Econ 5050 Midterm

When Sonoma Vineyards reduces the price of its Cabernet Sauvignon from $15 a bottle to $12 a bottle, the result is an increase in

Answer

Selected Answer: d.

the quantity of this wine supplied.

Correct Answer: c.

the quantity of this wine demanded.

Response Feedback: Please review the difference between change in quantity demanded (movements along demand, p 45) and change in demand (shifts in demand, p. 46).

Question 2

1 out of 1 points

Suppose that the firm's only variable input is labor. When 50 workers are used, the average product of labor is 50 and the marginal product of labor is 75. The wage rate is $80 and the total cost of the fixed input is $500. What is average variable cost?

Answer

Selected Answer: b.

$1.60

Correct Answer: b.

$1.60

Question 3

0 out of 1 points

When marginal cost is rising, average variable cost

Answer

Selected Answer: b.

must be falling.

Correct Answer: d.

could be rising or falling.

Question 4

1 out of 1 points

John has decided to start his own lawn-mowing business. To purchase the mowers and the trailer to transport the mowers, John withdrew $1,000 from his savings account, which was earning 3% interest, and borrowed an additional $2,000 from the bank at an interest rate of 7%. What is John's annual opportunity cost of the financial capital that has been invested in the business?

Answer

Selected Answer: c.

$170

Correct Answer: c.

$170

Question 5

1 out of 1 points

Which of the following will cause an increase in consumer surplus?

Answer

Selected Answer: b.

a technological improvement in the production of the good

Correct Answer: b.

a technological improvement in the production of the good

Question 6

1 out of 1 points

Which of the following is consistent with the elasticities given in the following table?

Good Price Elasticity of Demand

A 1.3

B 2.1

Answer

Selected Answer: d.

A has fewer...