FINAL EXAM - Take Home
Name: __________________________
Date: _____________
Use the following to answer question 1:
Figure: Marginal Cost Curve
1. (Figure: Marginal Cost Curve) Use the marginal cost curve in the
accompanying figure to determine that the approximate total cost of
mowing 7 lawns is:
A) $175.
B) $113.
C) $50.
D) $24.
Use the following to answer questions 2-3:
Figure: Indifference Curve Map
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FINAL EXAM - Take Home
2. (Figure: Indifference Curve Map) Sara enjoys attending Chicago Cubs'
baseball games and eating baby-back rib dinners. The accompanying
figure shows two of her indifference curves for Cubs tickets and babyback rib dinners. If she is currently consuming 20 baby-back rib
dinners and 6 tickets to Cubs games, she would be equally happy to
give up 8 dinners for ______ more ticket(s) to Cub games.
A) 1
B) 1/2
C) 3
D) 4
3. (Figure: Indifference Curve Map) Sara enjoys attending Chicago Cubs'
baseball games and eating baby-back rib dinners. The accompanying
figure shows two of her indifference curves for Cubs tickets and babyback rib dinners. If she is currently consuming 20 baby-back rib
dinners and 4 tickets to Cubs games, she would be equally happy to
give up 8 dinners for ______ more ticket(s) to Cub games.
A) 1
B) 1/2
C) 2
D) 4
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FINAL EXAM - Take Home
Use the following to answer question 4:
Figure and Table: The Changing Slope of an Indifference Curve
Consumptio
n bundle
Quantity of
rooms
V
W
X
Y
Z
2
3
4
5
6
Quantity of
restaurant
meals
30
20
15
12
10
4. (Figure and Table: The Changing Slope of an Indifference Curve) The
slope between points X and Y in the accompanying figure is:
A) 3.
B) 5.
C) 1/3.
D) 3.
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FINAL EXAM - Take Home
Use the following to answer question 5:
Figure: Total Cost
5. (Figure: Total Cost) In the accompanying figure, total cost at the
profit-maximizing quantity of bushels is $______.
A) 3.50
B) 14
C) 56
D) 72
6. Mary derives 288 utils from buying two pairs of hiking boots and four
saws. She gets 313 utils from buying one pair of hiking boots and
seven saws. Mary is indifferent between these two combinations of
hiking boots and saws.
A) True
B) False
Use the following to answer question 7:
Figure: Revenues, Costs, and Profits
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FINAL EXAM - Take Home
7. (Figure: Revenues, Costs, and Profits) In the accompanying figure, at
the profit-maximizing quantity of output, total revenue is $______,
total cost is $______, and profit is $______.
A) 90; 72; 18
B) 56; 56; 0
C) 30; 48; 18
D) 48; 56; 8
Use the following to answer question 8:
Figure and Table: Indifference Curve Map
Consumption
bundle
Quantity
of rooms
Quantity
of meals
A
B
C
D
3
6
5
4
30
15
10
45
Total
utility
(utils)
450
450
391
519
8. (Figure and Table: Indifference Curve Map) Which of the following
statements is true regarding the accompanying figure?
A) Combination A is preferred to combination B.
B) Combination B is preferred to combination D.
C) Combination C is preferred to combination A.
D) Combination B is preferred to combination C.
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FINAL EXAM - Take Home
9. If all firms in an industry are price-takers, then:
A) each firm can take the price that it wants to charge and sell at
this price, provided it is not too different from the prices other
firms are charging.
B) each firm takes the market price as given for its current output
level, recognizing that the price will change if it alters its
output significantly.
C) an individual firm cannot alter the market price even if it doubles
its output.
D) the market sets the price, and each firm can take it or leave it
(by setting a different price).
10. According to the optimal output rule, profits are maximized by
producing where the difference between marginal revenue and marginal
cost is the greatest.
A) True
B) False
Use the following to answer question 11:
Figure: Good X and Good Y
11. (Figure: Good X and Good Y) If we move from point B to point C in the
accompanying figure, the x-variable has ______ and the y-variable has
______.
A) decreased by 2 units; increased by 15 units
B) increased by 2 units; decreased by 15 units
C) decreased by 15 units; increased by 2 units
D) increased by 15 units; decreased by 2 units
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FINAL EXAM - Take Home
Use the following to answer questions 12-13:
Figure: Indifference Curves and Consumption Bundles
12. (Figure: Indifference Curves and Consumption Bundles) In the
accompanying figure, the initial optimum is at a. The price of hot
dogs now increases. The change in hot dog consumption due to the
substitution effect is:
A) H3 to H2.
B) H3 to H1.
C) H2 to H1.
D) H1 to H2.
13. (Figure: Indifference Curves and Consumption Bundles) In the
accompanying figure, the lines AA and BC are parallel. The optimal
consumption point could shift from b to c as a result of:
A) an equal percentage increase in the prices of both hot dogs and
pizza, while income is unchanged.
B) a decrease in income with prices constant.
C) a change in tastes.
D) both a and b
Use the following to answer questions 14-15:
Figure: The Optimal Consumption Bundle
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FINAL EXAM - Take Home
14. (Figure: The Optimal Consumption Bundle) In the accompanying figure,
which of the following could lead to an optimal consumption bundle on
indifference curve I3?
A) a decrease in income
B) an increase in the price of restaurant meals
C) a decrease in the price of rooms
D) none of the above
15. (Figure: The Optimal Consumption Bundle) In the accompanying figure,
which of the following could lead to an optimal consumption bundle on
indifference curve I3?
A) an increase in income
B) an increase in the price of restaurant meals
C) an increase in the price of rooms
D) all of the above
Use the following to answer question 16:
Table: Variable Costs for Lots
Quantity of
lots
0
10
20
30
40
50
Variable costs
$0
200
300
500
750
1,100
16. (Table: Variable Costs for Lots) During the winter, Alexa runs a snowclearing service, and snow-clearing service is a perfectly competitive
industry. Her only fixed cost is $1,000 for a tractor. Her variable
costs per cleared lot, shown in the accompanying table, include fuel
and hot coffee. If the current price per cleared lot is $14, how many
lots should Alexa clear?
A) 0
B) 40
C) 50
D) 20
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FINAL EXAM - Take Home
Use the following to answer question 17:
Figure: Supply, Demand and Equilibrium
17. (Figure: Supply, Demand and Equilibrium) In the accompanying figure,
there will be an excess demand of the good at a price of P3.
A) True
B) False
18. Average variable cost equals all the following except:
A) variable cost divided by output.
B) (total cost  fixed cost) divided by output.
C) average total cost minus average fixed cost.
D) variable cost times output.
19. The average total cost curve in the short run slopes upward due to:
A) economies of scale.
B) diseconomies of scale.
C) increasing returns.
D) diminishing returns.
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FINAL EXAM - Take Home
Use the following to answer question 20:
Figure: Four Markets for DVDs
20. (Figure: Four Markets for DVDs) Which of the graphs in the
accompanying figure shows what may happen in the market for DVDs if
the cost of DVD players increases?
A) A
B) B
C) C
D) D
21. To
A)
B)
C)
D)
maximize her grade in economics, Stacey should study until:
her marginal cost of studying begins to increase.
her marginal benefit of studying begins to decrease.
her marginal benefit of studying reaches zero.
her marginal cost of studying reaches zero.
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FINAL EXAM - Take Home
Use the following to answer question 22:
Figure: Cost Curve and Profits
22. (Figure: Cost Curves and Profits) The market for corn is perfectly
competitive, and an individual corn farmer faces the cost curves shown
in the accompanying figure. If the price of a bushel of corn in the
market is $14, then the farmer will produce ______ of corn and earn an
economic ______ equal to ______.
A) 4 bushels; profit; $0.
B) 4 bushels; profit; just less than $80 per bushel
C) 2 bushels; profit; $0
D) 2 bushels; loss; just more than $80 per bushel
Use the following to answer question 23:
Table: Market for Fried Twinkies
Market for Fried Twinkies
Quantity
Quantity
Price (unit) demanded (units)
supplied
(units)
$1.10
9,000
3,000
1.20
8,000
5,000
1.30
7,000
7,000
1.40
6,000
9,000
1.50
5,000
1,100
23. (Table: Market for Fried Twinkies) The government decides to tax fried
Twinkies at a rate of $0.30 per Twinkie and collect that tax from the
producers. Using this table, the consumers will pay ____ per Twinkie
and buy ____ Twinkies after the tax.
A) $1.20; 8,000
B) $1.30; 7,000
C) $1.40; 6,000
D) $1.50; 5,000
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FINAL EXAM - Take Home
24. In economics a “marginal” value refers to:
A) the value associated with an unimportant, or marginal activity.
B) a value entered as an explanatory item in the margin of a balance
sheet or other accounts.
C) the value associated with one more unit of an activity.
D) a value that is most appropriately identified in a footnote.
Use the following to answer question 25:
Figure: Supply of Coconuts
25. (Figure: Supply of Coconuts) The accompanying figure shows the supply
of coconuts. If the price of inputs (e.g., labor, fertilizer, and
fuel) used to produce and transport coconuts is decreasing, then the
movement in the model could be:
A) A to B.
B) B to A.
C) C to A.
D) E to B.
Use the following to answer question 26:
Table: Marginal and Total Benefit
Number of games
0
1
2
3
4
5
6
7
8
Total benefit
0
50
90
120
140
152
160
164
162
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FINAL EXAM - Take Home
26. (Table: Marginal and Total Benefit) Rodger is deciding how many
football games he wants to attend this year. The total benefit that
Rodger receives from football games is shown in the accompanying
table. If tickets to each football game cost $10, then he should
attend ______ game(s).
A) 0
B) 1
C) 2
D) 5
Use the following to answer question 27:
Table: Output and Costs
Q
FC
VC
TC
1
20
10
30
2
20
18
38
3
20
31
51
4
20
48
68
MC
8
13
17
In the Table above, Q = output, FC = fixed cost, VC = variable cost, TC =
total cost, MC = marginal cost.
27. (Table: Output and Costs) Using the information in the accompanying
table, when quantity equals 3, average total cost equals
A) 13.
B) 10.
C) 8.
D) 17.
28. Zoe's Bakery determines that P < ATC and P > AVC. Zoe should:
A) continue to operate even though she is enduring an economic loss.
B) continue to operate as she is making an economic profit.
C) shut down immediately as she is enduring an economic loss.
D) raise the price until she has maximized her profits.
29. An ambiguous change in price and a decrease in quantity is most likely
caused by:
A) no shift in supply and a shift to the left in demand.
B) a shift to the left in supply and a shift to the left in demand.
C) a shift to the right in supply and a shift to the left in demand.
D) a shift to the left in supply and a shift to the right in demand.
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FINAL EXAM - Take Home
Use the following to answer question 30:
Figure: Optimal Quantity
30. (Figure: Optimal Quantity) If the demand for lawn mowing decreased,
the ______ curve in the accompanying figure would shift to the ______
and the optimal quantity would be ______ 5 lawns mowed.
A) marginal benefit; right; greater than
B) marginal cost; right; less than
C) marginal benefit; left; less than
D) marginal cost; left; greater than
31. According to the relative price rule, the optimal consumption bundle
between hot dogs and beer takes place when the ______ rate of
substitution is ______ their relative price.
A) total; equal to
B) marginal; equal to
C) marginal; higher than
D) total; lower than
Use the following to answer question 32:
Figure: Demand for Coconuts
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FINAL EXAM - Take Home
32. (Figure: Demand for Coconuts) The accompanying figure shows the demand
for coconuts. If fish is a substitute good for coconuts and the price
of fish increases, then the movement that would take place in the
model could be:
A) A to C.
B) B to A.
C) C to A.
D) B to E.
Use the following to answer question 33:
Figure and Table: Market for Butter
Price
(per lb. of
butter)
$1.40
1.30
1.20
1.10
1.00
0.90
0.80
0.70
0.60
Quantity demanded
(millions of lbs.
of butter)
8.0
8.5
9.0
9.5
10.0
10.5
11.0
11.5
12.0
Quantity supplied
(millions of lbs. of
butter)
14.0
13.0
12.0
11.0
10.0
9.0
8.0
7.0
6.0
33. (Figure and Table: Market for Butter) This figure represents a
competitive market for butter. If a government price floor at $1.30 is
now imposed on this market (in the name of fairness), then an
inefficiency will result in the form of a:
A) surplus of 4.5 million pounds of butter.
B) shortage of 4.5 million pounds of butter.
C) surplus of 1.5 million pounds of butter.
D) shortage of 1.5 million pounds of butter.
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FINAL EXAM - Take Home
Use the following to answer question 34:
Figure: Market for DVDs
34. (Figure: Market for DVDs) In this figure, if the rental price of DVDs
rises from $5 per rental to $7 per rental, then:
A) demand will decrease from 50 to 30 rentals per weekend.
B) quantity demanded will decrease from 50 rentals per weekend to 30
rentals per weekend.
C) supply will increase from 50 to 70 rentals per weekend.
D) quantity supplied will increase from 50 to 60 rentals per weekend.
Use the following to answer questions 35-36:
Figure: Revenues, Costs, and Profits
35. (Figure: Revenues, Costs, and Profits) In the accompanying figure, the
firm's short-run supply curve is the ______ curve above a price of
$______.
A) average total cost curve; 14
B) average variable cost curve; 10
C) marginal cost curve; 10
D) marginal cost curve; 14
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FINAL EXAM - Take Home
36. (Figure: Revenues, Costs, and Profits) In the accompanying figure, if
the market price is $18, this firm will:
A) minimize its losses by shutting down.
B) minimize its losses by continuing to produce.
C) break even.
D) earn an economic profit.
Use the following to answer questions 37-38:
Figure: Prices, Cost Curves, and Profits
37. (Figure: Prices, Cost Curves, and Profits) In the accompanying figure,
if the price is P1, then the firm earns:
A) a loss equal to (ba) x Q1.
B) a loss equal to (ca) x Q1.
C) a loss equal to (bc) x Q1.
D) zero.
38. (Figure: Prices, Cost Curves, and Profits) In the accompanying figure,
if the price is P2, then the maximum profit the firm can earn is:
A) (fg) x Q3.
B) (de) x Q2.
C) (fg) x Q2.
D) (de) x P2 .
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FINAL EXAM - Take Home
Use the following to answer questions 39-40:
Figure: Good X and Good Y
39. (Figure: Good X and Good Y) Which chart in the accompanying figure
shows the effects of an increase in the price of X, when good X and
good Y are substitutes?
A) A
B) B
C) C
D) D
40. (Figure: Good X and Good Y) Which chart in the accompanying figure
shows the effects of an increase in the price of X, when good X and
good Y are complements?
A) A
B) B
C) C
D) D
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