Exam_2.B - NAME TEST FORM B Exam#2 DO NOT OPEN UNTIL...

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Version 5 Page 1 NAME ________________________ TEST FORM: B Exam #2 DO NOT OPEN UNTIL INSTRUCTED TO DO SO - Fill in your name at the top of this page and on your bubble sheet - Fill in your student ID, section and test form B on your bubble sheet
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Version 5 Page 2 Exam 2 Directions: Please choose the best answer for each question. There is no penalty for wrong answers. Thus, if you do not know the answer, it will not hurt you to guess. 1. Suppose that the price elasticity of demand for coffee is 0.5 and that the price of coffee increases by 10% . Which of the following would you expect? A) The quantity of coffee sold will decrease by 20%. B) The quantity of coffee sold will decrease by 5%. C) The quantity of coffee sold will increase by 20%. D) The quantity of coffee sold will increase by 5%. 2. Beef and chicken are substitutes. Suppose that the price of chicken increases. Which of the follow is true? A) Demand for beef will decrease. B) Demand for chicken will decrease. C) Demand for beef will increase and demand for chicken will decrease. D) Demand for beef will increase. 3. The marginal product of labor is A) the increase in labor needed to produce one more unit of output. B) the increase in costs that would result from hiring one more worker. C) the increase in output that would result from adding one more worker. D) the increase in costs that would result from producing one more unit of output. 4. Suppose that quantity of donuts demanded at an income of $6,000 is 10 and the quantity of donuts demanded at an income of $10,000 is 30. Using the midpoint formula calculate the income elasticity of demand for donuts. A) 1.5 B) 0.5 C) 1.0 D) 2.0 5. The difference between the long run and the short run is A) in the long run average cost is decreasing. B) in the long run all costs are fixed. C) the short run is less than a year. D) in the long run all costs are variable.
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Page 3 6. Suppose the government imposes a tax of $1.00 per cup of coffee paid by the suppliers. Which of the following is true? A) The price paid for coffee increase by more than $1.00. B) The price paid for coffee will increase by less than $1.00. C) The price paid for coffee will increase by $1.00. D) The price paid for coffee will decrease by less than $1.00. Use the following to answer questions 7-8: Q= output, FC = fixed cost, VC= variable cost, TC= total cost, MC= marginal cost, ATC= average total cost, AFC= average fixed cost, AVC= average variable cost 7. (Table: Output and Costs) Using the information in the table, when quantity equals three, average total cost equals: A) 10 B) 17 C) 13 D) 8 8. (Table: Output and Costs) What is the variable cost when producing 4 units? A) 37
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This note was uploaded on 11/11/2011 for the course EC 201 taught by Professor Haider during the Spring '10 term at Michigan State University.

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Exam_2.B - NAME TEST FORM B Exam#2 DO NOT OPEN UNTIL...

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