1) If the elasticity of demand for dry cleaning is -0.85 in the range between $3
ID: 1243737 • Letter: 1
Question
1) If the elasticity of demand for dry cleaning is -0.85 in the range between $3 and $2 per item, how will total consumer expenditures on dry cleaning be affected when dry cleaners lower prices from $3 to $2? a) Total consumer expenditures will decrease. b) Total consumer expenditures will remain unchanged. c) Total consumer expenditures will increase. d) We cannot determine what will happen to total consumer expenditures unless we also know something about the dry cleaners' costs. 2) If the price of movie admission declines and in response you attend twice as many movies as you would otherwise, then your expected marginal utility from the last movie you choose to see will be zero. True or False 3) When does a decision NOT result in an opportunity cost? a) when the work required to follow through on the decision is less than anticipated b) when someone else consumes an item you have paid for c) when you consume an item paid for by someone else d) when the resources involved are not scarce 4) The slope of the production possibilities curves tells you a) the quantity of all inputs available for productive uses. b) the length of time required to switch between two different economic activities. c) how much of one good must be sacrificed in order to produce more of the other. d) the size of the labor force. 5) The president of the United States promises to simultaneously produce more defense goods without any decreases in the production of other goods. Under which of the following conditions could such a promise be valid? a) if the United States were producing inside its production possibilities curve b) if the United States were producing to the right of its production possibilities curve c) if the United States were producing at a point on its production possibilities curve d) None of the above; the production possibilities curve must shift to the right. 6) Fred and Ann both decide to see the same movie when they are given free movie tickets. We know that a) both bear the same opportunity cost since they are doing the same thing. b) neither bears an opportunity cost because the tickets were free. c) both bear an opportunity cost since they could have done other things instead of see the movie. d) the cost of going to the movie is greater for the one who had more choices to do other things.Explanation / Answer
b true c c a d
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