exam1-sol - Economics 304L EXAM 1 Helen Schneider Fall 2008...

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Economics 304L EXAM 1 Helen Schneider Fall 2008 SOLUTIONS I. Multiple choice . 1. Macrosoft Inc. makes computer monitors, which sell for $500 each. What is the opportunity cost of ten monitors? a. $5,000. b. the other goods that could be produced with the resources that produce the ten monitors c. the profits that Macrosoft earns when it sells the ten monitors d. the profits that Macrosoft loses if it does not produce the monitors e. All of the above are correct. Figure 1 2. According to Figure 1, the opportunity cost of one more bushel of wheat is a. higher at B than at D. b. lower at B than at D. c. equal at B and D. d. impossible to determine from the information given. 3. In Table 1 from point C , the opportunity cost of 3 more units of cotton would be a. 4 units of corn. b. 8 units of corn. c. 14 units of corn. d. 18 units of corn. Table 1 Combination Cotton Corn A 12 16 B 17 15 C 21 13 D 23 9 E 24 5
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4. Demand is said to be elastic if a. the price of the good responds substantially to changes in demand. b. demand shifts substantially when income or the expected future price of the good changes. c. buyers do not respond much to changes in the price of the good. d. buyers respond substantially to changes in the price of the good. 5. Suppose the equilibrium price of a physical examination ("physical") by a doctor is $200, and the government imposes a price ceiling of $150 per physical. As a result of the price ceiling,
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exam1-sol - Economics 304L EXAM 1 Helen Schneider Fall 2008...

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