Final Exam key Spring 2010

Final Exam key Spring 2010 - AGEC 105 Spring 2010 Final...

Info iconThis preview shows pages 1–13. Sign up to view the full content.

View Full Document Right Arrow Icon
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Background image of page 2
Background image of page 3

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Background image of page 4
Background image of page 5

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Background image of page 6
Background image of page 7

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Background image of page 8
Background image of page 9

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Background image of page 10
Background image of page 11

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Background image of page 12
Background image of page 13
This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: AGEC 105 Spring 2010 Final Exam Capps Please put the following pieces of information on your scantron: (a) Name (b) UIN # (0) Section #: 501 502 503 (d) Sign the Aggie pledge on the back of your seantron. “On my honor, as an Aggie, l have neither given nor received unauthorized aid on this exam.” A "’7 Capps AGEC 105 FINAL EXAM Spring 2010 Hill’s Pet Nutrition, Inc. of Topeka, Kansas has three alternatives for manufacturing pet foods: 1) Manufacture dog food alone and obtain a profit of $40 million. 2) Manufacture cat food alone and obtain a profit of $25 million. 3) Manufacture both dog food and cat food and obtain a profit of $45 million. The opportunity cost of this firm is: (a) $5 million. (b) $25 million. (c) $40 million. (d) $45 million. You read in the Bryan—College Station Eagle that Texas A&M expects the price of basketball tickets to rise from $10 to $11 in the Spring of 201 1. As well, Texas A&M expects attendance to drop by 2% because of the ticket price increase. Ceferis paribus, you conclude that the own— price elasticity of demand for Texas A&M basketball tickets is: (a) ~5.0 a m . (b) -0.2 Ac? 1: M3, '1 e. z. (c) unitary elastic. % 0F 10 ((1) can’t say; insufficient information Concerns have been raised by consumers about ALAR, a chemical used in the production of apples. ALAR may be a cancer-causing agent. Given this information, it is likely in the short— run that: ‘ ,5 'Do (a) the quantity of apples sold will fall and the price of apples will rise. Q l’ (b) the quantity of apples sold will rise and the price of apples will rise. (0) the quantity of apples sold will fall and the price of apples will fall. ((1) the quantity of apples sold will rise and the price of apples will fall. According to the chart below, which bundle is most preferred? Quantity of Popcorn Quantity of Sodas Total Utility Questions 5 and 6 pertain to the following diagram. Hamburgers Given the indifference curves in this graph, which combination of wings-and hamburgers yields. the highest level of satisfaction? (a) 7 wings, l hamburger (b) 5 wings, 5 hamburgers (c) 7 wings, 4 hamburgers (d) 2 wings, 7 hamburgers The marginal rate of substitution between points C and D is: 0 WWW 5 7“ 2 "Z P? (a) 5/3. a a. .07 “’3 (b) 6/3. [1/209qu i (c) 3/5. (d) 3/5. Assume that the price of sorghum grain is $6.00 per bushel. When we apply 30 tons of fertilizer on our 20 acres of sorghum grain, the total yield is 1000 bushels. When we apply 50 tons of fertilizer, the total yield is 1500 bushels. What is the marginal value product per ton of feltilizer? (a) $25/ton g} (9 (b) $75/ton “We”; (0) $150/ton KL 7‘ ((1) none of the above 523 ~ 30 520 MVP: Pie/WM)“: (fl/éuygséu/Mifi 505%” Which of the following lists of goods most closely fits the definition of a complement? (a) Pepsi and Coca-Cola (b) cereal and milk (0) Tide detergent and milk (d) none of the above I550” mm a, £33,; 25?, MWMW’AQ Questions 9 to 12 pertain to the following information for the country of Mongolia. 10. J?) A C 13. 0 s 000000 0000 000000 0000 000000 In the arena of international trade, Mongolia is: N f expwij r: {wider/g --;MI)ar"h (a) a net exporter. (b) a net importer. ? _ _ lg . I - o - ‘ f. *1 00m 1 (o) neither a net importer or exporter. ¢ 700ml €00 m. l / (d) can’t say; insufficient information Nominal per capita GDP is equal to: (a) $1,350 million. I‘M” fizoemil If $5017)” a Pgmm'l Mr 00?: M000 b 2,700. . v "a, . -' 0 ms! ici $1,550 million. “MM my a i; (d) $3,100 swersirrsrl 0,0000 - 0/ 0,, .0.) (b) $ 1,5 00 million. (0) $2,600. (d) $3,000. Mongolia is experiencing: , .I 0 _ WWW (a) abalanced budget. 7W 7L WPL’JWM 7‘ fix ’ J (b) a surplus. (c) a deficit. (d) can’t say; insufficient information. Assume that for a given consumer, the marginal utility of 7—Up is 160 and the price of 7—Up is $2. Also, assume that the marginal utility of Coca-Cola is 200 and the price of Coca-cola is $3. This consumer: (a) is in equilibrium. U ‘ .l tW (‘0) should buy more 7—Up. m "M .3“ 80 “I” /‘1 “ (0) should buy more Coca-Cola. P (d) should buy more of both products. 7"”1 - ’" m , . mil-W00. 2ng W t " AW“ W L; J 0 3 14. Suppose that the own~price elasticity for yogurt is ~0.6. Which of the following statement(s) is (are) true? (a) Raise the price of yogurt in order to increase revenue in the short-run. (b) Lower the price of yogurt in order to increase revenue in the short-run. (c) It is likely that the own-price elasticity of Dannon Yogurt is larger than -0.6 (in absolute value). (d) both (a) and (0) Questions 15 to 17 pertain to the following table that gives the output produced (in bushels) and price of corn received ($/bushel) for Farmer Smith over the period 2007 to 2009. Assume that the only source of income for Farmer Smith is from the production of corn. Also assume that all production costs are zero. Mariam *5 7 a 15. The best year in terms of real income for Farmer Smith was: ‘ (a) 2007 1574060 (F 20.8" a (b) 2003 $20r5w/L , rs, Cro‘f (C) 2009 iiiifldl-‘d/(fif 7: ’7; 85m? (d) can’t tell; insufficient informatiou 16. Which of the following statements is true for Farmer Smith? (a) The base year for prices is 2007. 7/ ( (b) In 2008 prices were higher by 10 percent relative to 2007. D (c) In 2007, prices were higher by 40 percent relative to 2009. (d) (a) and (b) 17. You are to compute output indices for 2007 and 2009 for Farmer Smith with the base year of 2008. Which of the following statement(s) is(are) true? (a) The output index for 2007 is 0.75. 7‘”, (b) The output index for 2008 is 0.80. 7": /D (c) The output index for 2009 is 1.25. (d) (a) and (0) Questions 18 and 19 deal with the following diagram. I $80,000 - - - - — — — — _ _ _ _ _ $60,000 0 .........__...______ Q Monterey Jack cheese (pounds) 18. This diagram corresponds to a(n): (a) supply curve. 9 (b) E'ngel curve. (c) marginal cost curve. (d) None of the above. 19. According to this diagram, Monterey Jack cheese is what kind of good? (a) luxury (‘0) necessity Inca/Nb elm-lid; (C) inferior + I F fig % are”: 7 (d) Can’t tell; insufficient information. In, =- ' hwj The following chalt depicts a leftward shift in the supply curve. Use this chart to answer questions 20 to 22. P5 20. The change in producer surplus is given by: 3 eye D i L (b) B - E. g (c) E - B. 11 l3+i>i~Dm€ (d) none of the above. 3 ,, if 21. 22. C/ 23. 25. The change in consumer surplus is given by: (a) -13 — c. I C 9" (b) B — E. m A . (c) B + c. g'li‘ AM” (d) none of the above. ' A ... p (.3 Which of the following statement(s) is(are) true? A B (a) This diagram could describe the impact of a marketing quota. (b) This diagram could describe the impact of ideal growing conditions of a crop in a particular region of the US. (0) This diagram could describe the impact of an unexpected freeze on the citrus industry in Florida. (d) all of the above. Tom Johnson is a farmer" from the Show Me State a Missouri. His net Worth is $40 million. 1f Tom has liabilities of $20 million, then his assets total: miiiion NJ: warfli 3 4116/3 “WWI/w n11 1011 (c) -$20 million yin/0W] J» Hum? l ((1) can’t tell; insufficient information The following diagram illustrates what kind of relationship? (a) A demand curve (b) A budget line (c) The planned investment function (d) can’t tell; insufficient information According to the following graph, if the price of chicken is $3 per pound and the price of pork is $2.50 per pound, at point A: Q chicken (pounds) 10 6 12 Q pork fl (pounds) (a) the consumer is in equilibrium. / (W, (b) the consumer will allocate $30 to the purchase of pork and chicken. I W (e) the MU per dollar spent on pork is equal to the MU per dollar spent on chicken. 7 (d) all of the above. Questions 26 to 28 pertain to the following four graphs, labeled (a) through (d). (a) 26. 27. 28. 29. P Which of the four graphs describes the development and use of biotechnology to improve cotton yields? (d) (a) (b) (0) Which of the four graphs describes the effect of a food safety scare such as the cases of E.coli in the beef industry, salmonella in the poultry industry, and gastroenteritis in the seafood industry? (a) (b) (0) ((31) Which of the four graphs describes the effect of more environmental restrictions on dairy production? (a) (d) (b) (0) The government body responsible for buying and selling securities to bring about a change in the money supply is: (a) the Federal Trade Commission (b) the United States Department of Agriculture (0) the Federal Open Market Committee (d) the Commodity Credit Corporation Questions 30 pertains to the following diagram. SfBushel S 700 300 1200 Wheat(thousands otbushels) 30. The cost to taxpayers under this program is: . . 0 w (a) $2 million ' M i" 5" 2" (b) $2.4 million (c) $4.8 million (6) can’t tell; insufficient information 31. Recently, the price of gasoline went up to just over $3.00/gallon. Economic analysts currently are focusing on questions concerning the likely impacts of this price hike on the demand for gasoline. The branch of economics that deals with these questions is called: (a) normative economics (b) positive economics (0) microeconomics (d) macroeconomics 32. According to the following graph, What is the maximum level of profits? P MC $5.00 ATC Mfg. m C r (P i: A}, (200 $2.40 ‘1 D $5.» $2.00 ’0 ”" MR .771 £50,000 (a) $20,000 Q) /u) u 00 $26,000 w ix D 3:5 (0) $30,000 71: a f 314 due (a) $50,000 w r 77 37%» IL, 33. 34. 35. Suppose you have access to the following information: $70,000 $60,000 $5,000 $100,000 $85,000 $12,000 Which of the following statements is not true? (a) When DPI = $100,000, taxes equal $20,000 (b) The MPC : 5/8 (c) The MlS = —$3,500 (d) The MP8 2 1/6 Which of the following statement(s) is(are) true? .7”. m/JC 3:. 257000 a: doll} (a) The Law of Demand states that as the price of a commodity falls, we purchase more of that good. (b) Engel’s Law states that as incomes rise, we spend less of our budget on food. (0) The Law of Diminishing Marginal Utility states that our additional satisfaction declines as more of a good is consumed. (d) all of the above The following graph depicts the situation of imperfect competition in the labor market. What is the equilibrium quantity of input used and what is the price paid per unit under the condition of monopsony? PLABOR $4i75 20130 2500 QLAB 0R (hours) (a) Q Labor: P Labor: Q Labor: P Labor: (C) Q Labor2 P Labor: (:1) None ofthe above (yrs/low buffi- fihf, 10 36. Assume that a retailer sells 800 six packs of Dr. Pepper per day at a price of $3.00/sixpack. You, as an economic analyst, estimate that the cross—price elasticity between Dr. Pepper and Coca—Cola is 0.6. If the retailer raises the price of Coca-Cola by 10%, how would the sales of Dr. Pepper be affected, ceteris paribus? (a) Sales of Dr. Pepper would rise by 10% - ‘7 as (b) Sales of Dr. Pepper would fall by 48 sax—packs 0 DP C (0) Sales of Dr. Pepper would rise by 48 six-packs "0' ' '3 ' (d) None of the above d) a [2c 6 (Z: 7591 GDP 37. Assume that the own-price elasticity of rice in the domestic market is -0.4. Assume that the own-price elasticity of rice in the foreign market is -l .5. Assume that exports of rice are 60% of total rice sales. The own-price elasticity of total demand for rice is: (a) -0.16 ‘ " (b) "0-90 “£5” at .9 w cit/Mm (d) None of the above “c. C? e- ; / é» nun/.06; 38. The own—price elasticity of demand for oranges at the farm level is -0.3. Suppose that an unexpected freeze occurs resulting in a 6% drop in orange production. Orange prices are likely to. (a) fall by 20% % a q) _ %ma 2- (b) rise by 6% “m7 5“ ' C, (0) rise by 20% 0“ ...... g, % M: {20 (d) can’t tell; insufficient information iW ,. .3 39. According to the information below, which of the following statements is not true? Units of Variable Input (1) Units of Output (Q) (a) ATC : $11 (b) MC = $10 (0) The price of the input is $50/unit (d) Total fixed costs = $1,000 m 40. The shift in the budget line in the given graph is due to: Quanth 0f 5 (a) an increase in the Hamburgers 10 price of hamburgers. C (b) an increase in the price of tacos. (c) a rise in income. 10 15 ' (d) a fall in income. Quantity of Tacos ll 41. Which of the following graphs describes the use of a lump-sum tax}? (‘0) For questions 42 and 43, assume that the demand curve for six-packs of Dr. Pepper is given in the graph below: ‘ 42. The own-price elasticity for a six—pack of Dr. Pepper is: (a) Unitary elastic (b) Elastic (c) Inelastic (d) Can’t tell; insufficient information 43. The movement from point A to point B: (a) Describes Engel’s Law 6 (b) Describes a change in quantity demanded (c) Describes the law of diminishing marginal returns ' (d) Describes a change in demand 44. Suppose that the full employment level of aggregate output fora particular economy is $11 trillion. Suppose that the equilibrium level of GDP is $9 trillion. To eliminate this gap, it is advisable to: (a) lower taxes page {My ‘ (a 9 (b) lower government expenditures 9 a J P (0) lower interest rates (4) (a) and (C) 12 45. C,» Which of the following statements is @ true? (a) As disposable personal income rises, the level of consumer expenditures rises. (b) The MPC is the slope of the consumption function. (e) If the MPC = 0.7, then MIS = 0.3. (d) None of the above. The diagram below pertains to the quantity of snack foods produced per day by Frito Lay, using labor as an input. Using this diagram, answer questions 46 and 47. 46. it 47. 3 The marginal physical product between points B and C is: Quantity 5 000 __ __ _ _ (a) 500 products per hour (Snack } (b) 675 products per hour Food 4000 (c) 750 products per hour products) 3,000 None of the above (d) 1,000 If we are in the range of 4 to 8 hours of labor input per day, to what stage of production does this situation correspond? (a) Stage 1 MPPK 077’?“ «9,090 Labor (Hours) W V W” :1 5230 (b) Stage 2 AL (0) Stage 3 r . #60? mp4?) 0 ((1) Can’t say; insufficient information Mflflf fl, fl 4 ‘7 fit: Mtg/(,ij 2 WM 9* Ct“ a 635” Given the following graph and given the assumption of perfect competition, answer questions 48 to 50. 48. C/ 49. C 50. D The “breakeven” point for this firm is at a price of: (a) $100. (13) $150. (0) $200. (a) $300. If the price per unit is $300, in order to maximize profits, this firm should produce: (a) 8,000 units. (b) 10,000 units. (0) 12,000 units. (d) 15,000 units. If the firm produces 12,000 units, profits would be: (a) $3 .6 million. (b) $2.7 million. (0) $1.8 million. ((1) $900,000. 13 ...
View Full Document

This document was uploaded on 12/13/2010.

Page1 / 13

Final Exam key Spring 2010 - AGEC 105 Spring 2010 Final...

This preview shows document pages 1 - 13. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online