The above table shows Homer's marginal utility from consuming various quantities of chocolate chip cookies and cake. The price of cookies is 2 per pound, the price of cake is 2 per slice and Homer has 12 to spend on cookies and cake.
Homer will consume ________ of cookies and ________ of cake. A) 1 pound; 5 slices
B) 2 pounds; 4 slices
C) 3 pounds; 3 slices
D) 5 pounds; 2 slices
Ques. 2A chemical factory and a fishing club share a lake. Producing chemicals creates water pollution that harms the fish. The marginal social cost, private marginal cost, and marginal social benefit from producing chemicals are in the figure above.
If polluting is legal and no one owns the lake into which waste is dumped, then the amount of chemicals produced each week will be A) 0 tons.
B) 4 tons.
C) 8 tons.
D) None of the above answers is correct.
Ques. 3Among the factors that create a deadweight loss and inefficiency are
A) minimum wages, but not taxes.
B) rent ceilings, but not taxes.
C) taxes, but not minimum wages or rent ceilings.
D) minimum wages, rent ceilings, and taxes.
Ques. 4The increase in the demand for widgets, shown in the figure above, is the result of an increase in people's incomes from 28,500 per year to 31,500 per year. Therefore, the income elasticity of demand for widgets is
A) 0.25.
B) 0.75.
C) 1.33.
D) 4.00.
Ques. 5The figure above shows Sam's budget line. Which of the following would result in Sam's budget line rotating outward and not changing its horizontal intercept?
A) a fall in the price of a pound of coffee
B) a rise in the price of a pound of coffee
C) a fall in the price of a gallon of gasoline
D) a rise in the price of a gallon of gasoline
Ques. 6In the above figure, if the price is 16, a profit-maximizing perfectly competitive firm will
A) produce 50 units.
B) produce 35 units.
C) produce 10 units.
D) choose not to produce.
Ques. 7The figure above shows the market for umbrellas in Sunville. What is the marginal social benefit that Sunville consumers receive from the 200th umbrella bought?
A) 23.33
B) 30.00
C) 26.67
D) 50.00
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