BA 4302 — Microeconomics

Suppose that elementary education creates a positive externality. If the government subsidizes education by an amount equal to the per-unit externality it creates, then

Suppose a consumer spends her income on two goods: music CDs and DVDs. The price of a CD is $8, and the price of a DVD is $20. If we graph the budget constraint by measuring the quantity of CDs purchased on the horizontal axis and the quantity of DVDs on the vertical axis, what is the slope of the budget constraint?

Suppose that eight workers can manufacture 70 radios per day and that nine workers can manufacture 90 radios per day. If radios can be sold for $10 each, the value of marginal product of the ninth worker is:

Suppose that a violent earthquake causes the uninhabited Hawaiian island of Mokuauia (also called Goat Island) to fall into the Pacific Ocean. No people are killed or injured, and since the island is undeveloped, no buildings are destroyed. The island was a source of tourist income for Hawaiian landowners. Which of the following statements correctly describes the rents earned by the people who own land on the surrounding islands?

When all market participants are price takers who have no influence over prices, the markets have

A local manufacturing plant that emitted sulfur dioxide was forced to stop production because it did not comply with local clean air standards. This decision provides an example of

The profit-maximizing rule for a firm in a monopolistically competitive market is to always select the quantity at which:

Mrs. Smith operates a business in a competitive market. The current market price is $8.50. At her profit-maximizing level of production, the average variable cost is $8.00, and the average total cost is $8.25. Mrs. Smith should:

In the long run Willie's Chocolate Factory incurs total costs of $2,500 when output is 1,250 units and $2,750 when output is 1,500 units. For this range of output, Willie's exhibits:

Suppose that a college physics experiment goes horribly wrong and releases an electronic pulse that renders all electronic equipment in the city of San Francisco permanently useless. No people are hurt, and no buildings are damaged. After the accident, the wages earned by California workers will _____ because the marginal productivities of workers will _____.

Which one of the following best illustrates the concept of "derived demand?"
a. An increase in the wages of auto workers will lead to an increase in the demand for robots in automobile factories.
b. An automobile producer's decision to supply more cars will lead to an increase in the demand for automobile production workers.
c. An automobile producer's decision to supply more minivans results from a decrease in the demand for station wagons.
d. An increase in the price of gasoline will lead to an increase in the demand for small cars.

Ed is a writer who works from his home. Ed lives next door to Ricky, the drummer for a local band. Ricky needs lots of practice to earn his share of the bands profits, $250. Ed gets distracted by Ricky's drumming but needs to get his writing done to earn $500 for his current article. Which of the following is an efficient solution?

Suppose that a firm has only one variable input, labor, and firm output is zero when labor is zero. When the firm hires 6 workers the firm produces 90 units of output. Fixed costs of production are $6 and the variable cost per unit of labor is $10. The marginal product of the seventh unit of labor is 4. Given this information, what is the marginal cost of production when the firm hires the 7th worker?

For a worker, the opportunity cost of an hour of leisure:

Suppose roses are currently selling for $40 per dozen, but the equilibrium price of roses is $30 per dozen. Which one of the following would you expect to happen?