Suppose Hanna spends her entire budget buying bagels and cups of coffee each day. Also, suppose the marginal utility of her last bagel is 100 and the marginal utility of her last cup of coffee is 200.
If the price of a bagel is 4 and the price of a cup of coffee is 2, then A) Hanna needs to decrease her consumption of bagels to maximize her utility.
B) Hanna needs to increase her consumption of bagels to maximize her utility.
C) Hanna should buy half as many bagels as coffee in order to maximize her utility.
D) bagels must provide more total utility than coffee.
Ques. 2The table above shows output and costs of Evan's Subs, a typical perfectly competitive firm in a local market for sandwiches. Evan's fixed cost is 9 per hour. The current market price of a sandwich is 6.
If the market price does not change, Evan's will A) continue to operate in the short run, but will exit the industry in the long run.
B) continue to operate in the short run and in the long run.
C) shut down.
D) increase its production in the long run.
Ques. 3The difference between the marginal social cost and the marginal private cost equals the
A) cost of producing an additional unit of a good.
B) marginal external benefit.
C) marginal external cost.
D) marginal private benefit.
Ques. 4Bicycles are made out of steel. If the price of steel increases, there is a shift in the supply curve of bicycles that leads to
A) a shift in the demand curve for bicycles.
B) a temporary surplus of bicycles.
C) a permanent surplus of bicycles.
D) an increase in the price of a bicycle.
Ques. 5Suppose we are considering the relationship between two variables y and x. y is measured on the y-axis and x is measured on the x-axis, and the relationship between then is a straight line.
Suppose that the slope of the line is positive and is less than 1. This slope means that a change in x is associated with A) a bigger change in y.
B) a smaller change in y.
C) no change in y.
D) an equal change in y.
Ques. 6In 2008, Japan's government approved a 1 trillion fiscal stimulus plan comprised of both tax cuts and government expenditure increases. As a result
A) Japan's aggregate demand curve shifted rightward.
B) Japan's aggregate supply curve shifted leftward.
C) Japan's aggregate demand curve shifted leftward.
D) Japan's long-run aggregate supply curve shifted leftward.
Ques. 7The figure above shows the demand and supply of dollars in the foreign exchange market. At a price of 1.20 Brazilian reals per dollar
A) there will be a shortage of dollars.
B) 120 billion dollars will be supplied.
C) 40 billion dollars will be demanded.
D) there will be a surplus of dollars.
Ques. 8The equation of exchange becomes the same as the quantity theory of money by assuming that the velocity of circulation ________ when the quantity of money changes and potential GDP ________ when the quantity of money changes.
A) changes; changes
B) changes; does not change
C) does not change; changes
D) does not change; does not change
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