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ECON 102 Quiz: ECON102 Quiz 1-4 2014

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turquoisegnu128
1 Oct 2018
School
University of Illinois
Department
Economics
Course
ECON 102
Professor
All

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ECON 102 Full Course Notes
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ECON 102 Full Course Notes
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Document Summary

Although water is very abundant in most places, it is scarce because: Select one: scarce goods in general are not all that costly, it is a free good, there is not enough of it to meet all needs, it has no alternative uses. The student center on campus has burritos, bagels, or burgers for lunch, and they all cost the same. You decide to have a burger today, but if they were out of burgers, you would have bought a bagel. Select one: your enjoyment of the bagel, your enjoyment of the bagel and burrito, your enjoyment of the burrito, your enjoyment of the burger. Say sarah was choosing between three alternatives: working on her job that pays her ; writing a term paper which she values at ; or going out with a friend, which she values at. The opportunity costs of writing the term paper is: The university recently inherited a large mansion from a wealthy alumnus.

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Related Questions

1. Roshima is researching universities where she could study for her MBA degree. She is considering 3 major attributes that she considers important in her choice: ranking, price, and location. The value she places on each attribute, however, differs according to whether she remains full-time employed during her studies or quits her job and focuses on her degree. If she continues to work full time and takes all her courses online, then ranking is the most important attribute, twice as important as price and three times as important as location. If she quits her job and attends school full time, then location becomes three times as important as ranking and twice as important as price. She is considering two universities, respectively, the MBA program at Arizona State University (ASU) and the MBA program at University of Phoenix (UOP), both of which are priced at approximately $25,000. She has rated each attribute on a scale of 1 to 100 for each of the two schools.


Attribute

ASU

UOP


Ranking


Location


Price



80


50


45



70


70


45













a. Which of the two options should Roshima pursue of she wants to keep her full-time job? (Calculate the total expected utility from each school option and compare. Graph is not required)


b. Which of the two options should she pick if she plans to quit her job and dedicate to her studies?


c. Which option should she pursue if the probability of being laid off and unable to find a new job is estimated as 0.6? Show your calculations and explain your reasoning.




2. The demand function for Einstein Bagels has been estimated as follows:


Qx = -15.87 – 40.73Px + 84.17Py + 0.55Ax

where Qx represents thousands of bagels; Px is the price per bagel; Py is the average price per bagel of other brands of bagels; and Ax represents thousands of dollars spent advertising Einstein Bagels. The current values of the independent variables are Ax=216, Px=0.85, and Py=0.79.



a. Calculate the price elasticity of demand for Einstein’s Bagels and explain what it means.


b. Derive an expression for the (inverse) demand curve for Einsteins’s Bagels.


c. If the cost of producing Einstein’s Bagels is constant at $0.10 per bagel, should they reduce price and thereafter, sell more bagels (assume profit maximization is the company’s goal)?


d. Should Einstein Bagels spend more on advertising?



1. Roshima is researching universities where she could study for her MBA degree. She is considering 3 major attributes that she considers important in her choice: ranking, price, and location. The value she places on each attribute, however, differs according to whether she remains full-time employed during her studies or quits her job and focuses on her degree. If she continues to work full time and takes all her courses online, then ranking is the most important attribute, twice as important as price and three times as important as location. If she quits her job and attends school full time, then location becomes three times as important as ranking and twice as important as price. She is considering two universities, respectively, the MBA program at Arizona State University (ASU) and the MBA program at University of Phoenix (UOP), both of which are priced at approximately $25,000. She has rated each attribute on a scale of 1 to 100 for each of the two schools.


Attribute

ASU

UOP


Ranking


Location


Price



80


50


45



70


70


45













a. Which of the two options should Roshima pursue of she wants to keep her full-time job? (Calculate the total expected utility from each school option and compare. Graph is not required)


b. Which of the two options should she pick if she plans to quit her job and dedicate to her studies?


c. Which option should she pursue if the probability of being laid off and unable to find a new job is estimated as 0.6? Show your calculations and explain your reasoning.




2. The demand function for Einstein Bagels has been estimated as follows:


Qx = -15.87 – 40.73Px + 84.17Py + 0.55Ax

where Qx represents thousands of bagels; Px is the price per bagel; Py is the average price per bagel of other brands of bagels; and Ax represents thousands of dollars spent advertising Einstein Bagels. The current values of the independent variables are Ax=216, Px=0.85, and Py=0.79.



a. Calculate the price elasticity of demand for Einstein’s Bagels and explain what it means.


b. Derive an expression for the (inverse) demand curve for Einsteins’s Bagels.


c. If the cost of producing Einstein’s Bagels is constant at $0.10 per bagel, should they reduce price and thereafter, sell more bagels (assume profit maximization is the company’s goal)?


d. Should Einstein Bagels spend more on advertising?

1. Three fundamental economic questions

A manager asks an employee, "Should we use our research budget to improve the quality of the products we already make, or to develop new products?"

The manager's question is best classified as which one of the following fundamental economic questions?

a)For whom to produce

b)What to produce

c)How to produce

2. Scarcity, opportunity cost, and marginal analysis

Crystal is training for a triathlon, a timed race that combines swimming, biking, and running.

Consider the following sentence: Because her pool sessions are helping her swim more quickly, Crystal plans to reduce by 1 hour per week the time she spends training on the bike and increase by 1 hour the time she spends in the swimming pool; however, her husband says that she should stop doing any biking and running and spend all 20 hours per week in the pool.

Which basic principle of individual choice does Crystal's plan illustrate that her husband's advice does not?

a)People usually exploit opportunities to make themselves better off.

b)Many decisions are made on the margin.

c)Resources are scarce.

d)All costs are opportunity costs.

Juanita is a hard-working college freshman. One Tuesday, she decides to work nonstop until she has answered 250 practice problems for her physics course. She starts work at 8:00 AM and uses a table to keep track of her progress throughout the day. She notices that as she gets tired, it takes her longer to solve each problem.

Time Total Problems Answered
8:00 AM 0
9:00 AM 100
10:00 AM 175
11:00 AM 225
Noon 250

Use the table to answer the following questions.

1) The marginal, or additional, gain from Juanita’s second hour of work, from 9:00 AM to 10:00 AM, is---------problems.

2) The marginal gain from Juanita’s fourth hour of work, from 11:00 AM to noon, is------------problems.

Later, the teaching assistant in Juanita’s physics course gives her some advice. “Based on past experience,” the teaching assistant says, “working on 62.5 problems raises a student’s exam score by about the same amount as reading the textbook for 1 hour.” For simplicity, assume students always cover the same number of pages during each hour they spend reading.

Given this information, in order to use her 4 hours of study time to get the best exam score possible, how many hours should she have spent working on problems and how many should she have spent reading?

a) 0 hours working on problems, 4 hours reading

b) 1 hour working on problems, 3 hours reading

c) 2 hours working on problems, 2 hours reading

d) 4 hours working on problems, 0 hours reading

1/ All the problems studied in economics arise from

a. the unequal distribution of income

b. the scarcity of resources

c. inappropriate government action

d. overpopulation

e. war

 

2/ The overall performance of the economic system as a whole is the focus of

a. macroeconomics

b. public economics

c. international finance

d. labor economics

e. microeconomics

 

3/ After graduating from high school, Steve had the following three choices for his immediate future, listed in order of preference: (1) attend our campus, (2) work in a printed circuit board factory, or (3) attend a rival college. His opportunity cost of going to college here includes which of the following?

a. The income he could have earned at the printed circuit board factory plus the direct cost of attending college here (tuition, textbooks, etc.)

b. The benefits he could have received from going to the rival college.

c. Only the tuition and fees paid for taking classes here.

d. Cannot be determined from the information given.

e. The cost of books and supplies at the rival college.

 

4/ The question of scarce resources and unlimited wants are addressed in

a. psychology

b. history

c. anthropology

d. political science

e. economics

 

5/ Consider an economic model designed to analyze the purchasing decisions of households. An assumption that a household chooses between only two goods would be an example of an

a. positive assumption

b. simplifying assumption

c. macroeconomic assumption

d. financial assumption

e. critical assumption

 

6/ Which of the following explains why economists may disagree over normative issues?

a. They have different beliefs and values.

b. They often employ different statistical techniques when examining data.

c. Some work only on microeconomic issues, while others focus exclusively on macroeconomic issues.

d. They examine the same data to draw their conclusions.

e. They need to disagree to publish their research findings.

 

7/ Suppose your friends take you out for dinner on your birthday, and you have a much better time than you would have had to do anything else. There is still an opportunity cost, even though they will not let you pay for anything. True/False

 

8/ Microeconomics

a. addresses scarcity from a global perspective

b. is purely theoretical and has little value in explaining real-world phenomena

c. focuses on what is happening in the economy as a whole

d. examines how individuals, households, and firms make economic decisions

e. answers the fundamental economic questions of how, when, where, and why.

 

9/ People and organizations have to make choices about how to allocate time and money because

a. religious values conflict with economics

b. time and money are both scarce

c. government require it

d. there are unlimited resources

e. corporations control our lives

 

10/ The objective of an economic model is to

a. yield a better understanding of important relationships

b. use simplifying assumptions to make positive economic statements

c. be an accurate description of reality

d. predict real-world occurrences with complete accuracy

e. use basic principles of economics to derive fundamental assumptions about human behavior.