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Multiple choice problems relating to Chapters 1 & 3 of Thomas-Maurice
This Test allows 3 attempts. This is attempt number 1.
1. Economic theory is a valuable tool for business decision makin
40. A firm is using 500 units of capital and 200 units of labor to produce 10,000 units of output. Capital
costs $100 per unit and labor $20 per unit. The last unit of capital added 50 units of output, while the last
unit of labor added 20 units of output
ECN 5050 Economic Thinking
H. Wayne Huizenga School of Business and Entreprenuership
Note on Elasticity
Elasticity is probably one of the most important concepts in economics. Economists apply the
term elasticity to a broad range of situations
Additional Questions for Homework 3
Homework 3 : elasticity
1. If the price elasticity of demand for a good is 0.6, then which of the following events is consistent
with a 6 percent decrease in the quantity of the good demanded?
a. a 0.2 percent decrease
Homework 2 Questions
Use the following general linear demand function to answer questions 1 -4
Qd = 520 - 6P +.005M + 4PR
where M is money income and PR is the price of a related product (complement
1. From this relation it is apparent that
1. Which of the following statements is false?
a. Explicit costs of using market-supplied resources entail an opportunity cost equal to the dollar cost of
obtaining the resources in the market.
b. Accounting profit is usually bigger economic profit.
37. Suppose that for a particular firm the only variable input into the production process is labor and that
output equals zero when no workers are hired. In addition, suppose that when the firm hires 2 workers,
the total cost of production is $100. When
Applying the Supply-and-Demand Model
1) The change in price that results from a leftward shift of the supply curve will be greater if
(a) the demand curve is relatively steep than if the demand curve is relatively flat.
Which of the following statements is false?
a. Explicit costs of using market-supplied resources entail an
opportunity cost equal to the dollar cost of obtaining the
resources in the market.
b. Economic profit is usually bigger than accoun
13. The market demand curve for a given good shifts when there is a change in any of the following
a. the price of the good.
b. the level of consumers' income.
c. the prices of goods related in consumption.
d. the tastes of consumers.
Price Elasticity of Demand for New York City Subway
The New York Times reported (Feb. 17, 1996) that subway
ridership declined after a fare increase: There were nearly
four million fewer riders in December 1995, the first full
month after the price of a t
Calculating the Point Price Elasticity on a Linear Demand Curve
Consider the inverse demand function:
P = A + BQ
where B is a negative number and A is the price (vertical) intercept on the PQ diagram.
Notice we can solve the inverse demand function fo
After reading Chapter 6 and working the problems for Chapter 6 in the textbook and in
this Workbook, you should be able to:
Explain how price elasticity of demand (E ) is used to measure the responsiveness
or sensitivity of consumers t
1. If the average productivity of labor is constant for all levels of output, then the
marginal productivity of labor is
Hint: Construct a table.
The next 3 questions refer to the following:
Present Value Outline
1. Money at different points of time has different values even in the absence of inflation. This is
because money today can be put in a savings account. Over the course of a year, the account will
increase by a factor (1+r), where r
Additional Questions Marginal Analysis
1. A group has chartered a plane to fly to Abaco Island in the Bahamas from Fort
Lauderdale for a day. The plane costs $3,000 ( including landing fees and fuel)
and the pilot costs $1,000. The group has already paid
25. The Interior Department recently announced that it will increase the entrance fees at Yellowstone
National Park in order to increase park revenues. The Interior Department must believe that
a. park goers are very responsive to price changes.
b. the de
The next 2 questions refer to the following:
Amount of total output produced from various combinations of labor and capital.
Units of Capital
1. If cap