University of Louisiana, Lafayette - ECON 528 / ECON528 Midterm Exam

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Started on Sunday, 23 September 2018, 8:02 PM State Finished Completed on Sunday, 23 September 2018, 8:37 PM Time taken 34 mins 51 secs Marks 20.00/20.00 Grade 10.00 out of 10.00 (100%) Question 1 Cor... rect Mark 1.00 out of 1.00 Managerial economics Select one: a. helps managers make decisions in the face of scarcity. b. ensures managers always make good decisions. c. describes how pay for managers is set. d. explains which products consumers will buy. The correct answer is: helps managers make decisions in the face of scarcity. ECON528-850-ECON528-010-Question 2 Correct Mark 1.00 out of 1.00 Economic costs of production differ from accounting costs in that Select one: a. economic costs include expenditures for hired resources while accounting costs do not. b. accounting costs are always larger than economic cost. c. economic costs add the opportunity costs of a firm using its own resources while accounting costs do not. d. accounting costs include expenditures for hired resources while economic costs do not. The correct answer is: economic costs add the opportunity costs of a firm using its own resources while accounting costs do not.Question 3 Correct Mark 1.00 out of 1.00 How many pounds of apples should Margie sell to maximize her profit? Refer to Table 12-2. Table 12-2 lists the various pounds (lbs.) of apples that Margie Stattler can sell. Assume that Margie operates in a perfectly competitive market. Select one: a. 400 pounds b. This cannot be determined without knowing Margie's total or marginal production costs. c. 300 pounds d. This can be determined only when all of the values for market price, total revenue, average revenue and marginal revenue are given. The correct answer is: This cannot be determined without knowing Margie's total or marginal production costs.Question 4 Correct Mark 1.00 out of 1.00 Figure 12-9 shows cost and demand curves facing a profit-maximizing, perfectly competitive firm. Identify the short-run shut down point for the firm. Select one: a. a b. b c. c d. d e. The correct answer is: bQuestion 5 Correct Mark 1.00 out of 1.00 Sally quit her job as an auto mechanic earning $50,000 per year to start her own business. To save money she operates her business out of a small building she owns which, until she started her own business, she had rented out for $10,000 per year. She also invested her $20,000 savings (which earned a market interest rate of 5% per year) in her business. You are given the following information about the first year of her operations. Total revenue: $120,000 Cost of labor: $40,000 Cost of materials: $15,000 Equipment rental: $5,000 Foregone Salary: $50,000 Foregone Interest: $1,000 Opportunity cost of Building: 10,000 Which one is the correct answer? Select one: a. In the first year, economic profit is -$1,000 and accounting profit is $60,000 b. In the first year, economic profit is $120,000 and accounting profit is $61,000 c. In the first year, economic profit is $70,000 and accounting profit is $60,000 d. In the first year, economic profit is $60,000 and accounting profit is $60,000 The correct answer is: In the first year, economic profit is -$1,000 and accounting profit is $60,000Question 6 Correct Mark 1.00 out of 1.00 A firm that can effectively price discriminate will charge a higher price to Select one: a. customers who have the more inelastic demand for the product. b. buyers who belong to the largest market segment. c. buyers who are members of the smallest market segment. d. customers who have the more elastic demand for the product. The correct answer is: customers who have the more inelastic demand for the product. Question 7 Correct Mark 1.00 out of 1.00 Selling tickets in the orchestra region of the Metropolitan Opera for $55 and selling tickets in the upper balcony for $28 to listen to Luciano Pavoratti describes which type of price discrimination? Select one: a. first-degree price discrimination b. bundling c. third-degree price discrimination d. This is not necessarily price discrimination. The correct answer is: third-degree price discriminationQuestion 8 Correct Mark 1.00 out of 1.00 If a firm charges customers $ 200 per unit of the first unit purchased, and $160 per unit for each additional unit purchased in excess of one unit. Then, what is the economic term of this strategy? Select one: a. Third -degree price discrimination b. First-degree price discrimination c. Profit maximization pricing d. Second-degree price discrimination The correct answer is: Second-degree price discrimination Question 9 Correct Mark 1.00 out of 1.00 If the Apple iPhone and the Samsung Galaxy are considered substitutes, then, other things equal, an increase in the price of the iPhone will Select one: a. increase the quantity demanded for the iPhone. b. increase the quantity demanded for the Galaxy. c. increase the demand for the Galaxy. d. decrease the demand for the iPhone. The correct answer is: increase the demand for the Galaxy.Question 10 Correct Mark 1.00 out of 1.00 If the price of automobiles was to increase, then Select one: a. the quantity demanded of gasoline would decrease. b. c. the demand for gasoline would decrease. d. the demand for gasoline would increase. e. the supply of gasoline would increase. The correct answer is: the demand for gasoline would decrease. Question 11 Correct Mark 1.00 out of 1.00 Studies have shown links between calcium consumption and a reduction in osteoporosis. How does this affect the market for calcium? Select one: a. The calcium supply curve shifts to the right because of a change in tastes in favor of calcium. b. The calcium demand curve shifts to the right because of a change in tastes in favor of calcium. c. The calcium supply curve shifts to the left because this new information will increase the price of calcium. d. The calcium demand curve shifts to the left because this new information will increase the price of calcium. The correct answer is: The calcium demand curve shifts to the right because of a change in tastes in favor of calcium.Question 12 Correct Mark 1.00 out of 1.00 Buyers rush to purchase stocks in California vineyards following a forecast of a 30 percent decline in this year's grape harvest. What happens in the California wine market as a result of this announcement? Select one: a. The supply curve for California wine shifts to the left in anticipation of lower quantities in the future. b. The supply curve for California wine shifts to the right in anticipation of higher prices in the future. c. The demand curve for California wine shifts to the right in anticipation of higher prices in the future. d. The demand curve for California wine shifts to the left in anticipation of higher prices in the future. The correct answer is: The demand curve for California wine shifts to the right in anticipation of higher prices in the future. Question 13 Correct Mark 1.00 out of 1.00 If the cross-price elasticity of demand for two goods is 1.25, then Select one: a. the two goods are substitutes. b. the demand for one of the goods conforms to the law of demand, but the demand for the other good violates the law of demand. c. one of the goods is normal and the other good is inferior. d. the two goods are luxuries. The correct answer is: the two goods are substitutes.Question 14 Correct Mark 1.00 out of 1.00 Assume that a 4 percent decrease in income results in a 6 percent increase in the quantity demanded of a good. The income elasticity of demand for the good is Select one: a. b. negative, and the good is a normal good. c. positive, and the good is an inferior good. d. negative, and the good is an inferior good. e. positive, and the good is a normal good. The correct answer is: negative, and the good is an inferior good. Question 15 Correct Mark 1.00 out of 1.00 In September 2012, the average price of gasoline in the United States was $3.91 per gallon and consumers bought 5 percent less gasoline than they had during September 2011, when the average price was $3.66 per gallon. Based on these numbers, what was the arc price elasticity of demand (midpoint formula) for gasoline from September 2011 to September 2012? Select one: a. -2.96 b. -0.76 c. -6.75 d. -0.33 The correct answer is: -0.76Question 16 Correct Mark 1.00 out of 1.00 Which of the following statements about the price elasticity of demand is correct? Select one: a. Demand is more elastic in the long run than it is in the short run. b. Demand is more elastic the smaller the percentage of the consumer's budget the item takes up. c. The absolute value of the elasticity of demand ranges from zero to one. d. The elasticity of demand for a good in general is equal to the elasticity of demand for a specific brand of the good. Your answer is correct. The correct answer is: Demand is more elastic in the long run than it is in the short run. Question 17 Correct Mark 1.00 out of 1.00 The law of diminishing marginal returns states that increases in the variable input reduce the total product. Select one: a. False b. True Your answer is correct. The correct answer is: FalseQuestion 18 Correct Mark 1.00 out of 1.00 We should use relatively more labor if we learn that the marginal product per dollar of labor expenditures is less than a marginal product per dollar of capital expenditures. Select one: a. True b. False Your answer is correct. The correct answer is: False Question 19 Correct Mark 1.00 out of 1.00 If production displays economies of scale, the long-run average cost curve is Select one: a. upward sloping. b. above the short-run average total cost curve. c. downward-sloping. d. above the long-run marginal cost curve. Your answer is correct. The correct answer is: downward-sloping.Question 20 Correct Mark 1.00 out of 1.00 Over time, more experienced workers will demand higher wage and therefore, will lead to an increase in the cost of production for the producers Select one: a. True b. False Your answer is correct. The correct answer is: False Return to: Exam 1 ! [Show More]

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