The Flying Elvis Copter Rides

Quantity	Total Cost	Fixed Cost	Variable Cost	Marginal Cost	Average Fixed Cost	Average Variable Cost	Average Total Cost
	$50	$50	$0	--	--	--	--
	$150	A	B	C	D	E	F
	G	H	I	$120	J	K	L
	M	N	O	P	Q	$120	R

113. Refer to Table 13-5. What is the value of A?

a.	$25
b.	$50
c.	$100
d.	$200

114. Refer to Table 13-5. What is the value of B?

a.	$25
b.	$50
c.	$100
d.	$200

115. Refer to Table 13-5. What is the value of C?

a.	$25
b.	$50
c.	$100
d.	$200

116. Refer to Table 13-5. What is the value of G?

a.	$30
b.	$120
c.	$220
d.	$270

117. Refer to Table 13-5. What is the value of L?

a.	$60
b.	$135
c.	$240
d.	$270

118. Refer to Table 13-5. What is the value of O?

a.	$40
b.	$140
c.	$360
d.	$410

Table 13-7

Measures of Cost for ABC Inc. Widget Factory
Quantity of Widgets	Variable Costs	Total Costs	Fixed Costs
			$10
	$ 1
	$ 3	$13
	$ 6	$16
	$10
		$25
	$21		$10

119. Refer to Table 13-7. The average fixed cost of producing five widgets is

a.	$1.00.
b.	$2.00.
c.	$3.00.
d.	$5.00.

120. Refer to Table 13-7. The average variable cost of producing four widgets is

a.	$2.00.
b.	$2.50.
c.	$3.33.
d.	$5.00.

121. Refer to Table 13-7. The average total cost of producing one widget is

a.	$1.00.
b.	$10.00.
c.	$11.00.
d.	$22.00.

122 Refer to Table 13-7. The marginal cost of producing the sixth widget is

a.	$1.00.
b.	$3.50.
c.	$5.00.
d.	$6.00.

123. Refer to Table 13-7. What is the variable cost of producing zero widgets?

a.	$0.00
b.	$1.00
c.	$10.00
d.	$10.00

124. Refer to Table 13-7. What is the marginal cost of producing the first widget?

a.	$1.00
b.	$10.00
c.	$11.00
d.	It can't be determined from the information given.

125. Refer to Table 13-7. What is the variable cost of producing five widgets?

a.	$13.00
b.	$14.00
c.	$15.00
d.	It can't be determined from the information given.

CONSUMER’S OPTIMIZATION

Figure 21-9

125. Refer to Figure 21-9. Given the budget constraint depicted in the graph, the consumer will choose bundle

a.	B.
b.	C.
c.	D.
d.	E.

ANS: B DIF: 1 REF: 21-3 NAT: Analytic

LOC: Utility and consumer choice TOP: Optimization

MSC: Analytical

126. Refer to Figure 21-9. It would be possible for the consumer to reach I₂ if

a.	the price of Y decreases.
b.	the price of X decreases.
c.	income increases.
d.	All of the above would be correct.

ANS: D DIF: 2 REF: 21-3 NAT: Analytic

LOC: Utility and consumer choice TOP: Optimization

MSC: Analytical

127. Refer to Figure 21-9. Bundle B represents a point where

a.	MRSxy > Py/Px.
b.	MRSxy = Px/Py.
c.	MRSxy < Px/Py.
d.	MRSxy > Px/Py.

ANS: D

128. Refer to Figure 21-9. Bundle C represents a point where

a.	MRSxy > Py/Px.
b.	MRSxy = Px/Py.
c.	MRSxy < Px/Py.
d.	MRSxy > Px/Py.

ANS: B

129. Refer to Figure 21-9. Bundle D represents a point where

a.	MRSxy > Py/Px.
b.	MRSxy = Px/Py.
c.	MRSxy < Px/Py.
d.	MRSxy < Py/Px.

ANS: C

130. The consumer's optimum is where

a.	MUx/MUy = Py/Px.
b.	MUx/Py = MUy/Px.
c.	Px/MUx = Py/MUy.
d.	MUx/MUy = Px/Py.

ANS: D

Figure 21-10

131. Refer to Figure 21-10. Assume that the consumer depicted in the figure has an income of $20. The price of Skittles is $2 and the price of M&M's is $4. This consumer will choose a consumption bundle where the marginal rate of substitution is

a.	2.
b.	2/3.
c.	1/2.
d.	1/3.

132. Refer to Figure 21-10. Assume that the consumer depicted in the figure has an income of $20. The price of Skittles is $2 and the price of M&M's is $4. This consumer will choose consumption bundle

a.	A.
b.	B.
c.	C.
d.	D.

133. Refer to Figure 21-10. Assume that the consumer depicted in the figure has an income of $50. The price of Skittles is $5 and the price of M&M's is $5. This consumer will choose a consumption bundle where the marginal rate of substitution is

b.	5.

134. Refer to Figure 21-10. Assume that the consumer depicted in the figure has an income of $20. The price of Skittles is $2 and the price of M&M's is $2. This consumer will choose to optimize by purchasing bundle

b.

B.

135. Refer to Figure 21-10. Assume that the consumer depicted in the figure faces prices and income such that she optimizes at point B. According to the graph, which of the following would cause the consumer to move to point A?

d.	an increase in the price of M&M's

Figure 21-11

136. Refer to Figure 21-11. Assume that the consumer depicted in the figure has an income of $40, the price of a bag of marshmallows is $2, and the price of a bag of chocolate chips is $2. The optimizing consumer will choose to purchase which bundle of marshmallows and chocolate chips?

c.

C

137. Refer to Figure 21-11. Assume that the consumer depicted in the figure has an income of $100 and currently optimizes at bundle A. When the price of marshmallows decreases to $5, which bundle will the optimizing consumer choose?

c.

C

138. Refer to Figure 21-11. Assume that the consumer depicted in the figure has an income of $40. If the price of chocolate chips is $4 and the price of marshmallows is $4, the optimizing consumer would choose to purchase

c.	5 marshmallows and 5 chocolate chips.

139. Refer to Figure 21-11. Assume that the consumer depicted in the figure has an income of $80. If the price of chocolate chips is $4 and the price of marshmallows is $4, the optimizing consumer would choose to purchase

b.	10 marshmallows and 10 chocolate chips.

140. Refer to Figure 21-11. Assume that the consumer depicted in the figure has an income of $40. Based on the information available in the graph, which of the following price-quantity combinations would be on her demand curve for marshmallows if the price of chocolate chips is $4?

d.	P=$4, Q=9

141. Refer to Figure 21-11. Assume that the consumer depicted the figure has an income of $50. Based on the information available in the graph, which of the following price-quantity combinations would be on her demand curve for marshmallows if the price of chocolate chips is $2.50?

b.	P=$2.50, Q=10

142. Which of the following represents a consumer's optimum?

a.	MUx/MUy = Py/Px

143. A consumer has preferences over two goods, Xand Y. Suppose we graph this consumer's preferences (which satisfy the usual properties of indifference curves) and budget constraint on a diagram with X on the horizontal axis and Y on the vertical axis. At the consumer's current consumption bundle, the consumer is spending all available income, and the marginal rate of substitution is greater than the slope of the budget constraint. We can conclude that the consumer

a.	is currently maximizing satisfaction.
b.	could increase satisfaction by consuming more X and less Y.
c.	could increase satisfaction by consuming less X and more Y.
d.	could purchase more X and more Y and increase total satisfaction.

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