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1. DEVRY ECON 545 Week 2 Quiz NEW
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1. Consider the market for ping golf clubs.
Suppose the price of memberships at local golf
courses increases. Use the line drawing tool to show
how this affects the demand for ping golf clubs by
drawing a new demand curve. Assume memberships
at local golf courses and ping golf clubs are
complements. Properly label this line.
Instead, suppose the price of tennins rackets
decreases. If tennis rackets and goal substitutes,
then the demand for ping golf clubs will ………..
2. State whether each of the following events will result
in a movement along the demand curve for
McDonald’s Big Mac hamburgers or whether it will
cause the curve to shift
a. The price of Burger King’s Whopper hamburgers
declines. This will cause
b. McDonald’s eliminates $1.00 off coupons. This will
cause
c-d) KFC raises the price of a bucket of fried
chicken. This will
e) The U.S economy enters a period of decline in
incomes. This will cause
3. Imagine that the table on the right shows the
quantity demanded of UCG boots at fine different
prices in 2014 and in 2015.

2. Which of the following variables could cause the
demand for UCG boots to change as indicated
from 2014 to 2015?
4. Imagine that the curves shown in the accompanying
figure represent two demand curves for traditional
wings (basket of six) at Buffalo Wild Wings.
The movement from point A to B on Dl is caused
by
Indicate which of the following would cause a
movement from point A to C. (Check al that apply)
The difference between a change in supply and a
change in the quantity supplied is that the latter
is
5. Suppose the curves in the figure to the right
represent two supply curves for traditional wings
(basket of six) at Buffalo wild Wings
The movement from point A to B os S1 is caused
by
Indicates which of the following would cause a
movement from point A to C
6. Suppose that the table on the right shows the
quantity supplied of UCG boots at five different
prices in 2014 and in 2015
Refer to the table to the right note the change in
the quantity supplied of UCG boots from 2014 to
2015
Which of the following variables could explain the
change in the quantity supplied observed in
2015?
If the market price ‘Pmkt’ is equal to the price
‘Po’, then quantity supplied is ……. Quantity
demanded and the market is in …….
7. Consider the market for gasoline, illustrated in the
figure to the right.
The equilibrium quantity of gasoline is … million
gallons and the equilibrium price $......per gallon
If instead the market price were $1.75, then there
would be a …….. of … million gallons

3. 8. If a 22 percent increase in the price of cheerios
causes a 27 percent reduction in the number of
boxes of cereal demanded, the price elasticity of
demand for cheerios is - ……….
The demand for cheerios is ……
9. The following table gives data on the price of rye and
the number of bushels of rye sold in 2013 and 2014
a. Calculate the change in the quantity of rye demanded
divided by change in the price of rye. Measure the
quantity of rye demanded in bushels. The change in
the quantity of rye demanded divided by the change
in the price of rye in bushels is………
b. Calculate the change in the quantity of rye demanded
divided by change in the price of rye, but this time
measure the quantity of rye demanded in million of
bushels. The change in the quantity of rye demanded
divided by the change in the price of rye in million
bushels is………
Compare to part a, the answer to part b is …….
In absolute terms
c. Finally assuming the demand curve for rye did not
shift between 2013 and 2014, use the information in
the table to calculate the price elasticity of demand
for rye. Using the midpoint formla, the price
elasticity of demand for rye is ….
10.Suppose the price elasticity of demand for cereal is
-0.83.
If so then the price for demand for cereal is…..
In another example, assume the price
elasticity of demand for a particular magazine
is …….
The price elasticity of demand for the
magazine is ….
11.Consider the polar case where the price elasticity of
demand is perfectly inelastic

4. Use the line drawing tool to draw a perfectly
inelastic curve.
12.Consider the two demand curves illustrated in the
figure to the right
Which of the two is relatively more elastic?
13.Suppose that Bill owns an automobile collision
repair shop and the table below shows the quantity
of cars repaired per month according to how many
workers Bill hires. Assume he pays each worker
$6,000 per month and his fixed cost equals $5,000
per month
14.Suppose a pizza parlor has the following production
costs: $5.00 in a labor per pizza, $4.00 in ingredients
per pizza, $0.80 in electricity per pizza, $1,000 in
restaurant rent per month, and $5550 in insurance
per month
Assume the pizza parlor produces 6,000 pizzas
per month
What is the variable cost of production is ….?
What is fixed cost of production
The fixed cost of production is $...
15.The table below shows the quantity of workers and
total output for a local pizza parlor. Answer the
following questions based on this table
a. When the owner hires 4 workers, the average
product of labor is ….. pizzas
b. The marginal product of fifth worker is
c. If the marginal product of the second worker is 6,
then total number of pizzas produced when 2
workers are hired is ,,, pizzas
d. Assuming the marginal product of the second worker
is 6, the law of diminishing marginal returns set in
with the

5. 16.What are the three conditions for a market to be
perfectly competitive?
17.What is a price taker?
18.Consider the graph below showing the market
demand and supply for com. Use the line drawing
tool to graph the demand for com produced by one
farmer, properly label this line
19.Which of the following are perfectly competitive
markets?
20.Refer to the following table?
Suppose the price of what rises to $5.00 per
bushel. Farmer parker will maximize profits by
producing…. Bushels of wheat.
He will make a profit of $.........
21.The following table shows Farmer Parker’s revenue,
cost, and profit from wheat farming
Farmer parker’s fixed costs are $
Suppose that fixed cost increase by ……
Farmer parker’s new profit-maximizing level of
production after the increase in fixed cost is ….
The amount of profit that farmer parker will earn
after increase in fixed cost is …..?
22.Sophia grows Christmas tree. Her cost of production
is shown in the table below
Suppose the market for Christmas tree is
perfectly competitive and that market price for
Christmas tree is $152 per tree
How many Christmas tree should Sophia grow?
What is Sophia’s profit?

6. 23.Frances sells earnings in the perfectly competitive
earning market. Her output per day and costs are
seen in the table to the right.
a. Of the current equilibrium price in the earing market
is $1.80, what price will Frances charge?
b. Find the correct quantities for the missing values in
the table
c. What quantity of earings will maximize France’s
Profit?
24.The fig to be illustrates the average total cost (ATC)
and marginal cost (MC) curves for an orange farmer
in California. Assume market for oranges is perfectly
competitive
Suppose the market price of orange is $28.00 per
crate
25.Which of the following is an expression of profit for a
perfectly competitive firm?
Profit for a perfectly competitive firm can be
expressed as
26.Farmer brown grows a peaches. The average total
cost and marginal cost of growing peaches for an
individual farmer are illustrates in the graph to right
Assume the market for peaches is perfectly
competitive and that the market price is $38 per
box. Also assume that farmer Brown is producing
the amount of peaches that maximizes profits.
27.Lauren grows grapes. Her average variable cost
(AVC), average total cost (ATC), and marginal cost
(MC) of production are illustrated in fig to the right
Assume the market for grapes is perfectly
competitive and the market price is $4.00 per
crate

7. Characterize Lauren’s economic profits. Assume
she produces such that she maximizes profits in
short run