Econ 528 Midterm ULL|| All
Questions with Correct Answers
A firm's managers are constrained by
A) consumers.
B) workers.
C) government.
D) All of the above. - 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 - 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.
12) Vacation tours to Europe invariably package visits to disparate regions: cities,
mountains, and the seaside. Bundling, a type of second degree price discrimination, is
most profitable when:
a. the preference rankings of vacationers traveling together are negatively correlated.
b. a preference for cities is always higher than preferences for mountain vistas.
c. preference rankings of vacationers traveling together are positively correlated.
d. preference for the seaside is always higher than preferences for city excursions.
e. no one wants to take a European vacation package to cities, mountains, and the
seaside. - ANSWER-b. a preference for cities is always higher than preferences for
mountain vistas.
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 - 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 - 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 - 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. - 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
C) buyers that are members of the largest market segment
D) buyers that are members of the smallest market segment - ANSWER-A) customers
who have an elastic demand for the product
11) Some electric utilities offer one rate to commercial users and a different rate to
residential users. This is an example of:
a. universal access pricing.
b. bundling.
Questions with Correct Answers
A firm's managers are constrained by
A) consumers.
B) workers.
C) government.
D) All of the above. - 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 - 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.
12) Vacation tours to Europe invariably package visits to disparate regions: cities,
mountains, and the seaside. Bundling, a type of second degree price discrimination, is
most profitable when:
a. the preference rankings of vacationers traveling together are negatively correlated.
b. a preference for cities is always higher than preferences for mountain vistas.
c. preference rankings of vacationers traveling together are positively correlated.
d. preference for the seaside is always higher than preferences for city excursions.
e. no one wants to take a European vacation package to cities, mountains, and the
seaside. - ANSWER-b. a preference for cities is always higher than preferences for
mountain vistas.
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 - 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 - 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 - 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. - 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
C) buyers that are members of the largest market segment
D) buyers that are members of the smallest market segment - ANSWER-A) customers
who have an elastic demand for the product
11) Some electric utilities offer one rate to commercial users and a different rate to
residential users. This is an example of:
a. universal access pricing.
b. bundling.
