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Homework answers / question archive / University of Michigan - ECON 101 Quiz #1 20 points     INSTRUCTIONS:  You have 45 minutes to complete the quiz

University of Michigan - ECON 101 Quiz #1 20 points     INSTRUCTIONS:  You have 45 minutes to complete the quiz

Business

University of Michigan - ECON 101

Quiz #1

20 points

 

 

INSTRUCTIONS:  You have 45 minutes to complete the quiz.  Each question is worth 4 points. Please make sure to fill in your name on the line below.  Please read each question carefully and answer it fully.  Answer all of the questions in this quiz. Point values for each question are listed with the question.  Write your answers directly on this document.  If the question is multiple choice, circle the letter of the answer you believe is correct.  For analytical questions, work out your answer on the paper in the space given.  We can give partial credit if we see the work and can figure out where the problem is. Turn in this entire document when you are finished. Take your time, and good luck.

 

Your name___________________________________________

 

 

 

  1. Given the production possibilities curve of zip drives and zip disks below, which change in production has the largest opportunity cost of producing one zip drive (assume the curve has been drawn to scale)?

 

E

D

C

B

A

Zip drives

Zip disks

 

 

    1. Point C to point B
    2. Point B to point A
    3. Point C to point D
    4. Point D to point B
    5. Point E to point A

 

 

  1. You are paying a monthly membership fee of $24 at your health club, which you attend four times per month on average.  That is, your average cost per visit is $6.  Because you value each workout at $7, you are a happy club member.  As you are entering the club, you realize that you have forgotten to bring your own towel – a must have item.  If the club charges $2 for towels, should you pay or should you decide not to do the workout?  Explain your reasoning (use the back of this sheet for this answer).

 

 

  1. The production of potatoes requires land, mulch, fertilizer, and labor as inputs.  When there are diminishing returns to fertilizer in the production of potatoes:
    1. the marginal utility of fertilizer is negative
    2. additional fertilizer causes decreased output
    3. doubling fertilizer input will less than double output
    4. marginal cost decreases as more fertilizer is added
    5. doubling fertilizer input will more than double output

 

 

  1. Both Nzinga and Jan have to synthesize the material in the Economics 101 class to help write questions for the final exam.  The graphs below show Nzinga’s and Jan’s productivity when writing 101 questions based on material before and after the midterm. Which of the following statements is/are true regarding Nzinga’s and Jan’s productivity when writing the different types of question?

 

  1. Nzinga has an absolute advantage in writing both types of questions
  2. Jan has a comparative advantage in pre-midterm questions
  3. Jan has a comparative advantage in post-midterm questions
  4. Nzinga has a comparative advantage in post-midterm questions

 

    1. I only
    2. I and III
    3. I, II, and IV
    4. III only
    5. II and III

 

 

 

 

 

 

 

 

 

 

 

  1. Which of the following statements is wrong?
    1. The budget constraint indicates the maximum amount that can be spent on goods with one’s income.
    2. The slope of the production possibilities curve shows the trade-off between the production of two goods using a constant amount of resources.
    3. The ratio of the prices determines the slope of the budget constraint.
    4. The marginal product of labor measures how much extra output is produced if one more unit of labor is used.
    5. When the price of a normal good falls, the income effect encourages less consumption of that good.

 

 

  1.  The table below shows EunJung’s marginal utilities from consuming Oreos and Nesquik hot chocolate. She has $36 per week to spend on these two goods. Each box of Oreos costs $6, and each pack of Nesquik hot chocolate costs $4.

 

Quantity

1

2

3

4

5

6

MU of Oreos/Po

90/6=15

84/6=14

60/6=10

30/6=5

12/6=2

0

MU of Nesquik/Pn

40/4=10

28/4=7

20/4=5

12/4=3

8/4=2

4/4=1

 

In order to maximize her utility, how should EunJung allocate her budget between the two goods?

  1. 5 boxes of Oreos and 5 packs of Nesquik
  2. 1 box of Oreos and 3 packs of Nesquik
  3. 2 boxes of Oreos and 6 packs of Nesquik
  4. 3 boxes of Oreos and 1 pack of Nesquik
  5. 4 boxes of Oreos and 3 packs of Nesquik

 

7. Consider a single noodle store on campus. Since there are many similar noodle stores in the same area, the noodle store is just a price-taking, profit-maximizing firm. Suppose the noodle store has the following marginal costs:

 

Quantity                      Marginal Costs ($)   TR($)     TC($)        profit        

 

1                                  1.05                             

2                                  2.06                             

3                                  4.02                             

4                                  6.00                             

5                                  8.05                             

6                                  11.05                           

7                                  15.00                           

 

    1. What is the firm’s total cost if it produces 3 bowls of noodles?
    2. What will its profits be?

 

8.3 (4 points) Which of the following statements is wrong?

  1. The budget constraint indicates the maximum amount that can be spent on goods with one’s income.
  2. The slope of the production possibilities curve shows the trade-off between the production of two goods using a constant amount of resources.
  3. Income determines the slope of the budget constraint.
  4. The marginal product of labor measures how much extra output is produced if one more unit of labor is used.
  5. When the price of a normal good falls, the income effect encourages more consumption of that good.

 

 

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