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izmir university of economics department of economics econ 101 principles of microeconomics study questions for econ 101 midterm exam ii fall 2015 2016 multiple choice questions assuming that the price ...

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            Izmir University of Economics 
            Department of Economics 
            Econ 101 - Principles of Microeconomics 
             
             
            Study Questions for ECON 101 Midterm Exam II-(Fall 2015/2016) 
                                           
            Multiple Choice Questions 
             
            Assuming that the price of cola is $1 each, and burgers cost $2 each fill the table below. Then, 
            answer the following two questions according to the table. 
             Number     Total    MUc      MU / $   Number of   Total     MUb     MU / $ 
             of Colas  Utility                      Burgers    Utility 
                1        6                             1         10                  
                2        10                            2         14                  
                3        13                            3         15                  
                4        15                            4         15                  
                5        16                            5         7                   
                   
            1 - ) Which of the two goods demonstrates the law of diminishing marginal utility? 
            a. Cola only. 
            b. Burgers only. 
            c. Both cola and burgers. 
            d. Neither cola nor burgers. 
             
            2 - ) If the consumer has only $8 to spend, what would be the optimal consumption of both goods 
            for this consumer? 
            a. 4 colas and 2 burgers. 
            b. 5 colas and 1 burger. 
            c. 2 colas and 3 burgers. 
            d. 4 colas and 4 burgers. 
             
       Izmir University of Economics 
       Department of Economics 
       Econ 101 - Principles of Microeconomics 
        
        
       3 - ) If MUa / Pa=1.5 and MUb / Pb=3 for a consumer who is spending her entire budget, then to 
       maximize utility she should 
       a. buy more of product A and less of product B. 
       b. buy more of product B and less of product A. 
       c. not change her situation. 
       d. None of the above.  
        
       4 - ) A fall in the price of Pepsi that causes a household to shift its purchasing pattern away from 
       substitutes and toward Pepsi is the 
       a.  income effect of a price change. 
       b.  substitution effect of a price change. 
       c.  complementary effect of a price change. 
       d.  diminishing marginal utility effect of a price change. 
         
       5 - ) Assume leisure is a normal good. The substitution effect of a wage decrease implies a 
       __________ demand for leisure and a __________ labor supply. 
       a.  lower; higher 
       b.  higher; lower 
       c.  higher; higher 
       d.  lower; lower 
         
       6 - ) Economic costs 
       a.  include both a normal rate of return on investment and the opportunity cost of each factor of 
        production. 
       b.  are equal to the direct costs of hiring all factors of production. 
       c.  are the opportunity cost of each factor of production minus any interest charges paid on 
        borrowed funds. 
       d.  are equal to total revenue minus accounting profit. 
           
                   Izmir University of Economics 
                   Department of Economics 
                   Econ 101 - Principles of Microeconomics 
                    
                    
                   7 - )  The explanation for why marginal cost is positive and rising in the short run is _______ 
                   marginal product of labor in the production process. 
                    a.      a zero 
                    b.      a constant 
                    c.      an increasing 
                    d.      a diminishing 
                    
                   8- ) The information a firm needs to know with the objective of maximizing profit includes:  
                   a.  The market price of the output 
                   b.  The techniques of production that are available 
                   c.  The prices of inputs 
                   d.  All of the above 
                        
                   9 - ) Firms that are earning zero economic profits are 
                   a.  breaking even 
                   b.  shutting down in the long run 
                   c.  earning less than a normal rate of return 
                   d.  shutting down in the short run 
                        
                   10 - ) In the long run, a firm 
                   a.  can vary all inputs, but it cannot change the mix of inputs it uses 
                   b.  has no fixed factors of production 
                   c.  can shut down, but it cannot exit the industry 
                   d.  must make positive economic profits 
                        
                   11 - )If marginal product is greater than average product, then 
                   a.  average product must be decreasing. 
                   b.  marginal product must be decreasing. 
                   c.  marginal product must be increasing. 
                   d.  marginal product could either be increasing or decreasing. 
               Izmir University of Economics 
               Department of Economics 
               Econ 101 - Principles of Microeconomics 
                
                
                                                            Table 1 
                               Inputs Required to Produce a Product Using Alternative Technologies 
                                                                                       
               12 - ) Refer to Table 1. Which technology is the most capital intensive? 
                        
                       a.  A                 b. B                  c. C                  d. D 
                           
               13- ) Refer to Table 1. If the hourly wage rate is $10 and the hourly price of capital is $50, which 
               production technology should be selected? 
                       a.  A                 b. B                  c. C                  d. D  
                
               14 - ) A factory produces 1,000 radios a year. Average variable cost (AVC) is $10 and total fixed 
               cost is $5,000. Thus, the factory’s total cost (TC)  
               a.  Equals $5,010.     
               b.  Equals $6000 
               c.  Equals $15000 
               d.  Equals $5,000,000  
                           
               15 - ) A characteristic of perfect competition is that 
               a.  It is difficult for new firms to enter the industry 
               b.  The firm can influence the product’s price 
               c.  The firms in the industry produce a homogenous product 
               d.  The firm produces a large share of the industry’s total product 
                
               16 - ) In perfect competition, the marginal revenue curve 
               a.  and the demand curve facing the firm are identical. 
               b.  is always above the demand curve facing the firm. 
               c.  is always below the demand curve facing the firm. 
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...Izmir university of economics department econ principles microeconomics study questions for midterm exam ii fall multiple choice assuming that the price cola is each and burgers cost fill table below then answer following two according to number total muc mu mub colas utility which goods demonstrates law diminishing marginal a only b c both d neither nor if consumer has spend what would be optimal consumption this burger mua pa pb who spending her entire budget maximize she should buy more product less not change situation none above in pepsi causes household shift its purchasing pattern away from substitutes toward income effect substitution complementary assume leisure normal good wage decrease implies demand labor supply lower higher economic costs include rate return on investment opportunity factor production are equal direct hiring all factors minus any interest charges paid borrowed funds revenue accounting profit explanation why positive rising short run process zero constant a...

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