Exam 3 Study Guide
Exam 3 Study Guide Econ 2020
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This 0 page Study Guide was uploaded by Cheyenne Hunt on Monday March 21, 2016. The Study Guide belongs to Econ 2020 at Auburn University taught by William M. Finck in Spring 2016. Since its upload, it has received 73 views. For similar materials see Principles of Economics: Microeconomics in Business at Auburn University.
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Date Created: 03/21/16
a r 11in z39Qq V3 x z 41 w Study it i mm Eu 9 Mum Guide Exam 3 Practice Problems 9 WWW a MUY mum mm 41v WW WWW WW m mmwm a M MU Vy 7 gt 1 I 1 4 lt44 F E 10 u r a yup 60an am Terms line that shows various consumption bundles a consumer can purchase the combination of goodsservices consumed cannot exceed income as q rises LRATC rises as q rises LRATC falls opportunity cost what is given up for the consumption of the goodservice show the consumption bundles that yield the same amount ofTU as Qd rises MU falls as MU falls willingness to pay also fails good ygood X decreases as QX increases the bene t a consumer derives from the consumption of an additional unit ATU uses all of consumer39s income 0 units of one good all of the another consumption of same amount of both goods the more of good x consumed the less of good y willing to substitute the total bene t of consumption rises as Qd rises TU Z MU the bene ts of consumption VERSION 1 Name ECON 2020 Exam 3 DIRECTIONS Read each question and EVERY possible answer VERY carefully Select the best answer from the alternatives Good luck 1 The downwardsloping portion of the LRATC curve can best be explained by A economies of scale B diseconomies of scale C increasing returns to scale D A and B only E A and C only Use the following table to answer question 2 MUx 160 20 120 60 90 180 60 240 2 If the price of good X is 8 and the price of good Y is 16 what is the optimal consumption bundle A A B B C C D D E not enough information 3 Zack Lodge was red from his job and decreased his demand for shotguns How will the utility Zack receives from shotguns change A his marginal utility from the last unit consluned will increase B his total utility will increase C his marginal utility from the last unit consumed will decrease D A and B only E B and C only 4 Which of the following statements about xed costs is FALSE A Fixed costs exist in the short run when output is zero B Fixed costs do not change as output changes C Fixed costs are usually associated with capital D Fixed costs cannot be varied in the long run VERSION 1 Pizza Use the following graph to answer questions 5 8 20 1C3 1C2 ICl Maple Syrup 60 100 5 If the consumer has 300 to spend what is the price of one pizza A 15 B 3 C 750 D 5 E 3750 6 Which point on the above graph has the lowest marginal rate of substitution A A B B C C D D E E 7 Which of the following statements about the points on the above graph is TRUE A Bundles A and D yield a higher level of total utility than E B Bundle A yields a higher level of total utility than bundles D and E C Bundles A D and E yield the same level of total utility D Bundle D yields a higher level of total utility than bundles A and E E Bundle E yields a higher level of total utility than bundles A and D 8 If the consumer is at consumption bundle D then A he could increase total utility by buying more pizzas and more maple syrups B he could increase total utility by buying more pizzas and fewer maple syrups C he could increase total utility by buying fewer pizzas and more maple syrups D he could increase total utility by buying fewer pizzas and fewer maple syrups E he is already maximizing total utility 9 Which of the following is one of the properties of most indifference curves A indifference curves farther from the origin represent a lower level of total utility B indifference curves never cross C indifference curves are upward sloping D all of the above E A and B only VERSION 1 10 11 12 13 14 Use the following table to answer questions 10 12 TFC TVC TC 0 90 A 120 The correct value for the blank labeled quotAquot is meow 660 420 330 360 Pimps from Oakland The correct value for the blank labeled quotBquot is P150 50 20 30 450 150 If a rm with the above costs sells a quantity of 4 units at a price of 160 each what is the lm s pro t A B C D E 20 Cowboys from Arizona 640 25 100 The Law of Diminishing Marginal Returns A B C PU explains why short run cost curves eventually increase as output increases only applies in the short run states that as successive units of a xed resource are added to a variable resource the marginal product of the xed resource eventually decreases all of the above A and B only Which of the following will cause a decrease in the long run cost curves 3150 an improvement in technology an increase in taxes an increase in the price of an input all of the above B and C only VERSION 1 Use the following graph of Jeremy s consumption to answer questions 15 16 Crab Cakes 10 15 16 17 9 8 9 Which of the following statements is TRUE ecowe Crab cakes are more expensive than scallops 101 102 C3 BaconWrapped Scallops 10 Jeremy considers crab cakes and scallops to be perfect complements Jeremy considers crab cakes and scallops to be perfect substitutes A and B only A and C only Which bundle represents Jeremy s optimal consumption 39 B C D E A B C D Stage5 Clinger Use the following table to answer question 17 K L W Q MPL MC 1 0 18 0 1 1 18 9 9 2 1 2 18 A 3 1 3 18 18 3 The correct value for the blank labeled quotAquot is mpOW 18 6 12 15 Rule 76 No excuses Play like a champion VERSION 1 18 19 20 21 Use the following graph to answer question 18 Sailboats 4 BLl 3 BL2 Cigars 3 0 A movement of the budget line from BLl to BL2 would represent 9093 a rise in the price of cigars a fall in the price of cigars a fall in the price of sailboats a rise in the price of sailboats a fall in consumer income Gloria has 180 to spend on goods X and Y Good X has a price of 12 and good Y has a price of 24 What is the opportunity cost of one unit of good Y wuowe 75 units of X 156 units of X 5 units of X 05 units of X 2 units of X If Gloria from the above question spends all of her income on a consumption bundle containing units of good X and good Y and the bundle contains 5 units of good X how many units of good Y did she buy A B C D E 4 3 5 75 Baba ganoosh Gloria from the above questions considers X and Y to be com perfect complements perfect substitutes neither You shut your mouth when you re talking to me VERSION 1 22 23 24 25 Suppose that for Claire s consumption bundle MUxPX is greater than MUyPy for the last unit of each good purchased If Claire is currently spending all of her income she could increase her total utility by purchasing A less of X and more of Y B more of X and less of Y C more of Y only D more of X only Which of the following statements about utility is TRUE We cannot compare the utils assigned to multiple goods by one person We cannot compare the utils assigned to a good by multiple people We can compare the utils assigned to multiple goods by one person A and B only B and C only snow Holy Shirts and Pants is a rm earning normal pro t Which of the following statements about Holy Shirts and Pants is FALSE A The accounting pro t is equal to zero B The economic pro t is equal to zero C The firm is earning the same as it could in another industry D A and C only E B and C only Use the following information to answer question 25 Price of X 6 Income 36 Price of Y 4 TUx MUx MUxPx TU MU MU 72 72 44 44 60 10 84 10 9 234 24 294 24 16 At the optimal consumption bundle the consumer will consume A 410 utils B 2 16 utils C 350 utils D 434 utils E 308 utils
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