# MATH533 week 1 quiz - 2015

Dated: 10th Sep'17 11:37 AM
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Quiz 1

 1. Question: (TCO A) There is an increase in the cost of materials for producing bicycles. (4 pts.) What happens to bicycle supply? (6 pts.) What happens to bicycle demand? 2. Question: (TCO A) Digital cameras and memory cards are complements in consumption. The price of digital cameras falls.(4 pts.) What happens to the demand for memory cards? (6 pts.) What happens to the demand for digital cameras? 3. Question: (TCO A) The number of corn producers increases. (4 pts.) What happens to the supply of corn? (6 pts.) What happens to the demand for corn? 4. Question: (TCO A) A market is in equilibrium with equilibrium quantity Q* and equilibrium price P*. (2 pts.) What happens to P* if there is an increase in supply? (4 pts.) What happens to Q* if there is a decrease in supply and a decrease in demand? (4 pts.) What happens to P* if there is an increase in demand followed by a decrease in supply followed by another increase in demand? 5. Question: (TCO B) The following table shows part of the demand for tickets to a local sporting event: Price(P)...Quantity(Q)15...........4010..........1006............1503............250 (2 pts.) Is demand elastic in the \$6 - \$10 price range? (4 pts.) Ed = 0.75 in the \$3 - \$6 price range. In this range of demand, by what percentage would quantity demanded change if price changes by 20 percent? (4 pts.) Price falls from \$15 to \$10. Does total revenue (TR) increase, decrease, or remain the same? 6. Question: (TCO B) Use a hypothetical example to illustrate whether you agree or disagree with the following statement, "Unemployment will go up more if the demand for labor is inelastic, because the demand for labor will decrease more when you have inelastic demand than if demand were elastic".Explain why, using hypothetical numbers to illustrate your case. 7. Question: (TCO C) You have been hired to manage a small manufacturing facility which has cost and production data given in the table below.No. of workers Total Labor Cost Output Total Revenue1 \$550 100 \$1702 1100 108 3503 1650 114 8004 2200 119 12705 2750 123 16006 3300 125 17007 3850 126 1750(2 points) What is the marginal product of the third worker?(2 points) What is the marginal revenue product of the second worker?(2 points) What is the marginal cost of the fourth worker?(4 points) Based on your knowledge of marginal analysis, how many workers should you hire? Explain you answer. 8. Question: (TCO C) Answer the next question on the basis of the following cost data for a purely competitive seller:Total Product TFC TVC0 \$50 \$01 50 702 50 1203 50 1504 50 2205 50 3006 50 390Refer to the above data. If the product price is \$85, at its optimal output will the firm realize an economic profit, break even, or incur an economic loss? How much will the profit or loss be? Show all calculations. 9. Question: (TCO C) Answer the next question on the basis of the following cost data for a purely competitive seller:Total Product TFC TVC 0 \$50 \$01 50 702 50 1203 50 1504 50 2205 50 3006 50 390Refer to the above data. If the product price is \$105, at its optimal output will the firm realize an economic profit, break even, or incur an economic loss? How much will the profit or loss be? Show all calculations. 10. Question: (TCO C) A firm has Total Costs (TC) of \$12,000 over the next three months (TOTAL for the 3 months - not per month), of which \$8,000 are fixed costs (TFC) for rent on its lease that cannot be broken. If it stays in business over those months, then the firm will collect only \$6,000 in revenues (TR). So, considering only this information, should they stay in business for those three months, or should they close down right now? Provide your reasoning.
MATH533 week 1 quiz - 2015
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