REVIEW QUESTIONS FOR TOPIC 2 ON SYLLABUS: ELASTICITY
1. If the price elasticity of demand for a product is 2.5, then a price cut from $2.00 to $1.80
will (use $2.00 as a base):
A. increase the quantity demanded by about 2.5 percent.
B. decrease the quanti
Review Questions on Short-Run Costs
1. Refer to the above data. The total variable cost of producing 5 units is:
A. $61.
B. $48.
C. $37.
D. $24.
2. Refer to the above data. The marginal cost of producing the sixth unit of output is:
A. $24.
B. $8.
C. $16.
Exam I HINTS
NOTE: BELOW IS THE TEXT OF THE QUESTIONS PRECEDING THE CHOICES
ASSOCIATED WITH THE QUESTIONS.
1. Which of the following violates the LAW OF DEMAND?
2. Consider two goods, X and Y. Y is an agricultural product and there is a bad growing season
1. The demand function facing a firm is Q = 14 - (1/2)P.
Which of the following would indicate that the Law of Demand holds for
this demand function?
2. The demand function facing a firm is Q = 14 - (1/2)P.
This firm's total revenue would be maximized at
HINTS FOR EXAM II
1. Suppose that, when producing 10 units of output, a firm's AVC is $22, its AFC is $5, and its
MC is $30.
Table I
2. In Table I the average fixed cost of producing 4 units is:
3. In Table I the total fixed cost associated with 4 units i
1. Table 7-3 shows the combinations of labor and
capital required to produce various level of
output.
Table 7-3
Refer to Table 7-3. Assume that capital remains
fixed while labor is the only variable input used
in production. If the firm is currently produ
To do the math for the Bond problem, you will need to deal with exponents. Here is an exercise.
ALGEBRA OF THE BOND CASE PROBLEMS
1.
X -.9 = X.1
Find the numerical value of X.
ANSWER: MULTIPLY BOTH SIDES BY X+.9 . GET 1 = X SO X =
2.
4X-.5 = X.5
Find the
BOND CONSTRUCTION COMPANY CASE
Upon completing a bachelor's degree program in civil engineering in 1979,
Allen Bond opened his own construction business that specializes in
building garages for residential homes. By 1985, the firm had grown
substantially
TRAT on Costs in Bond Case: Time to do this:
10 minutes
Place answers on separate piece of paper.
On the paper put the following:
TRAT on Bond-fixed vs. variable costs
Please answer the following questions about the
Bond case. Note that whether a cost is
REVIEW QUESTIONS ON TOPIC 1 ON SYLLABUS: SUPPLY AND DEMAND
1.
The law of demand states that:
A. price and quantity demanded are inversely related.
B. the larger the number of buyers in a market, the lower will be product price.
C. price and quantity deman
Review Questions on Topic Three: Short-run Production and Marginal Utility Analysis
1. The basic characteristic of the short run is that:
A. barriers to entry prevent new firms from entering the industry.
B. the firm does not have sufficient time to chang
Review Questions on Short-Run Costs
*24 is the fixed cost below*
1. Refer to the above data. The total variable cost of producing 5 units is:
A. $61.
B. $48.
C. $37.
D. $24.
2. Refer to the above data. The marginal cost of producing the sixth unit of outp
1
IRAT-TRAT on Short-Run Costs
ECONOMICS 315 FALL-2013
1.
Consider the diagram below. Why does the distance between the AVC and
the ATC curve narrow as Q gets larger.
A.Total cost become smaller
B. Average Fixed Costs become smaller
C. Total fixed costs b
1
IRAT-TRAT ON Utility Theory and Short
Run Production - Fall 2013
TABLE I
TABLE II
TABLE III
2
1. Refer to the data in Table I. If the consumer has
a money income of $52 and the prices of J and K
are $8 and $4 respectively, the consumer will
maximize her
1
IRAT and TRAT on Elasticity- Econ. 315-Fall 2013
NAME_
a010
1. If the price elasticity of demand for a product is 2.5, then a price increase from $2.00 to $2.20 will (use
2.
3.
4.
5.
6.
7.
$2.00 as a base):
. increase the quantity demanded by about 250
1
Unit 1 - SS-DD - Econ. 315-FALL 2013 IRAT and TRAT
_ Name
I
1. The law of DEMAND states that:
. price and quantity supplied are
directly related.
. the larger the number of sellers in a
market, the higher will be product
price.
. price and quantity supp
ELASTICITY APPLICATION
The price of oil is $30 per barrel and the price elasticity over the short run is constant and
equal to .5. The long-run elasticity of demand is 1.2. An oil embargo reduces the quantity
available by 20 percent. 1. Which is the short