6.2   Value, Price, and Consumer Surplus   1) Which describes the economic meanings of value and price? A) Value is exchange worth minus marginal benefit and price is the dollars that must be paid. B) Value is the marginal benefit obtained and price is the dollars that must be paid. C) Value refers to the gain the producer gets from the good or service […]

  171.Whichofthefollowingcouldbethepriceelasticityofdemandforagoodforwhichanincreaseinpricewouldincreaserevenue? a.0.3 b.1 c.1.8 d.Noneoftheabovecouldbecorrect. 172.Whichofthefollowingcouldbethepriceelasticityofdemandforagoodforwhichadecreaseinpricewoulddecreaserevenue? a.0.8 b.1 c.1.8 d.2.4 173.Whichofthefollowingcouldbethepriceelasticityofdemandforagoodforwhichanincreaseinpricewoulddecreaserevenue? a.0.6 b.0.9 c.1 d.2.6 174.WhenthepriceofgoodAis$50,thequantitydemandedofgoodAis500units.WhenthepriceofgoodArisesto a.1.50,andanincreaseinpricewillresultinanincreaseintotalrevenueforgoodA. b.1.50,andanincreaseinpricewillresultinadecreaseintotalrevenueforgoodA. c.0.67,andanincreaseinpricewillresultinanincreaseintotalrevenueforgoodA. d.0.67,andanincreaseinpricewillresultinadecreaseintotalrevenueforgoodA. 175.Thelocalbakerymakessuchgreatcinnamonrollsthatconsumersdonotrespondmuchatalltoachangeintheprice.Iftheownerisonlyinterestedinincreasingrevenue,sheshould a.lowerthepriceofthecinnamonrolls. b.leavethepriceofthecinnamonrollsunchanged. c.raisethepriceofthecinnamonrolls. d.reducecosts. 176.ConsiderluxuryweekendhotelpackagesinLasVegas.Whenthepriceis$250,thequantitydemandedis2,000packagesperweek.Whenthepriceis$280,thequantitydemandedis1,700packagesperweek.Usingthemidpointmethod,thepriceelasticityofdemandisabout a.1.43,andanincreaseinthepricewillcausehotels’totalrevenuetodecrease. b.1.43,andanincreaseinthepricewillcausehotels’totalrevenuetoincrease. c.0.70,andanincreaseinthepricewillcausehotels’totalrevenuetodecrease. d.0.70,andanincreaseinthepricewillcausehotels’totalrevenuetoincrease. 177.Skip’sSealcoatingServiceincreaseditstotalmonthlyrevenuefrom$12,000to$13,500whenitraisedthepriceofdrivewayrepairsfrom$600to$750.ThepriceelasticityofdemandforSkip’sSealcoatingServiceis a.0.11. b.0.47. c.1.12. d.2.11. 178.Hilda’sHairHysteriaearned$3,750intotalrevenuelastmonthwhenitsold125haircuts.Thismonthitearned a.0.33. b.0.88. c.1.14. d.7.98. 179.Supposethatwhenthepriceofwheatis$2perbushel,farmerscansell10millionbushels.Whenthepriceofwheatis$3perbushel,farmerscansell8millionbushels.Whichofthefollowingstatementsistrue?Thedemandforwheatis a.incomeinelastic,soanincreaseinthepriceofwheatwillincreasethetotalrevenueofwheatfarmers. b.incomeelastic,soanincreaseinthepriceofwheatwillincreasethetotalrevenueofwheatfarmers. c.priceinelastic,soanincreaseinthepriceofwheatwillincreasethetotalrevenueofwheatfarmers. d.priceelastic,soanincreaseinthepriceofwheatwillincreasethetotalrevenueofwheatfarmers. 180.Supposethatwhenthepriceofgingeraleis$2perbottle,firmscansell4millionbottles.Whenthepriceofgingeraleis$3perbottle,firmscansell2millionbottles.Whichofthefollowingstatementsistrue? a.Thedemandforgingeraleisincomeinelastic,soanincreaseinthepriceofgingeralewillincreasethetotalrevenueofgingeraleproducers. b.Thedemandforgingeraleisincomeelastic,soanincreaseinthepriceofgingeralewillincreasethetotalrevenueofgingeraleproducers. c.Thedemandforgingeraleispriceinelastic,soanincreaseinthepriceofgingeralewillincreasethetotalrevenueofgingeraleproducers. d.Thedemandforgingeraleispriceelastic,soanincreaseinthepriceofgingeralewilldecreasethetotalrevenueofgingeraleproducers.    

    71.Jake, Sr. sells the family business, a factory that produces snake oil, to Jake, Jr., for $100, even though the factory has been assessed at $400,000. How will this transaction affect GDP? A. Investment will increase by $100. B. Investment will increase by $400,000. C. Consumption will increase by $400,000. D. GDP will not be affected by the transaction. 72.Mikey likes bagels, so he buys an old […]

  51) When production of a good results in an external cost, the unregulated competitive market equilibrium is inefficient because ________. A) MSC = MC B) MSC = MB C) MSC > MB D) MSC < MB E) MSC is undefined 52) For a good whose production creates an external cost, the efficient quantity of output is A) where the market demand curve and the […]

  Figure 2-8     Figure 2-8 above shows the production possibilities frontier for Vidalia, a nation that produces two goods, roses and orchids.   98) Refer to Figure 2-8.  Suppose Vidalia is currently producing 20 dozen orchids per period. How many roses is it also producing, assuming that resources are fully utilized? A) 30 dozen roses B) 50 dozen roses C) 100 dozen roses […]

  Scenario: There are two firms producing ball point pens in a perfectly competitive industry. The market price of one pen is $5. Firm A has a lower marginal cost than Firm B. The following graphs illustrate the marginal cost curves of both the firms.   13) Refer to the scenario above. If both the firms are optimizing, which of the following statements will be […]

    61.              Carbon-14 has a half-life of 5730 yr.  A living organism has an activity of 15.2 counts per minute (cpm) per gram of carbon.  If a bone is determined to have an activity of 3.80 cpm per gram of carbon, how old is the bone? A)  5730 yr    B)  17,200 yr    C)  22,900 yr    D)  8600 yr    E)  11,500 yr   62.              Carbon-14 […]

  11) Assume the average annual CPI values for 2010 and 2011 were 207.3 and 215.3, respectively. What was the percent increase in the CPI between these two years? A) 0.96 B) 1.04 C) 3.86 D) 8.0 12) A consumer price index of 160 in 1996 with a base year of 1982-1984 would mean that the cost of the market basket A) equaled $160 in […]

  81) Refer to Table 27-3. Suppose the public decides to hold 15% of their deposits in cash – that is, there is now a cash drain of 15%. As a result of the new deposit, the money supply would eventually A) increase by $ 3.75 million. B) increase by $12.50 million. C) decrease by $12.50 million. D) decrease by $20.00 million. E) not change. […]

  21) An expansionary monetary policy in the United States should A) decrease the foreign currency price of U.S. exports. B) cause the dollar to appreciate. C) decrease the dollar price of imports. D) decrease net exports. 22) How will an interest rate decrease in the United States affect equilibrium in the foreign exchange market? A) The equilibrium exchange rate will increase, and the equilibrium […]