(1) Which of the following is a normative statement? a) a higher price of oil me

Question

(1) Which of the following is a normative statement? a) a higher price of oil means that people will buy less. b) Reapid rates of economic growth can lead to environmental damage c) During a recession, unemployment rates Rise d) The government should keep inflation from rising. (2) Last year, the price of chicken was $6 per pound and the price of fish was $7 per pound. This year, the price of chicken is $10 per pound and the price of fish is $11 per pound. All things equal, and assuming that Brian purchased both items before, what would you expect to happen to his purchaases of chicken (relative to fish) this year? a)The relative of chicken has decreased, so Brian would be expected to purchase more. b)The money of chicken has decreased, so Brian would be expected to purchase more c)The relative of chicken has increased, so Brian would be expected to purchase less. d)The relative of chicken has not changed, so Brian would be expected to purchase the same amount . e)The money price of chicken has increased, so Brian would be expected to purchase less. (3) The publication Car and driver reduces transactions costs for high-performance car buyers a) by offering dollars-off coupons to subscribers. b) by peroviding reliable information so that car buyers do not have to spend as much time doing their own research. c) by advertsing sales at discount dealerships. d. by lobbyin car makers to hold the line on prices. (4) Which of the following has the most elastic demand? a) Electricity b) salt c) Cigarettes d) Coca Cola (5) Stella receives 20 utils from her first slice of pizza, 10 utils from her second slice of pizza, and 5 utils from her third slice of pizza. Stella's marginal utilis from her third slice of pizza is: a)5 b) 15 c)35 d)10 e) Marginal utility cannot be determined from the information given. (6)The first slice of pizza yields Jeffrey 42 units of utility and the second slice yields him an additional 28 units of utility. His total utility from three slices of of pizza is 90 units of utility. The marginal utility ofthe third slice of pizza is maximising her utility buying is a) 20 units of utility, b) cannot be determined c) 23 units of utility d) 18 units of utility (7) Staci is maximizing her utility buying hamburger and steak. this wek, the price of hamburger has increased. Staci considers these goods to be close substitutes. Which of the following best describes what Staci would be expected to do? a) Staci will buy more hamburger and less steak b) Staci will buy less hamburger and less steak c) Staci will buy more hamburger and more steak. d) Staci will buy more hamburger and more steak. (8) Steffi's Style Shopp earned an economic profit of $0. this year. This meant a) Steffi earned a normal rate of profit for firms in this industry. b) Steffi lost money this year. c) Steffi did not earn an accounting profit this year. d) Steffi could earn a greater profit in some other line of work. ( 9) A proprietorship is a) a stateowned enterprise b) a business owned by two or more joint owners. c) a business owned by one individual d) a legal that can conduct business in its own name. (10) If a small town, a steel mill produces a steel mill produces air pollution. If the government does not intervene, the equilibrium price of paper will be ______ and the equilibrium quantity of paper will be______. Fill in the blanks. a) equal to the socially optimal price, equal to the socially optimal quantity. b) less than socially optimal price, less than socially optimal quantity c) greater than socially optimal price, greater than socially optimal quantity d) less than socially optimal price, greater than socially optimal quantity e) greater than the socially optimal price, less than socially optimal quantity. The government could best correct this externality by a) subsidizing the production of steel, b) prohibiting the production of steel c)taxing the production of steel.

Here are my answers. Can a tutor or anyone confirm if I am correct. I will appreciate it....thanks

1 - D

2 - A

3 - B

4 - D

5 - A

6 - A

7 - C

8 - C

9 - C

10 - C, subsidiaing the production of steel

Explanation / Answer

(1) Which of the following is a normative statement?

d) The government should keep inflation from rising. Is the normative statement as it is a suggestion.

(2) Last year, the price of chicken was $6 per pound and the price of fish was $7 per pound. This year, the price of chicken is $10 per pound and the price of fish is $11 per pound. All things equal, and assuming that Brian purchased both items before, what would you expect to happen to his purchaases of chicken (relative to fish) this year?

6 C = 7F

C= 1.6F

10C = 11 F

C= 1.1F

Therefore, relative price of chicken has decreased.

a)The relative of chicken has decreased, so Brian would be expected to purchase more.

(3) The publication Car and driver reduces transactions costs for high-performance car buyers

b) by peroviding reliable information so that car buyers do not have to spend as much time doing their own research.

(4) Which of the following has the most elastic demand?

b) salt is the most elastic as it is a homogenous commodity.

(5) Stella receives 20 utils from her first slice of pizza, 10 utils from her second slice of pizza, and 5 utils from her third slice of pizza. Stella's marginal utilis from her third slice of pizza is:

a)5

(6)The first slice of pizza yields Jeffrey 42 units of utility and the second slice yields him an additional 28 units of utility. His total utility from three slices of of pizza is 90 units of utility. The marginal utility ofthe third slice of pizza is maximising her utility buying is

a) 20 units of utility,

(7) Staci is maximizing her utility buying hamburger and steak. this wek, the price of hamburger has increased. Staci considers these goods to be close substitutes. Which of the following best describes what Staci would be expected to do?

As steak is a close substitute, staci will buy more steak and less hamburger.

(8) Steffi's Style Shopp earned an economic profit of $0. this year. This meant

a) Steffi earned a normal rate of profit for firms in this industry.

( 9) A proprietorship is

c) a business owned by one individual

(10) If a small town, a steel mill produces a steel mill produces air pollution. If the government does not intervene, the equilibrium price of paper will be ______ and the equilibrium quantity of paper will be______. Fill in the blanks.

d) less than socially optimal price, greater than socially optimal quantity

The government could best correct this externality by

c)taxing the production of steel.

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