Marginal Costs

A driver wishes to buy gasoline and have her car washed. She finds that the wash costs $3.00 when she buys 19 gallons at $1.00 each, but that if she buys 20 gallons, the car wash is free. Thus the marginal cost of the twentieth gallon of gas is: A) -$2.00. B) $0.00. C) $1.00. D) $2.00. E) none of the above.

Elasticity/Demand Curves

In 1979, in a isolated small town, 100,000 bricks were sold at $1.20 per brick. In 1980, 120,000 bricks were sold at $1.50 each in the same town. This data could provide evidence of: A) a totally elastic demand curve for bricks. B) an unitary elasticity of demand for bricks. C) a contraction in the supply of bricks over time. D) a shift in the demand curve for bricks over time. E) none of the above.

Demand Curve

47. The following is a complete and correct definition of the demand curve for commodity X. The demand curve shows, for a given market: A) how much of X would be bought at the equilibrium price. B) how, as people's incomes rise and they have more money to spend, their purchases of X would increase. C) how the amount of money people spend to purchase X changes as the price they must pay for it changes. D) the amounts of X that would be bought each period, at each and any price, assuming other factors influencing demand (incomes, tastes, etc.) remain constant. E) the amounts of X that would be bought each period if taxes were to go down

Demand/Elasticity

If demand is relatively price inelastic: A) a 1 percent increase in price evokes a less than 1 percent decrease in quantity demanded. B) a 1 percent increase in price evokes a larger than 1 percent decrease in quantity demanded. C) a 1 percent decrease in price evokes a larger than 1 percent increase in quantity demanded. D) a 1 percent decrease or increase in price induces no change in total revenue. E) none of the above.

Consumer Equilibrium

53. A consumer spends all of her income on two goods, coffee and doughnuts. She purchases coffee at 25 cents a unit with a total utility of 800 and a marginal utility of 12. Doughnuts are purchase at 75 cents a unit with a total utility of 200 and a marginal utility of 24. In order to reach consumer equilibrium, she should consume: A) less doughnuts and more coffee. B) more doughnuts but the same amount of coffee. C) more coffee but the same amount of doughnuts. D) more doughnuts and less coffee. E) the same amount of coffee and doughnuts.