ECP3704 EXAM #2 QUESTIONS
& ANSWERS 100% CORRECT
(FULLY SOLVED)
A 10 percent decrease in the price of potato chips leads to
a 30 percent increase in the quantity of soda demanded.
It appears that: - correct answer- cross-price
elasticity of demand for soda is -3.
A 25 percent decrease in the price of breakfast cereal
leads to a 20 percent increase in the quantity of cereal
demanded. As a result: - correct answer- total
revenue will decrease.
According to Steven Levitt and Stephen Dubner, why do
drug dealers still live with their moms? - correct
answer- Drug dealers still live with their moms
because if they are not high up in the ladder, they are
making less than minimum wage. They continue to work
and make so little money with the hopes of going up the
ladder and making more money in the long run.
, An accountant for Sweet Dreams Ice Cream Co. was
recently asked to report the firm's costs of producing
various levels of output. The accountant knows that the
most recent estimate available of the firm's cost function
is C(Q) = 100 + 10Q + Q2, where Q is the number of ice
cream cones served.(a) What is the average fixed cost of
producing 20 units of output?(b) What is the average
variable cost of producing 20 units of output?(c) What is
the average total cost of producing 20 units of output? -
correct answer- (a) AFC = 100/20
AFC = 5
(b) AVC = 10(20) + (20)^2 = 600
= 600/20
AVC = 30
(c) ATC = 100 + 10(20) + (20)^2
= 100 + 600
= 700
= 700/20
ATC= 35
& ANSWERS 100% CORRECT
(FULLY SOLVED)
A 10 percent decrease in the price of potato chips leads to
a 30 percent increase in the quantity of soda demanded.
It appears that: - correct answer- cross-price
elasticity of demand for soda is -3.
A 25 percent decrease in the price of breakfast cereal
leads to a 20 percent increase in the quantity of cereal
demanded. As a result: - correct answer- total
revenue will decrease.
According to Steven Levitt and Stephen Dubner, why do
drug dealers still live with their moms? - correct
answer- Drug dealers still live with their moms
because if they are not high up in the ladder, they are
making less than minimum wage. They continue to work
and make so little money with the hopes of going up the
ladder and making more money in the long run.
, An accountant for Sweet Dreams Ice Cream Co. was
recently asked to report the firm's costs of producing
various levels of output. The accountant knows that the
most recent estimate available of the firm's cost function
is C(Q) = 100 + 10Q + Q2, where Q is the number of ice
cream cones served.(a) What is the average fixed cost of
producing 20 units of output?(b) What is the average
variable cost of producing 20 units of output?(c) What is
the average total cost of producing 20 units of output? -
correct answer- (a) AFC = 100/20
AFC = 5
(b) AVC = 10(20) + (20)^2 = 600
= 600/20
AVC = 30
(c) ATC = 100 + 10(20) + (20)^2
= 100 + 600
= 700
= 700/20
ATC= 35
