16) If the demand for a good increases, the demand for the factors used to produ
ID: 2441583 • Letter: 1
Question
16) If the demand for a good increases, the demand for the factors used to produce the good A) increases. B) decreases. C) stays the same. D) could increase, decrease, or stay the same.
17) People buy fewer used cars when their income increases. Based on this fact, used cars are A) a complement. B) a substitute. C) a normal good. D) an inferior good.
18) When the price of a product falls from $12.00 to $8.00, the quantity demanded increases from 900 units to 1100 units. The price elasticity of demand equals A) 50.0. B) 2.50. C) 2.00. D) 0.50. E) None of the above answers is correct.
19) Median U.S. household income is closest to A) $15,000. B) $128,000. C) $30,000. D) $93,000. E) $55,000.
20) Hot dogs and hot dog buns are compliments for consumers. If the price of a hot dog rises, then the equilibrium price of hot dog buns ____ and the equilibrium quantity ____. A) does not change; does not change B) rises; decreases C) might fall, rise, or not change; increases D) falls; increases E) falls; decreases Target Set low prices Set high prices Set low prices T: $19 million W: $1 million T: $14 million W: $13 million Walmart Set high prices T: $8 million W: $7 million T: $6 million W: $8 million
21) Target and Wal-Mart must decide whether to lower their prices, based on the potential economic profits shown in the table above. (A “T” indicates Target’s profit and a “W” indicates Wal-mart’s profit.) Who has a dominant strategy? A) Walmart has a dominant strategy but Target does not. B) Target has a dominant strategy but Walmart does not. C) Both Walmart and Target have dominant strategies. D) Neither Walmart nor Target has a dominant strategy E) More information is needed to determine if either Target or Walmart has a dominant strategy.
22) A common resource is ____ and ____ and a competitive market with no government intervention uses ____ allocatively efficient quantity. A) rival; nonexcludable; less than the B) nonrival; excludable; more than the C) nonrival; nonexcludable; less than the D) rival; nonexcludable; more than the E) rival; excludable; the
23) Lisa opens an ice cream shop in Gainesville, but it turns out that the Director is her only customer. Every week, her total revenue (all from the Director) is $300. Her weekly fixed costs (the rent, machines, etc.) are $300. Her weekly variable costs (the ice cream, napkins, etc.) are $200. Lisa ____. A) incurs an economic loss by remaining open and should close down in the short run. B) incurs an economic loss by remaining open, but should remain open in the long run. C) incurs an economic loss by remaining open, but should remain open in the short run. D) earns a normal profit by remaining open, but should close down in the long run. E) None of the above answers are correct.
24) The demand curve for low-skilled labor lies to the left of the demand curve for highskilled labor because A) there are more high?skilled workers than low?skilled workers. B) high?skilled workers require more compensation than low?skilled workers. C) high?skilled workers are more productive than low?skilled labor. D) firms do not see any difference between high?skilled labor and low?skilled labor.
25) Sarah’s Garage Cleaning is a perfectly competitive firm that currently cleans 40 garages a week. Sarah’s marginal cost is $35, her marginal revenue is $40, and her average total cost is $40. Sarah is A) maximizing her profit and is earning an economic profit. B) not maximizing her profit and is making a normal profit. C) maximizing her profit and is earning a normal profit. D) might be maximizing her profit and is incurring an economic loss. E) None of the above answers are correct.
26) A natural monopoly has a deadweight loss if I. it is regulated according to an average cost pricing rule II. it is regulated according to a marginal cost pricing rule III. it is unregulated. A) only I. B) only II. C) I and II. D) I, II, and III. E) I and III.
27) Suppose that fast food is an inferior good and people’s incomes increase. As a result, the equilibrium price of fast food ____ and the equilibrium quantity ____. A) rises; increases B) rises; decreases C) falls; increases D) falls; decreases Target Set low prices Set high prices Set low prices T: $19 million W: $1 million T: $4 million W: $3 million Walmart Set high prices T: $5 million W: $3 million T: $2 million W: $2 million
28) Target and Wal-Mart must decide whether to lower their prices, based on the potential economic profits shown in the table above. (A “T” indicates Target’s profit and a “W” indicates Wal-mart’s profit.) Who has a dominant strategy? A) Walmart has a dominant strategy but Target does not. B) Target has a dominant strategy but Walmart does not. C) Both Walmart and Target have dominant strategies. D) Neither Walmart nor Target has a dominant strategy
29) The figure above shows the market for pizza. Suppose the number of companies producing pizza increases. Which figure shows the effect of the increase in the number of pizza producers? A) Figure A B) Figure B C) Figure C D) Figure D Price (dollars per pizza) Price (dollars per pizza) Quantity (pizzas per month) Quantity (pizzas per month) Figure A Figure B D1 D2 S D2 D1 S Price (dollars per pizza) Price (dollars per pizza) Quantity (pizzas per month) Quantity (pizzas per month)
30) Remember, if you have if you have a question about your test score, email the grader but if you have a question about a question, email me. BE SURE TO ANSWER THIS QUESTION; AND ANSWER GETS FULL CREDIT. In the meanwhile, the director is so stupid A) he threw a rock at the ground and missed. B) he took a ruler to bed to see how long he slept. C) he asked “What’s the number for 911?” D) he ordered his sushi well done. E) his brain was donated to science and science rejected it.
Explanation / Answer
16).
Demand for the factor is derived demand. Hence, when demand for a good increases, the demand for factors rise as well
Right answer is : (A)
17)
Increase in income leads to fall in demand for used car. Hence, this is an inferior good. Demand for an inferior good falls when income increases.
Right answer is (D)
18)
Percentage change in price = 4/12
= 33 .22%
Percentage change in Quantity = 200 / 900
= 22.22 %
Elasticity of demand = 22.22/33.33
= 0 .66
Right answer (E)
19)
In 2017, US median income was Close to 59,000, Hence most close answer is : (E)
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