Econ 122 Exam 2

39 Questions | By Tclea3 | Updated: Mar 18, 2022 | Attempts: 137

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In Economics, we believe that utility is the amount of satisfaction that a good or service brings. The quiz below tests and advances your knowledge on the different aspects of economics, which include price and utility.

Questions and Answers

1.

The difference between the highest price a consumer is willing to pay for a good and the price the consumer actually pays is called
- A.
  
  The substitution effect
- B.
  
  The income effect
- C.
  
  Consumer surplus
- D.
  
  Producer surplus
2.

In a city with rent controlled apartments, all of the following are true except?
- A.
  
  It usually takes more time to find an apartment than it would without rent control
- B.
  
  Landlords have an incentive to rent more apartments than they would without rent control
- C.
  
  Apartments are often in shorter supply than they would be without rent control
- D.
  
  Apartments usually rent for rates lower than the market rate
3.

Paul goes to sportsmart to buy a new tennis racquet. He is willing to pay $200 for a new racquet, but buys one on sale for $125. Pauls consumer surplus from the purchase is
- A.
  
  $325
- B.
  
  $200
- C.
  
  $125
- D.
  
  $75
4.

The marginal benefit is equal to the _____ benefit to a consumer receives from consuming one more unit of a good or service
- A.
  
  Additional
- B.
  
  Surplus
- C.
  
  Total
- D.
  
  Unintended
5.

Arnolds marginal benefit from consuming the third burrito is
- A.
  
  $1.25
- B.
  
  $1.50
- C.
  
  $2.50
- D.
  
  $6.00
6.

The table above lists the highest prices three consumers, Tom, Dick and Harriet, are willing to pay for a short-sleeved polo shirt. If the price of one of the shirts is $28 dollars
- A.
  
  Harriet will receive $25 of consumer surplus since she will buy no shirts
- B.
  
  Tom and dick receive a total of $70 of consumer surplus from buying one shirt each. Harriet will buy no shirts
- C.
  
  Tom will buy two shirts, dick will buy one shirt and harriet will buy no shirts
- D.
  
  Tom will receive $12 of consumer surplus from buying one shirt
7.

The table above lists the highest prices of the three consumers, tom, dick, and harriet, are willing to pay for a short sleeved polo shirt. if the price of the shirts falls from $28 to $20
- A.
  
  Consumer surplus increases from $14 to $35
- B.
  
  Consumer surplus will increase from $70 to $95
- C.
  
  Tom will buy two shirts; dick and harriet will each buy one shirt
- D.
  
  Harriet will receive more consumer surplus than tom or dick
8.

If the market price is $1.00, what is the consumer surplus on the third burrito?
- A.
  
  $ 0.50
- B.
  
  $ 1.00
- C.
  
  $1.50
- D.
  
  $7.50
9.

What area represents producer surplus at a price of P2?
- A.
  
  A+B+C+D+E
- B.
  
  A+B
- C.
  
  A+B+C
- D.
  
  B+D
10.

What area represents the increase in producer surplus when the market prices rises from P1 to P2?
- A.
  
  C+E
- B.
  
  B+D
- C.
  
  A+B
- D.
  
  A+C+E
11.

What is the value of producer surplus at a price of $18?
- A.
  
  $300
- B.
  
  $720
- C.
  
  $340
- D.
  
  $240
12.

What is the value of the deadweight loss at a price of $18?
- A.
  
  $100
- B.
  
  $180
- C.
  
  $1040
- D.
  
  $660
13.

The figure above represents the market for pecans. Assume that this is a competitive market. If the price of pecans is $3, what changes in the market would result in an economically efficient output?
- A.
  
  The quantity supplied would increase, the quantity demanded would decrease and the equilibrium price would increase
- B.
  
  The price would increase, the quantity demanded would decrease and the quanity supplied would increase
- C.
  
  The price would increase, the quantity supplied would decrease, and the quantity demanded would increase
- D.
  
  The price would increase, the demand would decrease and the supply would increase
14.

What is the value of consumer surplus after the impostion of the ceiling?
- A.
  
  $120,000
- B.
  
  $230,000
- C.
  
  $270,000
- D.
  
  $430,000
15.

What is the value of producer surplus after the imposition of the ceiling?
- A.
  
  $40,000
- B.
  
  $100,000
- C.
  
  $300,000
- D.
  
  $430,000
16.

What is keegan's optimal consumption bundle?
- A.
  
  3 pita wraps and 3 bubble teas
- B.
  
  5 pita wraps and 0 bubble teas
- C.
  
  4 pita wraps and 2 bubble teas
- D.
  
  3 pita wraps 4 bubble teas
17.

If keegan can drink all the bubble tea he wants for free, how many glasses will he consume?
- A.
  
  4 glasses
- B.
  
  5 glasses
- C.
  
  6 glasses
- D.
  
  7 glasses
18.

If keira maximizes her utility, how many units of each good should she buy?
- A.
  
  1 cup of soup and 5 sandwiches
- B.
  
  4 cups of soup and 3.5 sandwiches
- C.
  
  6 cups of soup and 2 sandwiches
- D.
  
  3 cups of soup and 4 sandwiches
19.

Suppose keira's income increases from $18 to $23 but prices have not changed. What is her utility maximizing bundle now?
- A.
  
  5 cups of soup and 4 sandwiches
- B.
  
  6 cups of soup and 5 sandwiches
- C.
  
  4 cups of soup and 5 sandwiches
- D.
  
  5 cups of soup and 5 sandwiches
20.

When the price of hoagies increases from $5.00 to $5.75, quanity demanded decreases from Q1 to Q0. This change in quantity demanded is due to
- A.
  
  The income and substitution effects
- B.
  
  The price and output effects
- C.
  
  The fact that marginal willingness to pay falls
- D.
  
  The law of diminishing marginal utility
21.

Which of the following statements is true?
- A.
  
  Quanity Q0 could be a utility-maximizing choice if the price is $5.75, but quanity Q1 may not be because we have no information on the marginal utility per dollar when price changes.
- B.
  
  Quanities of Q0 and Q1 may not necessarily be the utility-maximizing quantities of hoagies at two different prices because we have no information on the consumers budget or the price of other goods
- C.
  
  Quantities Q0 to Q1 are derived independently of the utility-maximizing model
- D.
  
  Quantities Q0 and Q1 are the utility-maximizing quantities of hoagies at two different prices of hoagies
22.

Which of the following is an example of positive technological change?
- A.
  
  A firm conducts a new advertising campaign. As a result, the demand for the firms surf boards increases
- B.
  
  A firm buys a an additional machine that it uses to make surf boards. As a result, the firm is able to increase its weekly production of surf boards
- C.
  
  A firm offers workers a higher wage to work on weekends and night. As a result, the firm is able to increase its weekly production of surf boards.
- D.
  
  A firms workers participate in a training program designed to increase the number of surf boards they can produce per day.
23.

Economic costs of production differ from accounting costs in that
- A.
  
  Accounting costs include expenditures for hired resources wile economic costs do not
- B.
  
  Economic costs add the opportunity costs of a firm using its own resources while accounting costs do not
- C.
  
  Accounting cost are always larger than economic cost
- D.
  
  Economic costs include expenditures for hired resources while accounting costs do not
24.

If four workers can produce 18 chairs a day and five can produce 20 chairs a day, the marginal product of the fifth worker is
- A.
  
  2 chairs
- B.
  
  3 chairs
- C.
  
  4 chairs
- D.
  
  38 chairs
25.

The law of diminishing marginal returns
- A.
  
  Causes average total costs to rise at a decreasing rate as output increases
- B.
  
  Explains why the average total cost and marginal cost curves are u-shaped in the short run
- C.
  
  Explains why the average total cost, average fixed cost and the marginal cost curves are u-shaped in the short run
- D.
  
  Causes the difference between average total cost and average variable cost to get smaller as output increases