Question

(67)Suppose that when the price of cherries is $10 per lb, the quantity supplied of cherries is 20 lbs. When price of cherries is $6 per lb, the quantity supplied of cherries is 12 lbs. The price elasticity of supply is:

(a)1.7

(b)1.0

(c)2.5

(d)0.8

(68)If an excise tax is placed on the producer of a product that has a perfectly inelastic demand, given ceteris paribus then:

(a)The entire tax will be paid by the producer

(b)The consumer and producer will equally share the burden of the tax

(c)The entire tax will be paid by the consumer

(d)More information is needed to determine the tax incidence

(69)Suppose you are a member of a local soccer club. The goal of your soccer club is to increase the amount of revenue earned from ticket sales in the local competition. Two executives of the soccer club, Evadney and Felix suggest that the solution is to increase ticket prices. Are Evadney and Felix correct?

(a)They are correct if the demand for tickets is price elastic

(b)They are correct if the demand for tickets is unitary elastic

(c)They are correct if the demand for tickets is price inelastic

(d)They are incorrect if the demand for tickets is price inelastic`

(70)For which of the following medical services is the income elasticity of demand largest?

(a)Emergency services after a car accident

(b)Flu shots

(c)Breast enhancements

(d)Medical tests to diagnose specific symptoms

(71)If the income elasticity of demand for undergarments is estimated by economists to be 6.8 in a given market, it would be plausible to conclude that undergarments:

(a)Have a steep and negatively sloped demand curve

(b)Have a horizontal demand curve

(c)Are normal goods

(d)Are Giffen goods

(72)Which of the following statements is true?

Suppose CD players are classified as normal goods then it would be expected that:

(a)Consumers buy less when the price falls and vice versa

(b)Consumers buy less when income rises and vice versa

(c)Consumers buy more when income rises and vice versa

(d)More information needed to answer this question

(73)The cross elasticity of demand for toothpaste and toothbrush are likely to be:

(a)<0

(b)>0

(c)=0

(d)None of the above

(74)Suppose you are told that the percentage change in the quantity supplied of salmon is 4% and the percentage change in the price is 0%, which of the following is the coefficient of the price elasticity of supply for salmon:

(a)4

(b)0.8

(c)∞

(d)0

(75)Which of the following statements is true?

Profit maximization means that:

(a)The MC curve of a profit maximizing firm must increase and cuts its MR curve from above at the firm’s maximum output

(b)The MC curve of a profit maximizing firm lies below its MR curve then rises and cuts its MR curve from below at its profit maximizing price and output levels

(c)The MC curve of a profit maximizing firm must decline and cuts its MR curve from above at the firm’s profit maximizing output level

(d)None of the above

(76)Economic profit is:

(a)Always less than zero

(b)Never less than accounting profit

(c)Less than accounting profit if implicit costs are greater than zero

(d)Less than accounting profit if implicit costs are zero

(77)Economic profit equals accounting profits minus:

(a)Explicit costs

(b)Fixed costs

(c)Implicit costs

(d)Variable costs

(78)A statistician resigned her job where she earned $100,000 annually to work full-time in her own consulting business. In the first year, she had total revenue of $200,000 and business expenses of $150,000. She made a (an):

(a)Economic profit

(b)Implicit revenue

(c)Economic loss

(d)Accounting loss but not an economic loss

(79)The short-short run is a period of time in which a firm employs:

(a)Fixed and variable factors of production

(b)Variable factors of production only

(c)Fixed factors of production only

(d)Marginally fixed factors of production

(80)Consumers tend to maximize:

(a)Marginal utility

(b)Consumer surplus

(c)Total utility

(d)Savings

Answer 1

Ans. I'll be answering first 4 questions because we are only allowed to answer 4 questions at a time. You can post the other 4 in a different slot.

67. B. 1.0 - Elasticity = % change in Quantity Supplied ( 40% ) ÷ % change in Price ( 40% ) = 1

68. C. The entire tax will be paid by the consumer.

69. C. They are correct if the demand for ticket is Price Inelastic .

70. C. Breast Enhancements

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