ECO 365 Week 5 Final Exam (2017 Newest version)

ECO 365 Week 5 Final Exam (2017 Newest version)

ECO/365

PRINCIPLES OF MICROECONOMICS

 

The Latest Version A+ Study Guide

 

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ECO 365 Week 5 Final Examination Link

https://uopcourses.com/sd_product/eco-365-week-5-final-examination/

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question1

Penelope has recently started a printing business in Duluth. She had to pay a fee to obtain a trade license from the Minnesota government and took a loan from the local bank to purchase inkjet printers, laser printers, and screen printers. She employs 20 workers who are paid a wage of $30 per hour. She is also a trained ballet dancer who used to earn an average of $50,000 a year. Penelope’s implicit cost of running the business is:

· 



$72,000 per annum.

· 



the amount she used to earn as a ballet dancer.

· 



the interest she has to pay on the loan. 

· 



the fee paid to the government.

 

 

question2

Suppose Timothy consumes two goods, soda and chips. The slope of his indifference curve for these two goods reflects:

· 



the rate at which he is willing to substitute one good for the other.

· 



the total utility he gets from the consumption of the two goods.

· 



the relative price of soda.

· 



the relative price of chips.

 

 

question3

Which of the following is an example of a negative externality?

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Christina accepting a payment in cash rather than in check for her laundry services

· 



Smith reducing the consumption of imported wine following an increase in the price of imported wine

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Tom playing music loudly in his room, disturbing his roommate who has an exam the next day

· 



Phoebe refusing to contribute to the building of a children’s park in her neighborhood

 

 

question4

The exhibit given below shows the demand curve for and the supply curve of laptops, D and S1. The government decides to impose a price ceiling on the price of laptops. At the same time, the price of inverter boards that provide power to backlight lamps inside laptop screens increases. Identify the correct statement.



· 



At a price ceiling of P1, the quantity demand and supplied in the market will be Q2.

· 



A price ceiling above P3 will eliminate shortage in the market.

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The government should set the price ceiling at P1 to eliminate shortage.

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A price of P2 will be binding in this market.

 

 

question5

Which of the following reflects the law of demand?

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John purchasing a bigger apartment after an increase in his salary

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Jimmy’s demand for donuts decreasing from 4 per week to 2 per week after its price decreased from $1 to $0.5 per donut

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Jacques purchasing 4 bottles of lemonade instead of 3 when its price decreased from $12 to $10 per bottle

· 



Jonathan, a coffee drinker, switching to green tea after a fall in the price of green tea

 

 

question6

The Rhodes and Samson families, with annual incomes of $100,000 and $120,000, respectively, live in a society where the primary objective of the government is to maximize the sum of the utility attained by everyone in the society. Which of the following is likely to be true in such a society?

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The government will redistribute income between the two families in such a way that the welfare of the Rhodes family improves.

· 



The government will tax the Samson family and provide income transfers to the Rhodes family, but there will exist an inequality of income between the two families.

· 



The government will tax the Rhodes family and provide income transfers to the Samson family to maximize total utility.

· 



The government will redistribute income between the two families in such a way that both the families will have the same level of post-tax income.

 

 

question7

Which of the following is an example of adverse selection?

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Thomas refuses to pay for the construction of a swimming pool in his neighborhood that will be open to the public free of cost. 

· 



Patrick uses the service of a mechanic to inspect the condition of a second-hand Dodge he is interested in buying. 

· 



When the National Museum increased its entry fee, there was a reduction in its sale of tickets. 

· 



Harry refuses to buy health insurance at high premiums because he feels that he is in good health.

 

 

question8

Moonlife LLC. observed that its total revenue is proportional to the quantity of good sold. It is likely that Moonlife LLC. is a:

· 



perfectly competitive firm.

· 



monopoly.

· 



monopsony.

· 



monopolistic competitor.

 

 

question9

Suppose both Ross and Vivian produce butter and cheese. When Ross works for 10 hours a day, he produces 6 pounds of butter and 24 pounds of cheese. When Vivian works for the same hours, she produces 20 pounds of cheese and 40 pounds of butter. Ross’s opportunity cost of producing a pound of butter is:

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5 pounds of cheese.

· 



4 pounds of cheese.

· 



18 pounds of cheese.

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1/4 pounds of cheese.

 

 

question10

Scarcity occurs because of:

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the excess of quantity supplied over quantity demanded.

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limited human needs and wants.

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the limited supply of resources.

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overutilization of labor.
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