Phoenix ECO 365 Final Exam Answers (Fall 2017) 1. Recent political unrest ha
Phoenix ECO 365 Final Exam Answers (Fall 2017) 1. Recent political unrest has caused many citizens of Serria to flee the country. This is likely to: 2. Color Mate Inc., a company that produces interior and wall paints, dumps its chemical waste in a river. Which of the following is likely to be true in this case? 3. Which of the following reflects the law of demand? 4. Suppose Timothy consumes two goods, soda and chips. The slope of his indifference curve for these two goods reflects: 5. The table given below shows three buyers’ willingness to pay for an antique necklace. At a market price of $25,000, the total consumer surplus in the market is _____. 6. Paula wants to buy 3 packs of frozen yoghurt when it is priced at $2 per pack. When the price increases to $3.50 per pack, she wants to buy 2 packs. This reflects the: 7. The exhibit given below shows the market for wheat in Zenetia. At a price of p, the profit-maximizing quantity for a wheat producer is _____. 8. Bryan is trying to decide whether he should give up his job as a software programmer and invest in a start-up. Bryan earns an annual salary of $80,000 and has a saving of $50,000. The start-up would require an initial investment of $600,000. Bryan plans to take a loan from Trust Bank, a local commercial bank, which charges an interest rate of 5 percent on loans and provides an interest of 7 percent on savings deposits. Which of the following is true in this case? 9. Penelope has recently started a printing business in Duluth. She had to pay a fee to obtain a trade license from the Minnesota government and took a loan from the local bank to purchase inkjet printers, laser printers, and screen printers. She employs 20 workers who are paid a wage of $30 per hour. She is also a trained ballet dancer who used to earn an average of $50,000 a year. Penelope’s implicit cost of running the business is: 10. The state government of Dalmatia noticed that whenever its baseball team played a match in any of the local stadiums, the prices of tickets became too high. It decided to impose a price ceiling on the ticket prices. The exhibit given below shows the demand curve for and the supply curve of baseball game tickets in Dalmatia. If the government were to impose a binding price ceiling, it should set the price at: 11. The exhibit given below shows the supply curve of printing machines. At a price of $400 per machine, the producer surplus is: 12. The Rhodes and Samson families, with annual incomes of $100,000 and $120,000, respectively, live in a society where the primary objective of the government is to maximize the sum of the utility attained by everyone in the society. Which of the following is likely to be true in such a society? 13. Suppose both Ross and Vivian produce butter and cheese. When Ross works for 10 hours a day, he produces 6 pounds of butter and 24 pounds of cheese. When Vivian works for the same hours, she produces 20 pounds of cheese and 40 pounds of butter. Ross’s opportunity cost of producing a pound of butter is: 14. A sudden increase in the demand for air conditioners increased the earnings of the workers employed in air conditioner-manufacturing firms and attracted workers from other sectors. Which of the following will be true in the market for workers employed in air conditioner-manufacturing firms? 15. Adrianne and Joanna love watching plays on Broadway. Adrianne values a play at $85, and Joanna values it as $82. When the price of tickets increased from $80 to $83 following the imposition of a tax, Joanna stopped watching plays on Broadway, while Adrianne continued to buy tickets. Identify the correct statement. 16. A perfectly competitive firm sells 10 units of Good X at a price of $2 per unit. It incurs a fixed cost of $5 and a variable cost of $40 to produce the good. Which of the following is true? 17. Which of the following is an example of a negative externality? 18. Given an increase in the market demand for its product, a firm decides to hire an additional worker. The amount of output produced by 25 workers is 80 units. The marginal product of the 26th worker is 15 units. After the 26th worker is hired, the total output would increase to _____. 19. Mike sells navel oranges in a market where there are a lot of other sellers and faces a perfectly elastic demand curve for oranges. He hires 10 workers in a perfectly competitive market to help him with picking oranges. Given this information, it can be said that: 20. Liz starts driving rashly after buying insurance. This is an example of a(n): 21. Scarcity occurs because of: 22. Which of the following is an example of adverse selection? 23. During the winter break, Sam decides to go for a skiing vacation in Aspen instead of taking piano lessons. The opportunity cost of the skiing vacation is the: 24. Moonlife LLC. observed that its total revenue is proportional to the quantity of good sold. It is likely that Moonlife LLC. is a: 25. The exhibit given below shows the demand curve for and the supply curve of laptops, D and S1. The government decides to impose a price ceiling on the price of laptops. At the same time, the price of inverter boards that provide power to backlight lamps inside laptop screens increases. Identify the correct statement. 26. Suppose both Monica and Edith grow roses and make guns. If Monica devotes 10 hours to growing roses, she grows 16 roses, and if she devotes 10 hours to making guns, she produces 4 guns. If Edith divides her 10 hours equally, she produces 12 roses and 6 guns. Identify the correct statement. 27. The exhibit given below shows the demand curve for Good X, labeled D. At a price of $6 per unit, the quantity demanded of Good X is 5 units. A decrease in price to $4 per unit increases the quantity demanded to 8 units. Assuming that a decrease in price leads to new consumers buying the good, what is the consumer surplus received by the new consumers in the market? 28. Which of the following is a difference between liberalism and libertarianism? 29. Squeeze Inc. sells orange juice in a market where there are a large number of consumers and sellers. New firms can enter the market easily and also exit whenever they want to. It sells 40 bottles in a month at a price of $4 per bottle and incurs a cost of $5 per bottle. The average revenue of the firm: 30. The exhibit given below shows Melanie’s budget constraint for two goods, wine and cheese. The slope of the budget constraint equals:
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