14. If the price of X is set at $24.00 per unit, the consumer surplus gained by this consumer each month through purchasing X will be: A) $0 B) $22 C) $28 D) $42 E) $49 F) $52 G) $56 H) $72 1) $90 J) $98 K) $100 L) $121 M) $144 N) $168 0) $196 P) $200 Q) $222 R) $242 S) $260 T) $267 U) $300 V) $338 W) none of the above
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27) Which one of the following statements is true? A) When the average product curve is rising, marginal product is less than average product. B) The highest value of average product occurs where average product is greater than marginal product. C) When the average product curve is falling, marginal product is greater than average product. D) The highest value of average product occurs where average product equals marginal product. E) The maximum total product occurs at minimum marginal product.
50) Which of the following statements are true? I. Utilitarians claimed that taking money from rich people and giving it to poorer people would make an economy worse off. II. Utilitarians took into account the costs of making income transfers. III. The "big tradeoff" is between efficiency and equity. A) II and III B) I and III C) I and II D) I, II, and III E) III only
23. The government places a $30 per unit tax on the buyers of widgets. At the new equilibrium, the price received by sellers will be: A) $120 B) $123 C) $126 D) $129 E) $132 F) $135 G) $138 H) $141 1) $144 J) $147 K) $150 L) $153 M) $156 N) $159 0) $162 P) $165 Q) $168 R) $171 S) $174 T) $177 U) $180 V) $183 W) $240 X) $1500 Y) $3000 Z) none of the above
Question 4. (15 marks) Suppose supply is given by q = 2 + p and demand by q = 10 – 2p. (a) Plot these curves with p on the vertical axis, showing the slopes and all horizontal and vertical intercepts. (b) Using the information from Question 3 calculate the equilibrium quantity and price. (C) Suppose the demand curve shifts such that q = 15 - 2p. Compute the new equilibrium price and quantity. Show this on your graph.
3. Suppose the government has imposed a price ceiling on cellular phones. Which of the following events could transform the price ceiling from one that is binding to one that is not binding? a. Cellular phones become more popular. b. Traditional land line phones become more expensive. C. The components used to produce cellular phones become more expensive. @ A technological advance makes cellular phone production less expensive.
23) The theory of the firm is based on the following two key assumptions: A) Firms seek to become as large as possible, and they seek to maximize total revenue. B) Each firm has a highly diversified product line, and this necessarily leads to profit maximization. C) Firms seek to maximize profit, and to distribute the maximum value fairly. D) Firms seek to maximize profits, and the firm is a single, consistent decision-making unit. E) Firms seek to maximize revenues, and to maximize undistributed profits.
1. When the price of tortilla chips rose by 10 percent, the quantity of tortilla chips sold fell by 4 percent, and the sale of dips (like salsa and bean dip) fell by 8 percent. This set of facts indicates that a. the cross price elasticity between tortilla chips and dips is 0.8, so the two are substitutes. b. the cross price elasticity between tortilla chips and dips is 0.4, so the two are complements. c. the cross price elasticity between tortilla chips and dips is 0.8, so the two are complements. d. the cross price elasticity between tortilla chips and dips is 0.4, so the two are substitutes.
Question 12: The provincial sales tax is a tax on goods. Some people say that the GST, a tax on both goods and services, is a better tax. The following graph illustrates what would happen, if all provincial sales taxes were replaced with the provincial GST, for a consumer choosing Books and Haircuts (service). Here lo and I are the Indifference curves or the two products; BL are the budget lines. BL VE.COM 5 10 15 20 25 30 35 a) Label the x axis and y axis on the above graph. b) BLo represents the budget line for (GST or Provincial tax) c) How did the consumer choice of goods change with change in the tax structure? a. Consumption choice with Provincial Tax: haircut and books b. Consumption choice with GST: haircut and books d) In the above graph show the substitution and Income effect as a result of a change in relative prices. Explain how the consumption changed as a result of substitution effect and the income effect.
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