ECON 2001 Midterm: ECON 2001 Pitt Exam 3 2013

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turquoisegnu128

31 Jan 2019

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Take a few minutes to read the entire paper before you begin to write, and read each question carefully. The multiple choice questions are only worth 1 point and questions 11-15 are worth 6 points each. Make a note of the questions you feel con dent you can do, and try those rst: you do not have to do the questions in the order they are presented. Instructions: you have 3 hours to complete this exam, this is a closed book exam, and no notes of any kind are permitted. The use of calculators, cell phones, or similar devices is not permitted. All implanted cyber devices not necessary for life-support must be disabled at the beginning of the exam. 15: questions 1 to 10 are multiple choice. 16 [bonus] correct answer, are worth 1 point each and no part marks will be given. Please record your answers in the spaces opposite.

Related Questions

1. Use the table below for the following question. Suppose you have a budget of $6 and that brownies and Twizzlers cost $1 each. What is the consumer optimum?

Number of Brownies	Total Utility of Brownies	Marginal Utility of Brownies	Number of Twizzlers	Total Utility of Twizzlers	Marginal Utility of Twizzlers
0	0	-	0	0	-
1	10	10	1	6	8
2	19	9	2	13	7
3	26	7	3	19	6
4	30	4	4	23	4
5	30	0	5	25	2
6	29	-1	6	25	0

6 brownies

3 brownies and 3 Twizzlers

4 brownies and 2 Twizzlers

any combination of 6 because they're both $1

2. Use the table below for the following question. What is the consumer equilibrium for a $6 budget if the price of brownies rises to $1.50 and the price of Twizzlers remains at $1.00?

Number of Brownies	Total Utility of Brownies	Marginal Utility of Brownies	Number of Twizzlers	Total Utility of Twizzlers	Marginal Utility of Twizzlers
0	0	-	0	0	-
1	10	10	1	6	8
2	19	9	2	13	7
3	26	7	3	19	6
4	30	4	4	23	4
5	30	0	5	25	2
6	29	-1	6	25	0

The consumer will buy all Twizzlers because they're cheaper.

4 brownies

3 Twizzlers and 2 brownies

3 brownies and 3 Twizzlers

3. At Nice Price for the Ice, an ice cream parlor, customers routinely buy a scoop of ice cream for $3. If consumers purchase one scoop of ice cream at $3, then why don't they keep buying more and more scoops for $3 until the store sells out?

People would not want more than one scoop of ice cream because then they would have less money to spend on other goods.

People do not want to consume all the scoops of ice cream because their total utility is higher the less they eat.

At some point, customers do not value an additional scoop at $3, so they will not pay $3 for a scoop after they reach that point.

4. Suppose you plan on eating 50 potato chips. As you start consuming potato chips, your marginal utility is very high, but it begins to fall slowly until you've eaten 10 chips. After you have eaten 10 chips, your marginal utility decreases even faster with each additional chip. The marginal utility continues to decline until you've eaten 49 chips. The fiftieth chip does not give you any additional utility. After 50 chips, your mouth gets so salty that it's unpleasant to eat anymore, so marginal utility is actually negative for those chips. How many chips should you eat in order to maximize your total utility?

5. As you start consuming potato chips, your marginal utility is very high, but it begins to fall slowly until you've eaten 10 chips. After you have eaten 10 chips, marginal utility decreases even faster with each additional chip. The marginal utility continues to decline until you've eaten 49 chips. The fiftieth chip does not give you any additional utility. After 50 chips, your mouth gets so salty that it's unpleasant to eat anymore, so marginal utility is actually negative for those chips. How many chips should you eat in order to maximize your marginal utility?

6. At current levels of consumption, Alice is spending her entire budget. If Alice gets 3 utils of satisfaction per dollar spent on ice cream and 2 utils per dollar spent on shampoo, then how should she adjust her consumption to get closer to the consumer optimum?

She is already at the consumer optimum, so no adjustment is necessary.

She should buy more ice cream and less shampoo.

She should buy more shampoo and less ice cream.

She should buy more of both goods.

7. Suppose you are at a restaurant and your favorite dish costs $20. You can get your next-favorite dish for $17. If your next-favorite dish gives you 100 utils, how many additional utils do you need from your favorite dish to spend the extra $3?

17.65

117.65

8. The diamond water paradox is the observation that water is essential to life and inexpensive, while diamonds are not essential and are highly-priced. Which of the other pairs of goods exhibit a pricing structure similar to water and diamonds?

economy & luxury cars

rice & truffles (very expensive mushrooms)

paper clips & gasoline

paper & textbooks

9. Rice is a cheap staple food eaten several times a day by many people all over the world. In Trufflelandia, residents also eat expensive mushrooms known as truffles once every year as a birthday celebration. Rice keeps the people alive and truffles are not necessary for sustaining their lives. Why is rice so cheap and truffles so expensive?

Truffles taste better, so they are worth more money.

Rice is easy to cook, so people buy a lot of it. If people are going to buy so much, then it has to be cheap.

Truffles are more nutritious, and healthy food is always more expensive than unhealthy food.

People eat so much rice that an additional serving of rice has little marginal value, but the marginal value of another serving of truffles is very high.

oliverat570

_____ 1. Suppose you make silver jewelry. If the price of silver falls, we would expect you to:

a. be willing and able to produce less jewelry than before at each possible price.

b. be willing and able to produce more jewelry than before at each possible price.

c. face greater demand for your jewelry.

d. face a weaker demand for your jewelry.

_____ 2. If suppliers expect the price of their product to fall in the future, then they will:

a. increase supply (supply curve shifts out) now.

b. decrease supply (supply curve shifts in) now.

c. increase supply in the future, but not now.

d. decrease supply in the future, but not now.

_____ 3. Consider the market for portable air conditioners, initially in equilibrium. When a heatwave strikes, the equilibrium price:

a. increases and equilibrium quantity decreases.

b. decreases, and the equilibrium quantity increases.

c. and quantity both increase.

d. and quantity both decrease.

_____ 4. Buyers can buy all they want to buy and sellers can sell all they want to sell at:

a. prices at and above the equilibrium price.

b. prices at and below the equilibrium price.

c. prices above and below the equilibrium price, but not at the equilibrium price.

d. the equilibrium price, but not at prices above or below the equilibrium price.

_____ 5. The law of supply and demand states that:

a. demand and supply curves shift out as time goes by.

b. the price of a goodwill rise in response to excess demand for that good.

c. when the supply curve for good shifts, the demand curve for that good shifts in response.

d. the equilibrium price of goodwill be rising more often than it will be falling.

_____ 6. If Doritos and Cheetos are substitutes, a rise in the price of Cheetos will cause:

a. the equilibrium quantity of Doritos to fall and the price of Doritos to rise.

b. the equilibrium quantity and price of Doritos to rise.

c. the equilibrium quantity and price of Doritos to fall.

d. the equilibrium quantity of Doritos to rise and the price of Doritos to fall.

_____ 7. New production technology is perfected that allows auto manufacturers to build an automobile using half the labor hours formerly needed. As a result:

a. the equilibrium quantity of automobiles increases and the price decreases.

b. the equilibrium quantity and price of automobiles increase.

c. the equilibrium quantity and price of automobiles decreases.

d. there is likely no change in the number of automobiles produced.

_____ 8. The U.S. government announces that it will raise the interest rate on college student loans beginning in January of next year. The immediate market impact is:

a. the demand curve for student loans shifts out.

b. the supply curve for student loans shifts out.

c. we anticipate that more student loans will be completed next year than this year.

d. all of the above are correct.

_____ 9. What curve shift produces a fall in price and increase in quantity exchanged?

a. An inward shift in the demand curve.

b. An inward shift in the supply curve.

c. An outward shift in the supply curve.

d. An outward shift in the demand curve.

_____ 10. We note that fewer motorcycles were sold this year than last and that the price is also lower. What event could have caused this outcome?

a. A technological change that improved the fuel efficiency of motorcycles.

b. A rise in the wages paid to motorcycle manufacturing workers.

c. A motorcycle craze due to the popularity of Sons of Anarchy.

d. Increasing concerns about health impacts from breathing motorcycle exhaust.

_____ 11. The price that results in quantity supplied equaling quantity demanded is the optimal (best) price because it:

a. maximizes the combined welfare of buyers and sellers.

b. maximizes the cost of the seller.

c. minimizes the expenditure of buyers.

d. all of the above are correct.

_____ 12. Consumer surplus is the:

a. quantity of good consumers get without paying anything.

b. amount a consumer pays minus the amount the consumer is willing to pay.

c. amount a consumer is willing to pay minus the amount the consumer pays.

d. value of a good to a consumer.

_____ 13. In a market, the marginal buyer is the one:

a. whose willingness to pay is higher than all other buyers and potential buyers.

b. whose willingness to pay is lower than all other buyers and potential buyers.

c. who is willing to buy exactly one unit of the good.

d. who would be the first to leave the market if the price were any higher.

_____ 14. If a consumer is willing and able to pay $20 for a particular good and if she actually pays $16 for the good, then her consumer surplus is:

a. $4.

b. $16.

c. $20.

d. $36.

_____ 15. Suppose there is an early freeze in California that reduces the size of the orange crop. What happens to consumer surplus in the market for oranges?

a. Consumer surplus increases.

b. Consumer surplus decreases.

c. Consumer surplus is not affected by this change.

d. We would have to know whether the demand for oranges is elastic or inelastic.

_____ 16. Producer surplus is the area on a supply/demand graph:

a. under the supply curve.

b. between the supply and demand curves.

c. below the price line and above the supply curve.

d. under the demand curve and above the price line.

_____ 17. Economists typically measure economic efficiency using:

a. total producer and consumer surplus.

b. profits to firms.

c. the quantity supplied by sellers.

d. the price paid by buyers.

_____ 18. Which of the following statements is correct?

a. Efficiency and equality are both maximized when total surplus is maximized.

b. Efficiency deals with the size of the economic pie; equality with how fairly the pie is sliced.

c. Efficiency is more difficult to evaluate than equality.

d. Equality is judged on positive grounds; efficiency requires normative judgments.

_____ 19. The price elasticity of demand measures how much:

a. quantity demanded a response to changes in price.

b. quantity demanded a response to changes in income.

c. price responds to a change in demand.

d. Both a and c are correct

_____ 20. Goods with many close substitutes tend to have:

a. less elastic demands.

b. more elastic demands.

c. price elasticities of demand that are unit elastic.

d. income elasticities that are negative.

Short Answer Questions:

All of the following questions are based on the data shown here for coffee demand and supply at a fictional Columbus coffee shop called Go-bucks.

Price Quantity Quantity

per Cup Demanded Supplied

$1.60 1,700 1,220

$1.80 1,555 1,300

$2.00 1,400 1,400

$2.20 1,235 1,520

$2.40 1,060 1,660

$2.60 875 1,820

_____ 21. (6 points) Using the mid-point formula, calculate the price elasticity of demand as the price increases from $1.60 to $1.80.

_____ 22. (6 points) Repeat the calculation of the price elasticity of demand, this time for a price increase from $1.80 to $2.00.

_____ 23. (6 points) Repeat the calculation of the price elasticity of demand, this time for a price increase from $2.40 to $2.60.

24. (4 points) Over which price range is demand inelastic? Over which price range is demand elastic? Does this follow the trend noted in class?

_____________________________________________________________________________

_____ 25. (6 points) Turning to the supply side, calculate the price elasticity of supply as the price increases from $2.20 to $2.40.

26. (2 points) How would you describe the price elasticity of supply over this range?

_____________________________________________________________________________

graychimpanzee865

AEC 316 - Agricultural Marketing
Homework Assignment 2: Chapter 2

Name:____________________ Date:____________________

Multiple choice questions.

There is only one correct answer in multiple choice questions. Please, mark the correct

answer. Each multiple choice question is worth 5 points.

1. A perfectly competitive firmâs demand curve equals its:

Marginal cost curve

Average variable cost curve

Average fixed cost curve

Average revenue curve

None of the above

2. A perfectly competitive firm maximizes profits by setting price equal to:

a. Marginal cost

b. Marginal revenue

c. Average revenue

d. Average total cost

e. Average variable cost

3. In order for a monopoly to continue to be a monopoly:

a. The marginal revenue curve must be downward sloping

b. There must be no close substitutes

c. Marginal revenue must equal marginal costs

d. Average total costs must be decreasing

e. None of the above

4. Marketing strategy which involves dividing a broad target market into subsets of consumers who have, or are perceived to have, common needs, interests, and priorities, and then designing and implementing strategies to target them.

a. Brand name

b. Minor ingredients

c. Market segmentation

d. Product features

e. Packaging

5. What characteristic is indicative of oligopolies?

Low profits

Interdependence of firms

Many firms

Entry is blocked

None of the above

6. At an equilibrium price:

a.The self-interest of consumers is maximized

b.Supply equals demand

c.There is an upward pressure on price

d.There is a downward pressure on price

None of the above

7. When both supply and demand increase, equilibrium quantity will:

a.Decrease

b.Increase

Stay the same

Canât say

None of the above

8. Elasticity is a concept that deals with:

a.Market structure

b.Market equilibrium

c.Perfect competition

d.Consumer and producer sensitivity to changes in prices and income

None of the above

9. A set of competing firms producing similar products or a commodity in a market is called a(n) ___ .

a.Branch

b.Competition

c.Channel

Industry

None of the above

10. A market structure where there is only one buyer of a specific product is called:

a.Monopsony

b.Monopoly

c.Oligopsony

Monopsonistic competition

None of the above

Essay question: 50 points

11. Use the agricultural commodity that you selected in Chapter 1 and choose one agribusiness that buys it. Investigate the agribusiness using the Internet and other resources, and then write an essay addressing all or as many as possible of the following aspects of the agribusiness:

Size

Sales

Scope of product line

Worth (if public)

Number of employees

Locations globally

Market structure

Industry sector

All your answers/discussion should be typed in one essay that is at least 15 lines long (using formal English, correct paragraph and sentence structure, and making sure your ideas flow well from one sentence to another) using Times New Roman, 12 point, double space and 1-inch margins all around. Before submitting the final essay, use the âSpelling & Grammarâ function of the MS Word to correct grammar.

At the end of your essay, provide the full citation record in alphabetical order in your list of references. For examples, visit: http://www.saea.org/wp-content/uploads/2013/08/reference-style-sheet.pdf. Please, note that the list of references does not count toward the minimum required 15 lines. Include your references in the text as â(Smith, 2015)â when citing at the end of a sentence, or âAccording to Smith (2015)â when citing at the beginning of a sentence. For example,

Negative publicity is a key determinant affecting consumersâ buying decisions (Ahluwalia, Burnkrant, and Unnava, 2000).

According to Cawley and Rizzo (2005), pharmaceutical products in the same therapeutic class experienced negative spillover in terms of lost sales.

Note: Most of the future essay questions will build on this essay question and/or the one agricultural commodity that you choose. This means that if there is little information on the agricultural commodity that you have chosen for this essay question, you should consider choosing a more common agricultural commodity on which ample information is available. In addition, this course will require you to compile all your answers to the essay questions into one term paper to be submitted by the end of the course. This means that the more effort you put into answering essay questions now, the more material you will have accumulated for your term paper by the end of the semester.

TYPE YOUR ANSWER TO THE ESSAY QUESTION 11 BELOW USING AS MUCH SPACE AS YOU NEED. THEN, PRINT THE HOMEWORK ASSIGNMENT AND SUBMIT THE HARD COPY.

ECON 2001 Midterm: ECON 2001 Pitt Exam 3 2013

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