I. Multiple Choices(60%)

經濟學原理一

Homework#3

Winter, 2007

Due day: 12/26

I. Multiple choices(60%)

In the table above, what is the level of unemployment (in millions of workers) if the minimum wage is set at $4 per hour?

A)0.

B)1.

C)3.

D)4.

1. If penalties are imposed on both the buyers and the sellers of illegal goods or services, then an effect in the market for the illegal good or service would definitely be

A)an increase in the equilibrium price.

B)a decrease in the equilibrium price.

C)a decrease in the equilibrium quantity.

D)an increase in the equilibrium quantity.

1. Suppose the demand for wine is elastic and that initially 5 million bottles of wine are produced and consumed in the United States. If the government levies an excise tax of $2 per bottle of wine, the government will collect

A)more than $10 million in tax revenues.

B)$10 million in tax revenues.

C)less than $10 million in tax revenues.

D)an amount that may be more than, equal to, or less than $10 million in tax revenues depending on the precise elasticity of demand.

In the above figure, if the minimum wage is set at $5.00 per hour, what effect will it have on the market for low-skilled labor?

A)The minimum wage will have no effect when set above the equilibrium wage rate.

B)The minimum wage will create a surplus of low-skilled labor.

C)The minimum wage will create a shortage of low-skilled labor.

D)The minimum wage will attract more labor to the low-skilled labor market and cause the wage rate to fall.

The figure shows the market for books before and after a sales tax is introduced. The tax on books is ______a book, buyers pay ______of tax per book, and the government's tax revenue is ______a week.

A)$1.20; $0.80; $128

B)$0.80; $1.20; $12

C)$0.40; $0.40; $4

D)$1.20; $0.80; $12

In the above figure, if income is $45.00, the price of hamburgers is $1.50, and the price of gasoline is $1.00, then which is the correct budget line?

A)F.

B)G.

C)H.

D)I.

1. Which of the following is NOT an assumption of marginal utility theory?

A)A consumer derives utility from the goods consumed.

B)Each additional unit of consumption yields additional utility.

C)Consumers maximize their total utility.

D)As more of a good is consumed, the decrease in the marginal utility from the good means that the total utility from the good decreases also.

1. Joshua consumes only apples and bread and is in consumer equilibrium. Joshua reads that eating bread is healthy, so his total utility from each loaf of bread increases. At his new consumer equilibrium Joshua wouldconsume

A)more apples and less bread.

B)fewer apples and more bread.

C)some combination of apples and bread corresponding to a lower ratio of the marginal utility of bread to the marginal utility of apples.

D)the same quantity of apples and the same quantity of bread.

In the figure above, the curve that shows the diminishing marginal utility is

A)total utility curve A because it gets steeper as consumption of tomatoes increases.

B)total utility curve A because it is higher than total utility curves B or C.

C)total utility curve C because it gets flatter as consumption of tomatoes increases.

D)total utility curve C because it is lower than total utility curves B and C.

1. We can explain the paradox of value as follows: The consumer surplus from water,which ischeap, is ______than the consumer surplus from gold, which is expensive; the total utility from gold is ______than the total utility from water; and the marginal utility per dollar spent on water ______the marginal utility per dollar spent on gold.

A)greater; less; equals

B)smaller; less; equals

C)greater; greater; greater than

D)less; greater; greater than

1. Suppose that Dave has $200 to spend per week and he buys only magazines and pizza. The price of a pizza is $10 and the price of a magazine is $5. What is Dave's real income in terms of magazines?

A)20.

B)40.

C)200.

D)10.

1. Bart consumes food and clothing, which are both normal goods. Suppose that the price of food falls. The substitution effect of this price decrease is ______and the income effect of this price decrease is ______.

A)that Bart buys more clothing and less food; that Bart buys more of both food and clothing

B)reflected by a change in the relative prices of food and clothing; is represented by a movement along the original indifference curve

C)reflected by a parallel shift outward of the budget line; that Bart earns more money each month

D)reflected by the change in the slope of the budget line; that Bart has greater purchasing power

In the above figure, Brendan originally consumes at point A. If his income rises and both compact discs and haircuts are normal goods then he will begin consuming at a point such as

A)F

B)B.

C)C.

D)D.

1. The substitution effect

A)is always larger than the price effect.

B)always decreases purchases of a good as the price of a good rises.

C)increases purchases of the good as the price rises if the good is a normal good.

D)is always smaller than the income effect.

The above figure illustrates Sally's budget line and her preferences. Point ______is Sally's best affordable point, and Sally prefers point ______to point ______.

A)A; B; A

B)E; C; B

C)B; A; B

D)B; B; D

II. Problems(40%)

1. The figure illustrates the market for a banned substance. What are the equilibrium price and quantity if there is a penalty for $20 a unit on(要有計算過程 或是畫圖)

a.Sellers only? Price:70 Quantity:100

b.Buyers only?Price:50 Quantity:100

c.Both sellers and buyers?Price:60 Quantity:90

1. The figure illustrates the market for CDs.

1. What are the equilibrium price and equilibrium quantity of CDs?

Price:10 Quantity:100

1. Shade in the consumer surplus (and label it) and the producer surplus (and label it).

1. Shade in the cost of producing the CDs sold.

1. Calculate total surplus.

(20-5)*100/2=750

1. What is the efficient quantity of CDs?100

1. Jason enjoy DVDs and spy novels and spends $60 a month on them. The price of a DVD is $20 and the price of a spy novel is $10.

a.Draw Jason’s budget line. Label the combinations of DVDs and spy novels that Jason cannot afford and the combinations that Jason can afford.

b.What is Jason’s real income in terms of spy novels?

6 spy novels per month

c.What is the relative price of a DVD?

20/10=2(spy novel)

1. The table shows the utility that Jason gets from DVDs and spy novels.

a.Draw graphsshowing Jason’s total utility from DVDs and from spy novels.

b.Compare the two utility graphs. What can you say about Jason’s preference?

將上面兩圖合併畫成一個 可以知道dvd的偏好大於 spy novel

c.Draw graphs that show Jason’s marginal utility from spy novels.

1