Where necessary please show all computations in order to get full credit for your answer

1. Use the above table. The income elasticity of artisan bread is
A) 1.285.
B) 0.780.
C) 0.012.
D) 8.330.

2. Use the above table. Based on the information in the table, artisan bread is a(n)
A) normal good.
B) necessary good.
C) inferior good.
D) negative good.

3. In the above table, the cross price elasticity of demand for good X with good Y when PY falls from $20 to $18 is
A) -2.
B) 0.
C) +1.
D) -1.

4. In the above table, the cross price elasticity of demand for good Y with good X when PX rises from $10 to $12 is
A) +0.29.
B) +1.83.
C) +0.58.
D) -0.58.

5a. Refer to the above table. What is the absolute price elasticity of demand if a price falls from $7 to $6.50?
A) 0.85
B) 1.08
C) 1.17
D) 0.92

5b. Refer to the above table. What is the absolute price elasticity of demand if a price falls from $7.50 to $7?
A) 10
B) 1.38
C) 0.724
D) 0.1

Quantity of
Movies Total Utility
Mary Total Utility
John
3 100 190
4 140 250
5 170 300
6 190 340
7 200 370
8 210 390
9 210 405
10 200 415
11 190 420

6a. According to the above table, Maryʹs marginal utility from watching the 6th movie is
A) 190 units of utility.
B) 40 units of utility.
C) 10 units of utility.
D) 20 units of utility.

6b. According to the above table, Johnʹs marginal utility from watching the 9th movie is
A) 405 units of utility.
B) 0 units of utility.
C) 15 units of utility.
D) 10 units of utility.

7. For good A and good B, the consumer maximizes personal satisfaction when
A) MUA/PA = PB/MUB.
B) PA/MUA = PB/MUB.
C) MUA/PA = MUB/PB.
D) MUA/MUB = PA/PB.

Bobʹs Marginal Utility for consuming beer and pizza with $8.00 in income

Quantity
of Pizza Marginal
Utility Quantity of
Beer Marginal
Utility
1 45 1 40
2 40 2 40
3 30 3 35
4 15 4 10
5 -5 5 0

8a. In the above table, how much beer and pizza will Bob consume if the price of a piece of pizza is $2.00 and the price of a beer is $2.00?
A) 1 piece of pizza and 3 beers
B) 2 pieces of pizza and 2 beers
C) 2 pieces of pizza and 3 beers
D) 3 pieces of pizza and 1 beer

8b. Referring to the above table, suppose Bobʹs ratios of marginal utility of beer to the price of beer and the marginal utility of pizza to the price of pizza are equal. If the price of beer
increases
A) Bob will probably consume more beer and less pizza.
B) Bob will probably consume less beer and less pizza.
C) Bob will probably consume less beer and more pizza.
D) Bob will still consume the same amount of beer and pizza.

9. Suppose the auto industry has several investment projects with an expected rate of return of 15 percent, the aluminum industry has projects with an expected return of over 20 percent, the
publishing industry projects with an expected return of 10 percent, the steel industry has projects with an expected return of 7 percent and the rubber industry projects with an expected return of
5 percent. The current market rate of interest is 7 percent. A reduction in the supply of funds causes interest rates to rise to 11 percent. The effect is to
A) cause the firms in the steel and publishing industries to cancel their projects, which would have been funded at the old interest rate.
B) cause the firms in the steel and the rubber industries to go ahead with their projects.
C) force the firms in the automobile industry and the publishing industry to rely on funding their projects through other means.
D) make the projects of the aluminum industry and the steel industry unprofitable; the firms in these industries will not borrow the funds or make the investments.

10. What is the present value of $100 three years from now at an interest rate of 6%?
A) $83.96
B) $82
C) $94.34
D) $119.10
11. In the above figure, the market price charged by this profit-maximizing, perfectly competitive firm is
A) $5 per unit of output.
B) $10 per unit of output.
C) $8 per unit of output.
D) $14 per unit of output.
12. In the above figure, at the profit-maximizing rate of production for the perfectly competitive firm total revenue is
A) $100.
B) $70.
C) $30.
D) $130.

13. In the above figure, at the profit-maximizing rate of production for the perfectly competitive firm total cost is
A) $100.
B) $70.
C) $30.
D) $130.

14. Refer to the above table. This firm operates in a perfectly competitive market in which the market price is $10 per unit. What is its profit-maximizing rate of production?
A) 104 units
B) 106 units
C) 108 units
D) 110 units

15. Under what condition are profits maximized?
A) at the rate of output at which marginal revenue equals marginal cost
B) at the output rate where marginal cost is greater than marginal revenue
C) at the point at which the difference between total revenues and total costs is negative
D) at the point at which the difference between price and quantity demanded is greatest

16. Refer to the above figure. Which of the following statements is true about the demand curves for an individual firm in a perfectly competitive industry and a monopoly?
A) Panel A is the demand curve for a perfectly competitive firm and panel B is the demand curve for a monopoly.
B) Panel C is the demand curve for a perfectly competitive firm and panel A is the demand curve for a monopoly.
C) Panel C is the demand curve for a perfectly competitive firm and panel B is the demand curve for a monopoly.
D) Panel B is the demand curve for a perfectly competitive firm and panel A is the demand curve for a monopoly.

17. What does the demand curve facing a monopoly look like? Why?

18. A monopoly will maximize profits at the level of output at which
A) MR = MC.
B) MR = AFC.
C) MC = ATC.
D) MC = P.

19. As a price searcher, a monopoly firm
A) must only determine the price it charges.
B) must determine its optimal price-output combination.
C) must determine its output level and then accept the market price for its product.
D) must determine the prices it pays for its inputs and accept the market price for its output.

The short-run production function for a manufacturer of flash memory drives is shown in the table below. Based on this information, answer the following questions.

Input of Labor
(workers per week) Total Output of
Flash Memory Drives
0 0
1 25
2 60
3 85
4 105
5 115
6 120
20a. Calculate the average product at each quantity of labor.
20b. Calculate the marginal product of labor at each quantity of labor.
20c. At what point does marginal product begin to diminish?