Econ 222 Quiz 1 (ALTERNATIVE) – 8 points K. Jaber Grader's Initials: (at least 2) NAME (L, F): (1) ____(T/F) If wages for accountants fell, then accountants' leisure time would have a lower opportunity cost. (2) (T/F) A rational decision-maker takes an action if and only if the marginal cost exceeds the marginal benefit. (3) (T/F) Suppose one county in Alabama decides it wants to reduce alcohol consumption, so the county passes a law that raises the price of a bottle of beer by $1. As a result, people drive to other counties to drink alcohol, which results in an increase in drunk driving. This illustrates the principle that people respond to incentives. (4) Mallory decides to spend three hours working overtime rather than watching a video with her friends. She earns $8 an hour. Her opportunity cost of working is: A) the $24 minus the enjoyment she would have received from watching the video. B) the $24 she earns working. C) nothing, since she would have received less than $24 of enjoyment from the video. D) the enjoyment she would have received had she watched the video. (5) The price of an airline ticket from Los Angeles to Boston is $600. A train ticket costs $125. Traveling by plane takes 4 hours and traveling by train takes 44 hours. A) If a person valued his time at $12/hour, which mode of transportation would make him better off? B) What value of time would make a person indifferent between these two modes of transportation for this trip? (Round to the nearest penny.) 1 of 1 on 222 Quiz 2 (ALTERNATIVE) – 8 points K. Jaber Grader's Initials: (at least 2) NAME (L, F): (1) -__(T/F) If a line passes through the points (20,10) and (5,20), the line is positively sloped. (2) The slope of a flat, upward sloping line will be a relatively A) large positive number. B) small positive number. C) large (in magnitude) negative number. D) small (in magnitude) negative number. (3) Calculate the slope of a line that that passes through points (9, 12) and (10, 24). Recall: (x, y). (4) Assume that Pete's budget constraint for purchasing goods Y and X is given by the following linear equation: Y=200-4X. Answer the following questions. A) The Y-intercept is: and the slope is: B) If Pete spent all his money on good Y, how many units would he buy? C) If Pete spent all his money on good X, how many units would he buy? D) Which good is more expensive, Y or X? E) IfX represents movie tickets and Y represents rental movies, which of the following is the correct interpretation of the slope of Pete's budget constraint? a) For each 4 additional movie tickets, Pete must forego 1 movie rental. b) For each 200 additional movie tickets, Pete must forego 1 movie rental. c) For each additional movie ticket, Pete must forego 1/4 of a movie rental. d) For each additional movie ticket, Pete must forego 200 movie rentals. e) For each additional movie ticket, Pete must forego 4 movie rentals. Lecture 4 Practice K. Jaber A B с D P Si P S. P S. S. Si S. Pi Po Po Pi Po P1 Pi Po Di Do Di DO Q Q Do Q Oo Qo Q1 Q, Q Oo Q Decrease in input cost Increase in input cost A __Increase in price of substitutes B_Decrease in price of substitutes B_Increase in price of complement A __Decrease in price of complement Increase in Income, Normal good B Increase in Income, Inferior good B_Decrease in Income, Normal good A Decrease in Income, Inferior good A Population increases BPopulation decreases A Consumers expect price to rise in future B_Consumers expect price to fall in future A_ Consumers educated on many benefits of this good B_Consumer educated on the many risks of this good Price of substitute in production rises Price of complement in production rises Price of substitute in production falls Price of complement in production falls Producers think price of good will rise in future Producers think price of good will fall in future Number of firms supplying good increases Number of firms supplying good falls Technology improves A technology previous allowed is banned Producers of this good are taxed _Producers of this good are subsidized 2 Lecture 4 Practice K. Jaber A B с D P Si P S. P S. S. Si S. Pi Po Po Pi Po P1 Pi Po Di Do Di DO Q Q Do Q Oo Qo Q1 Q, Q Oo Q Decrease in input cost Increase in input cost A __Increase in price of substitutes B_Decrease in price of substitutes B_Increase in price of complement A __Decrease in price of complement Increase in Income, Normal good B Increase in Income, Inferior good B_Decrease in Income, Normal good A Decrease in Income, Inferior good A Population increases BPopulation decreases A Consumers expect price to rise in future B_Consumers expect price to fall in future A_ Consumers educated on many benefits of this good B_Consumer educated on the many risks of this good Price of substitute in production rises Price of complement in production rises Price of substitute in production falls Price of complement in production falls Producers think price of good will rise in future Producers think price of good will fall in future Number of firms supplying good increases Number of firms supplying good falls Technology improves A technology previous allowed is banned Producers of this good are taxed _Producers of this good are subsidized 2 More Practice with Market Changes and Comparative Statics Consider the market for Jet's Pizza in Saginaw. Do comparative statics for each of the following possible market shocks. You should be able to (1) correctly identify which side of the market is affected, (2) determine whether the shock results in an increase or a decrease in this side of the market (and illustrate this effect), (3) identify initial and new equilibrium points and their respective prices and quantities; and (4) do comparative statics. Possible Shocks: Ingredients for Jet's Pizza get cheaper. Pizza is rated one of the best foods for improving your I.Q New legislation requires local restaurants to pay their workers more. - Al's Pizza, with equally delicious pizzas and lower prices, opens in Saginaw. 6
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