This preview shows pages 1–11. Sign up to view the full content.
This preview has intentionally blurred sections. Sign up to view the full version.
View Full DocumentThis preview has intentionally blurred sections. Sign up to view the full version.
View Full DocumentThis preview has intentionally blurred sections. Sign up to view the full version.
View Full DocumentThis preview has intentionally blurred sections. Sign up to view the full version.
View Full DocumentThis preview has intentionally blurred sections. Sign up to view the full version.
View Full Document
Unformatted text preview: 1. Costs that can be reduced by altering production are referred
to as. eunk costs. 35%;.
Jam/43 W $76116. 6194?}; MW Mdf 2. If the price of a good has increased and the quantity of the good seld has decreased, the demand curve for the geed has
shifted to the right. Jea‘mMﬁWré‘rZwa 3. l1i'ii'ith a price inelastic demand curve, price and total revenue meve in the same direction as you move aleng the demand
curve. 4% ML
Ema: ‘6 75
{life ﬁrst}:
Ceﬂ “ﬁr’iﬁ 4. Every day at the local fish market1 there are 50 demanders
who are willing to pay up to $45 for a fish. 35 demanders who
are willing to pay up to 825 for a fish, and 1D demanders who are
willing to pay up to $20 for a fish. No demander wants more than
one fish. There are 20 fishermen who sell fish in this market.
Every day the fishermen arrive with the day‘s catch. Each
fisherman has spent $10 on fuel for his boat the night before.
but they have no other costs. Fish that are not sold on the same
day they are caught will rot and become worthless. Every day
the fish market reaches a competitive equilibrium price for the
day's ﬁsh. On Monday each fisherman caught 2 fish, on Tuesday
each fisherman caught 3 fish, on Wednesday each ﬁsherman
caught 4 fish. and on Thursday each ﬁsherman caught 5 ﬁsl1.Un which day did the fishermen make the greatest profit?
{a} Monday [la] Tuesday
(c) Wednesday
(d) Thursday pftliﬂ gamed? geummﬁ ﬂﬁﬁ J!—
”' a
MORAN? aes— iz‘D '5 ljé’eo igloo
 a
Team? ea; [35; ‘5' ifoa iﬁoza
Wee{inc we“ 8’0 tame a} m;
M? 3’ r 3 O a fact)
7ime C; [5’25  5. it is late August. The nation's corn crop is ripe in the fields,
but none of it is harvested. It is known that if it is all harvested.
the total amount of corn harvested will be 20 million tons. The
cost of harvesting the corn and bringing it to market {rather than
leaving it in the fields and glowing it down] is $20 per ton.
Farmers have spent $30 per ton on preparingT fertilizing, and
cultivating the corn ﬁelds. On a graph where quantity is on the
horizontal axis {measured in millions of tons) and the price is on
the vertical axis {measured in dollars per ton), the sugglyr curve in late August for this year's corn delivered at harvest time
consists of (a) a line running from {0,0} to (0.20): a line from [0,120] to {20,20}, and a line running vertically straight up from {20,20}. {b} a line running from (0,0) to {20. 0} and a line running vertically
straight up from {20,0}. (c) a line running from [0.0] to {0,50}, a line from {0.50} to {20.50}. and a line running vertically straight Up from [20,501. [d] a horizontal line at the height of 20. at} 5 a 6. The demand curve for this year‘s oorn harvest in the market
desoribed in the previous question is given by the equation
P=1DD_50, where Q is the millions of tons of corn that are sold
and P is the price per ton of corn. Assuming the market reaches
a competitive equilibrium. hovv manyr million tons of corn will he
brought to market ? [a] 10
(b) 14
{o} 16
id} 2D WMSBZCQ f9=15t39. bmﬂll‘cﬂﬂﬁ P: T. A drought in the southwest reduced the sUppiy of
watermelons produced in Arizona this year. Despite their reduced crop, watermelon growers in Arizona actually earned
more total revenue this year than last year. Assuming the demand curve did not change. the increase in total revenue is
evidence that (a) the price elasticity of supply for watermelon is between D and
+1.0. {h} the price elasticity of demand for watermelon is between 'l.ﬂ
and D. (o) the price elasticity of supply for watermeion is greater than
+1.0. [d] the price elasticity of demand for watermelon is less than 
1.0. 8. Every day at the local fish market. there are 100 demanders
who are willing to pay up to $30 for a fish, 100 demanders who
are willing to pay up to $20 for a fish. and 10D demanders who
are willing to pay up to S10 for a fish. No demander wants more
than one fish. There are 20 fishermen who sell fish in this
market. Every day the fishermen arrive with the day's catch.
Each fisherman has spent $100 on fuel for his boat the night
before, but they have no other costs. Fish that are not sold on
the same day they are caught will rot and become worthless.
Every day the fish market reaches a competitive equilibrium
price for the day*s fish. On Monday each fisherman caught 3
fish. On Tuesday. each fisherman caught 4 fish, on Wednesday.
each fisherman caught 8 fish, on Thursday, each fisherman caught 12 fish, and on Friday each fisherman caught 16 fish.
What was the price of fish on Thursday? {a} $35
[hi $30
{c} $20
{:1} $15
(e) 313 9. On which day did the fishermen make the greatest profit?
(a) Monday {b} Tuesday;r
{C} WEdneedey
{El} Thursday
(E) Friday pYLi'ﬂ QMEHF‘ITL? ﬁlﬂb’fmf prd‘iéu‘i M 530 at} @330 "26:35 w “5’30 16%? 33.; 5105’ iqw
:31 (2‘06? T ﬁlo amigo J 5:) — L1; 0063 F .45? 0 3:90" Ly
¢MMM,WWM W 10. Suppose the cost of fuel for a day's fishing rose from $100 to
$150. Assuming that the fishermen all continue to fish. what would be the effect or this increase on the price of fish on those
days when each fisherman catches 12 fish? {3} There would be no effect on price. {b} The price per fish would rise by about $12.50 per ﬁsh.
(c) The price of fish would rise by about $6 per fish.
(d) The price of fish would fall. [ {e} The price of fish would rise by about $3 per fish. é’wmﬁ cod/f! so; 51 “WM W _ _ folsec.
W artists ﬁfﬁfc’f W’% m” firich . 11. An improvement in the 1lilieather led to an increase cf 80% in
the size of the corn crop. The demand curve for cern did not change. The price ctccrn fell by 20%. Frcm this we can
conclude that: ( a} The elasticity of demand for corn is «4‘
{In} The elasticity cf demand fcr ccrn is‘lM.
[c] The elasticity cf supply for corn is 4
{d) The elasticity of supply fer corn is tie.
is] The elasticity of sUpply for sum is 1i4 iW. 9’7!me mm: m {MW W gmw ID1—
ﬂ" A
ECL: ﬂ;
gaaoﬁ '—“_.—
_._—. ...
View
Full
Document
 Spring '07
 Bergstrom

Click to edit the document details