Practice Quiz 3
Question 1 of 17
A monopolistically competitive firm is producing an output level at which marginal revenue is greater
than marginal cost. This firm should _ quantity and _ price to increase profit or
A. increase; decrease
Durlng March, a rm expects to Its total sales to be $151, Its total valuable costs to be $94,".uf', and Its
total xed costs to be HINDU. The cuntrlbutlon margln for March I5:
0 . $52,300.
Contrlbutlnn margln = Sa
Consider HIE following scenario:
Antonio is training for a triathlon, a timed race that combines swimming, biking, and anning. Each hour he spends swimming is an
hour 1at he can't spend biking or running.
Which basic principle of individual choice doe
4. Scarcity, opportunity oosl, and marginal analysis
Consrder the following scenano:
Sharon is training for a triathlon, a timed race mat combines. swimming, biking, and mnning. Sharon has only 2D hours per Iweek
that she can devote to training for her
Attempts: 1.8 Keep the Highest: 1.8!:
5. Ination and unemployment
Suppose that the government lerieves the economvr is producing goods and services lsevond its optimal level. The government therefore decides
to decrease the quantity:r of mDnEy' in the eco
6. Normative and positive statements
The foliowing ta hie contains statements that provide some anaivsis of poiicies that address taxes.
Categon'ae eadrr of obese statements as either positive or nonnative.
Statement Positive Normative
Taxes are too high.
3. Shifts in production possibilities
Suppose Spain produces two types of goods: agricultural and capital. The following diagram shows its current production possibilities frontier for
aifalfa, an agricultural good, and industrial robots, a capital good.
Detennfne whe'rer ead of the fouwing tanks would more Iikeiy to be Studied in mJU'DECDHDmeS or mammmics.
The effects. of the internet on the pricing of u5ec| cars.
' ' cfw_E O
The effect of a cigarette tax on the quantity
2. Ellicisenclilr in the production possibilities model
Suppose Japan produces on|'|.ur two goods: corn and cars. The following graph shows Japan's current production possibilities frontier, along with
six output combinations. represented by black points
1- The circular flow model
The foiewing cfw_agram presents a cinderew model at a simple emmmv. Ihe ute: set at anows cfw_stmwn in green stmws Hie ew ef delars,
and HIE inner set of arrows [shown in red] shows the mnespontwg ew 0f inputs and mltputs.
Attempts: 1 Keep the Highest: 1 i 1
5. The interaction of individual choices
Immediateiy after an ice storm brought down power lines throughout the region, hardware stores were soio out of batteries and ashiights.
However, within a coupie of days, special
1. Understanding opportunity cost
Before you started applying for college, a job recruiter offered you a full-time cashier position at a department store, earning an altertax salary
of $28,000 per year. However, you turn down this offer and attend your rs
Durlng Its most recent scal year, Dover, Inc; had total sales of $3,1801DDD. Contnbutlon margln amounted to
$1.49Cl and pretax Income was ssespoo. What amount should have been reported as xed costs In the
companfs oontnbutlon margIn Income statement for t
Award: 33 out of 333 pains
Locus Company has total xed costs of $120,500. Its product sells for $55 per unlt and yanable costs amount
to $55 per mm. Next year Locus Company 1III-fishes to earn a pretax Income that equals 10% of xecl costs.
Hoy.r many unlt
Watson Cam parry.r has mummy fixed coats of $9,000 and a HIDE; camrlbuuan margln ratio. If 1110 t:0rr10ar15,1r
has set a target mommy Income of $14,500, what dollar arnaunt of sales must be made 10 produce the target
O . $234,000
The fellewlng Information Is evelleble for a company's cost of sales ever me last ve months.
Units Cost Inf
Month sold sales
January 0 $21300
Febmary T20 $33,000
Uslng the hlgh-lew method, the esumsted valuable cast of sale
The budgeted Income statement presented beloII-lr Is for Burkett Corporatlon for the comlng scal 1great
Compute the number of unIts that must be sold In order to achleve a target pretax Income of $209,500.
Sales cfw_51000 unlts
The budgeted Income statement ptesented below 15 for Eturkett Cdrpdradn for the camlng scal year. If
Eturkett Cdrpdratldn 15 able to achieve the budgeted levet of sales, Its mergln of safety In dollars would be
cfw_Do not round I'ttemtednte culmlatlntmj:
Consider die following scenario:
Eol is training for a triathlon, a timed race that combines swimming, hiking, and running. While Bob usuallyr practices swimming for
two hours per day, he decides to continue for an additional hour because 1e pool is les
4. |.'3Ipportunit'.lr cost and production possibilities
Lucia is a skiHed toy:r maker who is able to produce both cars and puzzles. She has 8 hours a d211,:r to produce toys. The foliowing table shows the
dairyr output resulting Jfrom various possible com
Gonoept: Functions of Money 2
Which of the following is NOT a function of money?
(:3 A. Unitofaccount
Ct B. Store of value
If C. Medium of exchange
(it: D. Acceptability
V Good job!
1. Medium of exchange. 1When sellers of goods and services are willing to
1n. Undershncllng how shlrklng decreases mm output in Ail
Madeline sells bottled water from a small stand by the beach. 0n the last da'pr of summer vacation, there are mam:f
people on the tleachIr and Madeline realizes that she can make a lot more money'
Johan ineeeta $5,000 in a project that is expected to earn a at; annual rate of return. The
earnings will be reinvested in the project each year for ve years. Calculate how much money
he IInrlll have at the end of ve years by uslng the Future Value ufftah
Review the statements below and choose the one which Is correct regarding interest as it
relates to money.
V Your answer is correct.
Interest Is another name for the face amount of debt which was honcwed.
Interest is the ownership percentage i
The oorreot answer Is shown.
Show your understanding of Interest by completing the followlng sentence:
Interest is the amount of money earned (earned, owed by the owner of an asset and oaidlipaid, eon-red by
the borrower of the asset for Its use.
5. Economic growth and public policalr
Suppose iamahonda. a Japaneseowned motorcvcle manufacturer. builds a production plant in Alabama.
This is an example of foreign direct 1 investment in the United States.
Enqanation: Ciose Exptanaon A
2. Growth experiences
Small differences in the rate of economic growth can lead to large dit'Ferences in living standards. Consider two countries, Upper Richistan and
Lower Richistan. Currently, real GDP per person [average income] is $100,000 in Upper Ri
4. Productivity and growth policies
Consider a small island countnir whose only industry is weaving. The following table shows information about the small economy in two differ:
Complete the table by calculating ohysrtai capital per worker as wail
5. The catchup eect
Consider the economies of Hermes and Traifamadore, both of which produce gobs of goo using oniy toois and workers. Suppose that, during: the
course of cit years, the tenet of physical capitai per worker rises by 5 toois per worker in e
5. Thewlnner's ours: M As: a
.IacitIr Jason, and Patrick are all interested In the chair being
auctioned off at the Jean Auction House in a rst-price sealed-bid
auction. cfw_What Is this kind of auction?) The only Infon'natlon the
bidders have about the c
Attempts: 1 ' ' ' keeptne Highest: 1:4
B. How asymmetric information prevent-s gains from trade A; A3 a
Albert sees a classified ad offering a used digital camera for $5. On the opposite page, he sees a big color ad from a
national electronics chain
13. A supply and demand puzzle
111E following graph shows the market for laptops in 200?. Between EDI? and EEDB, the eguilibn'um price of laptops remained constant, but the
equilibrium quantityr of laptops increased. From this, you can conclude that betwe
When a country has a comparative advantage in thE production of a good, it means that it can produce this good at a lower opportunity cost
than its trading partner. Then the country will specialize in the producljon of this good and trade it for other goo