X and Y are substitutes.

interest paid on the firm's debt

____ 82. Refer to Figure 13-3. The graph illustrates a typical

____ 84. Refer to Table 13-7. What is the value of A?

a technological advance resulting in increased productivity

____ 106. If marginal cost is equal to average total cost, then

Review Questions for Midterm-1

TOP: Cross-price elasticity of demand

LOC: Costs of production

TOP: Cost curves | Average fixed cost

LOC: Costs of production

TOP: Economies of scale

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