ECON 2G03 Study Guide - Midterm Guide: Isocost, Isoquant, Sea Salt

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5 Jun 2014

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45*37. 50 = . 50: if you spend all on input 2, now you can buy 90 units if you only buy input 2. New isocost with new tangency at 20 input 1, 35 input 2: need an isocost with the new slope tangent to y1 isoquant. Tangency at input 1 = 35 and input 2 = 53: using the values from #5 and the current prices, tc = 35*20 + 16. 67*53 = . 50, w1/w2 = 8w2/w2 = 8. Set z2/z1 = 8 so z2 = 8z1. Then y = z11/3(8z1)1/3 so z1 = (y/2)3/2: z2 = 8(y/2)3/2. Isoquant steeper than isocost so a corner solution using only input 1. So 120 = 70 z1 and z1 = 1. 7. sh. 86: opp cost = slope of the isocost = . 83 sea salt, a linear production always has crs because a*each input gives exactly a*original output, see lecture slides, see lecture slides.

Related Questions

1	Which of the following statements about Type I and Type II errors is correct
a	Type I: Reject a true alternative hypothesis. Type II: Do not reject a false alternative.
b	Type I: Reject a true null hypothesis. Type II: Do not reject a false null hypothesis.
c	Type I: Reject a false null hypothesis. Type II: Reject a true null hypothesis.
d	Type I: Do not reject a false null hypothesis. Type II: Reject a true null hypothesis.

2	You are reading a report that contains a hypothesis test you are interested in. The writer of the report writes that the p-value for the test you are interested in is 0.0749, but does not tell you the value of the test statistic. From this information you can:


a	Not reject the hypothesis at a Probability of Type I error = .05, but reject the hypothesis at a Probability of Type I error = 0.10

b	Reject the hypothesis at a Probability of Type I error = .05, and reject at a Probability of Type I error = 0.10

c	Not reject the hypothesis at a Probability of Type I error = 0.05, and not reject at a Probability of Type I error = 0.10

d	Reject the hypothesis at a Probability of Type I error = .05, but not reject at a Probability of Type I error = 0.10


3	The random sample below is obtained to test the following hypothesis about the population mean.
	H?: ? ?	1500
	H?: ? >	1500
	620	1711	366	2528	2678	1661	442	725	1938
	409	330	2480	542	369	2124	549	2074	1665
	1873	873	2143	2061	1177	2509	1264	2397	1523
	1837	1958	1041	1639	2199	2232	387	2270	2136
	1111	1883	2612	2230	1597	1726	694	1990	1354
	2090	909	2128	1608	747	1121	2220	2390	2347
	1041	316	655	632	2064	1901	532	552	846
	2704	1410	2165	1065	937	1452	2539	410	656
	1169	527	809	2364	2350	2210	1459	2391	856
	2711	1985	2382	2289	1927	518	2177	437	1151
	2018	1580	607	2715	2188	1691	1394	2610	1186
	695	2428	2246	858	2036	1681	2449	1578	1971
	1846	1729	2389	1737	1913	1863	2072	2593	2287
	2220	2230	551	458	2626	2731	488	2551	1736
	1373	307	1803	2647	2679	1508	1468	1443	516
	1002	2116	2616	817	2522	460	1879	1999	1837

	The level of significance of the test is ? = 0.05. Compute the relevant test statistic.
	This is a(n) _______ (two-tail, upper-tail, lower-tail) test. The test statistic is TS = _______.
a	Two-tail test		TS =	1.81
	Do not reject H?: ? ? 1500. Conclude that the population mean is not greater than 1500.
b	Upper tail test.		TS =	1.52
	Do not reject H?: ? ? 1500. Conclude that the population mean is not greater than 1500.
c	Upper tail test.		TS =	1.81
	Reject H?: ? ? 1500. Conclude that the population mean is greater than 1500.
d	Lower tail test.		TS =	1.98
	Do not reject H?: ? ? 1500. Conclude that the population mean is no greater than 1500.

4	Consider the following hypothesis test.
	H?: ? ?	30
	H?: ? >	30
	A random sample of n = 15 yielded the following observations
	51	38	26	16	28
	57	20	33	35	23
	21	47	56	54	36
	Use ? =	0.05
	TS = ______	CV = ______	State the decision rule.
a	1.68	1.761	Do not reject H?. Conclude the mean is not greater than 30.
b	1.68	1.64	Reject H?. Conclude the mean is greater than 30.
c	1.847	2.145	Do not reject H?. Conclude the mean is not less than 30.
d	1.847	1.761	Reject H?. Conclude the mean is less than 30.

5	In a recent study, a major fast food restaurant had a mean service time of 165 seconds. The company embarks on a quality improvement effort to reduce the service time and has developed improvements to the service process. The new process will be tested in a sample of stores. The new process will be adopted in all of its stores, if it reduced mean service time by more than 45 seconds compared to the current mean service time. To perform the hypothesis test, the sample of 48 stores yields the following data (seconds).





	90	96	133	108	136	110	119	138
	129	98	101	92	135	124	115	90
	132	125	110	124	126	138	94	130
	108	96	140	135	102	114	109	137
	138	104	108	134	92	107	96	119
	105	111	96	136	126	116	98	131

	Use ? =	0.05
	\|TS\| = ______	\|CV\| = ______
a	1.548	1.678	Do not reject H?. The mean service time is not reduced by more than 45 seconds. Do not adopt the new process.

b	1.871	1.678	Reject H?. The mean service time is reduced by more than 45 seconds. Adopt the new process.

c	1.871	1.640	Do not reject H?. The mean service time is not reduced by more than 45 seconds. Do not adopt the new process.

d	1.548	1.640	Reject H?. The mean service time is reduced by more than 45 seconds. Adopt the new process.

1) Suppose your grandmother gave you $25 for your birthday and you decided to spend all of it on candy bars and bags of popcorn. The price of candy bars is $1.25 and price of a bag of peanuts is $3.75.

a) Construct a table showing the alternative combinations of the two products that are available.

b) Plot the data in your table as a budget line in a graph. What is the slope of the budget line? What is the opportunity cost of one more candy bar? Of one bag of peanuts?

c) How, in general, would you decide which of the available combinations of candy bars and bags of peanuts to buy?

2) With current technology, suppose a firm is producing 750 screwdrivers daily. Also assume that the least-cost combination of resources in producing those screwdrivers is 15 units of labor, 20 units of land, 4 units of capital, and 3 unit of entrepreneurial ability, selling at prices of $50, $45, $75, and $50, respectively. If the firm can sell these 750 screwdrivers at $2.50 per unit,

a) what is its total revenue?

b) what is its total cost?

c) what is its profit or loss?

d) will it continue to produce screwdrivers?

e) If this firmâs situation is typical for the other makers of screwdrivers, will resources flow toward or away from this product?

3) How will each of the following changes in demand and/or supply affect equilibrium price and equilibrium quantity in a competitive market; that is, do equilibirium price and quantity rise, fall , or are the answers indeterminate because they depend on the magnitudes of the shifts?

a)Supply decreases and demand is constant. Change in eqilibrium price chnage in eqilibrium quantity

b)Demand decreases and supply is constant.

c)Supply increases and demand is constant.

d)Demand increases and supply increases.

e)Demand decreases and supply decreases.

4)Zeke likes to go to music concerts. The number of times per year that he attends concerts depends on both the price of the concerts as well as Zekeâs income and the cost of other types of entertainmentâin particular, how much it costs to go see a movie instead of attending concerts. The three demand schedules in the $60,000 per year and movies cost $10 each. In scenario D2, Zeke's income is also $60,000 per year, but the price of seeing a movie rises to $12. And in scenario D3, Zeke's income goes up to $80,000 per year, while movies cost $12.

a)Using the data under D1 and D2, calculate the cross-elasticity of Zeke's demand for concerts at all three prices. (To do this, apply the midpoints approach to the cross-elasticity of demand.) Is the cross-elasticity the same at all three prices? Are movies and concerts substitute goods, complementary goods, or independent goods?

b)Using the data under D2 and D3, calculate the income elasticity of Zeke's demand for concerts at all three prices. (To do this, apply the midpoints approach to the income elasticity of demand.) Is the income elasticity the same at all three prices? Are concerts an inferior good?

PRICE	D1	D2	D3
50	10	5	12
40	15	10	25
30	25	15	40

Income 60,000 60,000 80,000

Cost of revenue 10 12 12

5) On the basis of the three individual demand schedules below, and assuming these three people are the only ones in the society, determine (a) the market (a) the market demand schedule on the assumption that the good is a private good and (b) the collective demand schedule on the assumption that the good is a public good.

P	Qd(D1)	Qd(D2)	Qd(d3)
20	0	0	1
19	0	1	2
17	0	2	3
16	0	3	4
15	1	4	5
14	2	5	6
13	3	6	7
12	4	7	8
11	5	8	9
10	6	9	10

periwinklemuskrat632

Microeconomics Multiple choice questions. Please answer all the questions.

1. Scarcity:
A. exists because resources are limited while human wants are unlimited.
B. means we are unable to have as much as we would like to have.
C. will likely be eliminated as technology continues to expand.
D. is not an issue addressed in economics.

2. People are forced to make choices because of:
A. unlimited wants and unlimited resources.
B. limited wants and unlimited resources.
C. unlimited wants and limited resources.
D. limited wants and limited resources.
E. irrational wants and limited resources.

3. Which of the following is closest to the definition of capital?
A. c and e.
B. c and d.
C. Tools, equipment, means of transportation
D. Factories and machinery.
E. Borrowed money.

4. Which one of the following is the most accurate definition of economics?
A. Economics is the study of stocks and bonds.
B. Economics is the study of how people allocate unlimited resources.
C. Economics is the study of how consumers choose to spend their income.
D. Economics is the study of how society chooses to allocate scarce resources.

5. The basic difference between macroeconomics and microeconomics is:
A. microeconomics concentrates on individual markets while macroeconomics focuses primarily on international trade.
B. microeconomics concentrates on the behavior of individual consumers while macroeconomics focuses on the behavior of firms.
C. microeconomics concentrates on the behavior of individual consumers and firms while macroeconomics focuses on the performance of the entire economy.
D. microeconomics explores the causes of inflation while macroeconomics focuses on the causes of unemployment.

6. Which of the following is not a resource?
A. Land.
B. Labor.
C. Money.
D. Capital.

7. Which of the following would an economist classify as capital?
A. 100 shares of Microsoft stock.
B. $50 bill.
C. credit card.
D. lawyer's personal computer.

8. Economics, according to its definition, studies how people:
A. earn and spend money.
B. invest in the stock and bond markets.
C. make choices in the face of scarcity.
D. supply goods in response to demand.

9. Which of the following is the best example of a microeconomic topic?
A. The impact that the money supply has on inflation.
B. The reasons for increases in the price of soft drinks.
C. The effect that federal budget deficits have on the interest rate.
D. The tradeoff between inflation and unemployment.

10. Which of the following is a macroeconomics topic?
A. Wages of textile workers in the Northeast.
B. The cost of producing 10,000 bookcases.
C. The economy's annual growth rate.
D. National demand for fish.
E. Effects of farm subsidies on food prices.

11. An economic theory claims that a rise in gasoline prices will cause gasoline purchases to fall, Ceteris paribus. The phrase "Ceteris paribus" means that:
A. other relevant factors like consumer incomes must be held constant.
B. the gasoline prices must first be adjusted for inflation.
C. the theory is widely accepted but cannot be accurately tested.
D. consumers' need for gasoline remains the same regardless of the price.

12. An economic model is:
A. a plastic scaled version of the economy.
B. a complete depiction of reality.
C. an abstraction from reality.
D. applicable to consumer behavior but not to producer behavior.
E. not an accepted tool of the economics profession.

13. Which of the following sayings best reflects the concept of opportunity cost?
A. "You can't teach an old dog new tricks."
B. "There is no such thing as a free lunch."
C. "I have a baker's dozen."
D. "There's no business like show business."

14. The opportunity cost of watching television is:
A. all of the alternative programs that appear on other stations.
B. zero because there is no money expenditure involved.
C. the alternative use of the time foregone by watching the program.
D. zero if it benefits you.

15. Which of the following does not illustrate opportunity cost?
A. If I study, I must give up going to the football game.
B. If I buy a computer, I must do without a 35" television.
C. More consumer spending now means more spending in the future.
D. If I spend more on clothes, I must spend less on food.

16. When deciding whether to buy a second car, marginal analysis indicates that the purchaser should compare the:
A. benefits expected from two cars with the cost of both.
B. additional benefits expected from a second car with the cost of the two cars.
C. dollar cost of the two cars with the potential income that the cars will generate.
D. additional benefits of the second car with the additional cost of the second car.

17. According to marginal analysis, you should spend more time studying economics if the extra benefit from an additional hour of study:
A. is positive.
B. outweighs the extra cost.
C. exceeds the benefits of the previous hour of study.
D. will raise your exam score.

ECON 2G03 Study Guide - Midterm Guide: Isocost, Isoquant, Sea Salt

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