SOC 1200 Lecture Notes - Lecture 11: Horse Racing, Economic Equilibrium, Average Variable Cost
15 May 2018
School
Department
Course
Professor
Nov 20, 2017
Econ 1010
A02
Test 2A
Multiple Choice
Identify the letter of the choice that best completes the statement or answers the question. Read each answer choice before
deciding your answer since some questions are tricky. You cannot use calculators or scratch sheet. Place your ID on the desk.
Good luck
Table 1
1. Refer to Table 1. The space that would represent a decrease in equilibrium price and an indeterminate
change in equilibrium quantity would be
2. When the price of ice cream is $2, Denise eats five per month. When the price is $1, she eats ten per
month. Denise's demand for ice-cream is (do not use mid-point formula)
3. Water shortages caused by droughts can be most efficiently lessened by
An Increase in Supply
A Decrease in Supply
An Increase in Demand
A
B
A Decrease in Demand
C
D
a.
A
b.
B
c.
C
d.
D
a.
elastic and the curve would be relatively flat.
b.
elastic and the curve would be relatively steep.
c.
inelastic and the curve would be relatively flat.
d.
inelastic and the curve would be relatively steep.
a.
allowing price to equate the quantity demanded of water with the quantity supplied of water.
b.
restricting water usage of consumers.
c.
arresting anyone who wastes water.
d.
imposing tight price controls on water.
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Scenario 1
Mr. Okogwu, inspired by his favorite Econ. Professor Dr. Evil, wants to start his own business; Okogwu Salsa Dance Inc. The
business will require that he purchase a building that costs $300,000. To finance this purchase, he will use $100,000 of his own
money, on which he has been earning an interest equivalent to $10,000. In addition, he will borrow $200,000, and he will pay
$24,000 interest.
4. Refer to Scenario 1. For the first year of operation, what is Mr. Okogwu’s explicit cost?
The figure below depicts average total cost functions for a firm that produces automobiles. Use the figure to answer the following
questions.
Figure 13-7
!
5. Refer to Figure 13-7. This firm experiences diseconomies of scale at what output levels?
a.
$10,000
b.
$20,000
c.
$24,000
d.
$34,000
a.
output levels above N
b.
output levels between M and N
c.
output levels below M
d.
All of the above are correct, if the firm is operating in the long run.
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!
Use the information for a competitive firm in the table below to answer the following questions.
Table 2
6. Refer to Table 2. At a production level of 5 units which of the following is true?
7. Refer to Table 2. If this firm chooses to maximize profit, how many units of output will it produce?
e. None of the above
8. Refer to Table 2. What is the marginal cost of the second unit of output?
Quantity
Total Revenue
Total Cost
0
$0
$10
1
8
14
2
16
19
3
24
25
4
32
33
5
40
42
6
48
52
7
56
63
8
64
75
a.
Marginal cost is $6.
b.
The market price is $8.
c.
Price is equal to marginal cost.
d.
None of the above are correct.
a.
4
b.
7.
c.
8.
d.
9.
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Document Summary
Identify the letter of the choice that best completes the statement or answers the question. Read each answer choice before deciding your answer since some questions are tricky. The space that would represent a decrease in equilibrium price and an indeterminate: a b. c. Denise"s demand for ice-cream is (do not use mid-point formula: when the price of ice cream is , denise eats five per month. Evil, wants to start his own business; okogwu salsa dance inc. The business will require that he purchase a building that costs ,000. To finance this purchase, he will use ,000 of his own money, on which he has been earning an interest equivalent to ,000. In addition, he will borrow ,000, and he will pay. For the first year of operation, what is mr. okogwu"s explicit cost? a. b. c. d. The figure below depicts average total cost functions for a firm that produces automobiles.
