Econ 528 Midterm Exam UPDATED
ACTUAL QUESTIONS AND CORRECT
ANSWERS
A firm's managers are constrained by
A) consumers.
B) workers.
C) government.
D) All of the above. - CORRECT ANSWER D.) All of the above
2) Which of the following would be categorized as an opportunity cost?
a. not being able to spend your $10,000 savings if you sink the money in your business
b. the cost of purchasing supplies for your house-cleaning business
c. the cost of purchasing auto insurance for your dry-cleaning delivery business
A) a only
B) a and c only
C) b and c only
D) all of the above - CORRECT ANSWER A) a only
3) Golda Rush quit her job as a manager for Home Depot to start her own hairdressing salon,
Goldilocks. She gave up a salary of $40,000 per year, invested her savings of $30,000 (which was
earning 5 percent interest), and borrowed $10,000 from a close friend, agreeing to pay 5 percent
interest per year.
In her first year, Golda spent $18,000 to rent a salon, hired a part-time assistant for $12,000, and
incurred another $15,000 on equipment and hairdressing material. Based on this information, what is
the amount of her implicit costs?
A) $80,000
B) $70,000
, C) $42,000
D) $41,500 - CORRECT ANSWER Answer: D
4) Refer to Table 12-1. If the market price of each camera case is $8, what is the profit-maximizing
quantity?
A) 300 units
B) 400 units
C) 500 units
D) 600 units - CORRECT ANSWER B) 400 units
5) Refer to Table 12-1. If the market price of each camera case is $8, what is the firm's total revenue?
A) $2,400
B) $3,200
C) $4000
D) $4,800 - CORRECT ANSWER B) $3,200
9) Price discrimination is
A) is the practice of charging different prices to different customers based on a seller's personal
preferences and prejudices.
B) is the practice of charging different prices to different customers based on the different costs of
supplying the product to different customers.
C) is the practice of charging different prices to different customers when the price differences cannot
be attributed to variations in cost.
D) is the practice of giving preferential treatment to certain groups of customers based on their long-
standing relationship to the producer. - CORRECT ANSWER C) is the practice of charging
different prices to different customers when the price differences cannot be attributed to variations in
cost.
10) For a firm that can effectively price discriminate, who will be charged a lower price?
A) customers who have an elastic demand for the product
B) customers who have an inelastic demand for the product
ACTUAL QUESTIONS AND CORRECT
ANSWERS
A firm's managers are constrained by
A) consumers.
B) workers.
C) government.
D) All of the above. - CORRECT ANSWER D.) All of the above
2) Which of the following would be categorized as an opportunity cost?
a. not being able to spend your $10,000 savings if you sink the money in your business
b. the cost of purchasing supplies for your house-cleaning business
c. the cost of purchasing auto insurance for your dry-cleaning delivery business
A) a only
B) a and c only
C) b and c only
D) all of the above - CORRECT ANSWER A) a only
3) Golda Rush quit her job as a manager for Home Depot to start her own hairdressing salon,
Goldilocks. She gave up a salary of $40,000 per year, invested her savings of $30,000 (which was
earning 5 percent interest), and borrowed $10,000 from a close friend, agreeing to pay 5 percent
interest per year.
In her first year, Golda spent $18,000 to rent a salon, hired a part-time assistant for $12,000, and
incurred another $15,000 on equipment and hairdressing material. Based on this information, what is
the amount of her implicit costs?
A) $80,000
B) $70,000
, C) $42,000
D) $41,500 - CORRECT ANSWER Answer: D
4) Refer to Table 12-1. If the market price of each camera case is $8, what is the profit-maximizing
quantity?
A) 300 units
B) 400 units
C) 500 units
D) 600 units - CORRECT ANSWER B) 400 units
5) Refer to Table 12-1. If the market price of each camera case is $8, what is the firm's total revenue?
A) $2,400
B) $3,200
C) $4000
D) $4,800 - CORRECT ANSWER B) $3,200
9) Price discrimination is
A) is the practice of charging different prices to different customers based on a seller's personal
preferences and prejudices.
B) is the practice of charging different prices to different customers based on the different costs of
supplying the product to different customers.
C) is the practice of charging different prices to different customers when the price differences cannot
be attributed to variations in cost.
D) is the practice of giving preferential treatment to certain groups of customers based on their long-
standing relationship to the producer. - CORRECT ANSWER C) is the practice of charging
different prices to different customers when the price differences cannot be attributed to variations in
cost.
10) For a firm that can effectively price discriminate, who will be charged a lower price?
A) customers who have an elastic demand for the product
B) customers who have an inelastic demand for the product
