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ECON 3030 (3)
Midterm

# Midterm #1.docx

6 Pages
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School
University of Lethbridge
Department
Economics
Course
ECON 3030
Professor
Richard Meuller
Semester
Winter

Description
1. Which of the following are true? a. Accounting costs generally understate economic costs b. Accounting profits generally overstate economic profits c. In the absence of any opportunity costs, accounting profits equal economic profits d. All of the statements associated with this question are correct. 2. Suppose total benefits and total costs are given by B(Y)=100Y-8Y and 2 C(Y)=10Y . Then marginal costs are a. 20Y 3. The change in net benefits that arise from a on unit change in quantity is the: a. Marginal net benefits 4. The interest rate is 3%, the present value of \$900 revieved at the end of 4 yrs is: a. 797 b. 799.64 c. 873.79 d. 927.40 5. To maximize net benefits in the above table it is most appropriate to use a. five units of control , since marginal net benefits are zero 6. If the interest rate is 7%, \$500 received at the end of 9 years is worth hos much today? a. 500 / (1 + 0.07)9 7. A firm will have constant profits of \$100,000 per year for the next four years and the interest rate is six percent. Assuming these profits are realized at the end of each year, what is the present value of future profits? a. 325,816 b. 376,74 c. 400,000 d. 346,511 8. Negotiation between buyer and seller of new ski-boat is an example of: a. Consumer-producer rivalry 9. Accounting profits are a. Total revenue minus total cost 10.Suppose total benefits and total costs are given by B(Y)=100Y-8Y and 2 C(Y)=10Y . What level of Y will yield the maximum net benefits? a. 100/36 11.The higher the interest rate, the greater the a. Present value b. Net present value c. All of the statements are correct d. Non of the statements are correct 12.A farm must decide whether or not to purchase a new tractor. The tractor will reduce costs by \$2,000 in the first year, \$2,500 in the second and \$3,000 in the third and final year of usefulness. The tractor costs \$9,000 today, while the above cost savings will be realized at the end of each year. If the interest rate is seven percent, what is the net present value of purchasing the tractor? a. 6,764 b. 9372 c. 18,362 d. non of the statements associated with this question are correct 13. (Look at the above image) What is the total cost associated with producing eight units of the control variable? (value B in the table) a. 3600 14.Looking at the same table, the marginal cost is a. Increasing at a constant rate 15.What is an implicit cost of going to college? a. Foregone wages 16. What is the marginal cost of producing the tenth unit? a. 4 17.Under producer-producer rivalry, individual firms want to sell the product to maximum price the consumers will pay, but are unable to do this because of a. Competition among sellers 18.Suppose the demand for good X is given by Qdx = 10 + axPx + ayPy + aMM. If ay is positive, then: a. Goods Y and X are substitutes 19.The demand function: a. Describes how much of good x will be purchased at the alternative price of good X, given all other variable being constant b. Recognizes that the quantity of a good consumed depends in its price and demand shifters c. Shows the relationship between the quantity demanded of X and variable other than its price d. Des not include expectations 20.Suppose there is a simultaneous increase in demand and decrease in supply, what effect with this have on equilibrium price? a. It will rise b. It will fall c. It may rise or fall d. It will remain the same 21. Competitive market equilibrium a. is determined by the intersection of the market demand and supply curves 22. Given a linear supply function of the form QXS = 3,000 + 3PX - 2Pr - Pw, find the inverse linear supply function assuming Pr = \$1,000 and Pw = \$100 a. PX = -300 + 0.3333QX. 23. If A and B are substitutes goods, an increase in the price of good A would: a. lead to an increase in demand for B 24.Given a linear demand function of the form QXd = 500 - 2PX - 3PY + 0.01M, find the inverse linear demand function assuming M = 20,000 and PY = 10. a. PX = 335 - 0.5QX d 25. Good X is a normal good and its demand is given by Q = x + a0P + X X + Y Y aMM + a H. Then we know that a. a M 0 26. Other things held constant, the lower the price
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