12) Refer to Figure 6.3. On this graph, area ACD is:
A) producer surplus.
B) total surplus.
C) consumer net benefit.
D) consumer surplus.
Answer:
13) Joe runs a business and needs to decide how many hours to stayopen. Figure 2.2 illustrates his marginal benefit of staying openfor each additional hour. Suppose that Joe’s marginal cost ofstaying open per hour is $24. How many hours should Joe stayopen?
A) 3 hours
B) 4 hours
C) 5 hours
D) 6 hours
Answer:
14) Assume that you have a monthly fixed income of $ 1500 and has$50 of your income allocated to buy pizza and ice cream. Supposethat there is a decrease in the price for pizza and in the pricefor ice cream, this will shift:
A) indifference curves to the left.
B) indifference curves to the right.
C) the budget line to the left.
D) the budget line to the right.
Answer:
15) As a consumer moves along an indifference curve, the benefitsof trading will be exhausted only when:
A) The MRS equals the price ratio.
B) The MRS is greater than the price ratio.
C) The MRS is smaller than the price ratio.
D) There is not sufficient information.
Answer:
16) Refer to Figure 7.7. The marginal rate of substitution (inabsolute value) is ________ the price ratio (in absolute value) atpoint A; ________ the price ratio at point B; and ________ theprice ratio at point C (trading peaches for herbs).
A) greater than; less than; equal to
B) less than; equal to; greater than
C) equal to; less than; equal to
D) greater than; equal to; less than
Answer:
Number of workers Units of output
0 0
1 25
2 55
3 95
4 125
5 150
Table: 8.2
17) Refer to Table 8.2, which gives a firm’s production function.Assume that all non-labor inputs are fixed. Diminishing returns setin with the addition of the:
A) third worker.
B) fourth worker.
C) fifth worker.
D) sixth worker.
Answer:
Number of Cakes VC MC AVC FC TC ATC
0 50
1 30
2 50
3 25
4 155
18) Table 8.3 presents the cost schedule for Candy’s Cakes. IfCandy produces zero cake, Candy’s total costs are:
A) $0.
B) $50.
C) $100.
D) $150
Answer:
19) Figure 8.3 shows a firm’s marginal cost, average total cost,and average variable cost curves. At Q=50, the total cost is:
A) $2,100.
B) $2,800.
C) $4,500.
D) $6,300.
Answer:
20) If marginal cost is above average cost, average cost must berising. TRUE or FALSE?
Answer:
21 ) Suppose that Figure 10.4 shows a monopolist’s demand curve,marginal revenue, and its costs. The monopolist would maximize itsprofit by producing a quantity of:
A) 30 units.
ScholarMatic: Explanation & Answer
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