6) If average movie ticket prices rise by about 5 percent and attendance falls by about 2 percent, other things being equal, the elasticity of demand for movie tickets is about:
A. 0.0
B. 0.4
C. 0.6
D. 2.5
7) When labor is the variable input, the average product equals the
A. marginal product divided by the number of workers
B. marginal product multiplied by the number of workers
C. number of workers divided by the quantity of output
D. quantity of output divided by the number of workers
8) The increase in output obtained by hiring an additional worker is known as
A. the average product
B. the marginal product
C. the total product
D. value added
9) Which of the following is the best example of a long-run decision?
A. An automobile manufacturing company is considering whether or not to invest in robotic equipment to develop a more cost-effective production technique.
B. An automobile manufacturing company is considering whether or not to expand its existing workforce, while keeping the same factory and equipment.
C. A business consulting firm is considering whether or not to hire interns to assist with research and data processing.
D. A business consulting firm is considering whether or not to add new computers while maintaining the same number of employees.
10) Other things being equal, when average productivity falls,
A. average fixed cost must rise
B. marginal cost must rise
C. average total cost must rise
D. average variable cost must rise
25) From the point of view of consumer and producer surplus, what problem may be created when a country subsidizes the cost of energy to consumers to help alleviate the burden of higher energy costs?
A. It hurts the poor and benefits the rich.
B. It leads to less fuel being used than the amount that maximizes consumer surplus.
C. It encourages the consumption of too much fuel at the expense of other goods.
D. It has no effect; consumers gain a surplus, but taxpayers lose the same amount because they must finance the subsidy.
6) To determine the elasticity of demand for movie tickets, we need to calculate the percentage change in quantity demanded and the percentage change in price. The formula for elasticity of demand is:
Elasticity of Demand = (Percentage change in quantity demanded) / (Percentage change in price)
In this case, average movie ticket prices have risen by about 5 percent, so the percentage change in price is 5 percent. Attendance has fallen by about 2 percent, so the percentage change in quantity demanded is -2 percent (since it is a decrease).
Plugging these values into the formula:
Elasticity of Demand = (-2% / 5%) = -0.4
Since the elasticity of demand is negative, we can ignore the sign for this question. Therefore, the elasticity of demand is 0.4.
Answer: B. 0.4
7) The average product of labor is defined as the total output produced divided by the number of workers.
Average Product = Quantity of Output / Number of Workers
Answer: D. Quantity of output divided by the number of workers
8) The increase in output obtained by hiring an additional worker is known as the marginal product of labor.
Answer: B. The marginal product
9) A long-run decision refers to a decision that involves changing the scale of operations, such as expanding capacity or investing in new technology.
Out of the options given, option A is the best example of a long-run decision as it involves making an investment in robotic equipment to develop a more cost-effective production technique.
Answer: A. An automobile manufacturing company is considering whether or not to invest in robotic equipment to develop a more cost-effective production technique.
10) When average productivity falls, it means that output per unit of input decreases. This can have an impact on costs.
Out of the options given, the option that aligns with this situation is option C. Average total cost must rise. This is because when average productivity falls, it means that more input is required to produce the same output, leading to an increase in average total cost.
Answer: C. Average total cost must rise.