SAMPLE MULTIPLE CHOICE QUESTIONS
Suppose that elasticity of demand for a product is 3.5 when its price decreases by 2 percent.
We can conclude that quantity demanded a. increased by 7 percent, b. decreased by 7
percent, c. decreased by 9 percent, d. de
THEORY OF THE FIRM
1. What is the goal of business firms?
Firms (corporations) exist and make decisions in order to maximize profits.
2. Explain the difference between the short run and the long run.
Short run is the period of time which the quantity of a
10. The production function of a widget firm yields the following (the price of capital is
$2/unit and the price of labor is $10/unit):
a. Fill in the blanks.
What is the average tot
Principles of Microeconomics
STUDY GUIDE #2
How to use this study guide. First, making use of your lecture notes and the text, answer
the questions below. They reflect all of the material covered in the course since the last test.
Then, work th
PRE-TEST #2 PROBLEM SET
Assume that an increase in the price of a product from $1.00 to $2.25 per unit leads
to a decrease in the quantity demanded from 150 to 120 units. Calculate the
numerical value of the elasticity of demand and interpret the resul
Super Size Me
Obesity is currently a prominent issue in the United States. In South Carolina,
where obesity is ranked eighth highest in the nation, it is questioned what actions the state
should take to fix the problem. Focusing on junk food for