<p>I took the 95 MC today, and i had some answers that didnt make any sense to me. I was wondering if you could help.</p>
<li>An outward shift in the production possibilities curve of an economy can be caused by an increase in</li>
</ol>
<p>A. unemployment
B. the labor force
C. inflation
D. output
E. demand</p>
<p>I said output, but apparently it’s the labor force, why? I see both of them as being relevant choices.</p>
<li>If a store raises its prices by 20 percent and its total revenue increases by 10 percent, the demand it faces in this price range must be</li>
</ol>
<p>A. inelastic
B. elastic
C. unit elastic
D. perfectly elastic
E. perfectly inelastic</p>
<p>I got 20/10= 2, so I put B, but apprently it’s A. is there somehting I’m missing here?</p>
<p>If the labor force increases, then that's an increase in resources which will allow the economy to produce more (causes the curve to shift outwards). For the second one, if prices increased, and TR increased as well, this means that quantity of output sold increased as well (P x Q = TR). If P and TR move in the same direction, then demand is inelastic.</p>
<p>Production possibilities = what you can make with your inputs. How do you change that, change your inputs, IE labor, better technology/equipment, research (long run).</p>
<p>Elasticity = % change of quantity / % change in price. So in this one you only know the % change in price. So you cant just plug in. But then you can think if it was unit elastic, = 1, then increasing will be one to one 20% price = 20% revenue.
Instead you are making less per each additional unit, meaning that the marginal demand < 1. You have to increase the product by more than what you get for it. Meaning that an increase in price leads to a drop (an increase, but not as much) in revenue. The only way for this to be possible is to have an elasticity < 1. Change in quantity < change in price. This is elastic. This is not the best explanation but I hope it helps.</p>
<p>I guess you can't increase output to increase output of economy? i was thinking increasing output per labor unit. So I thought... well never mind.. I get it thanks a bunch</p>
<p>I'm probably not going to do a good job explaining this, but here I go...</p>
<h1>16 The PP curve shows all the POSSIBLE outputs (rememeber? inside the curve= attainable, outside the curve= unattainable). So an outward shift of the PP curve just shows an increase in output production possibilites. It doesn't answer the question why the increase in output happened.</h1>
<p>What causes an increase in output? An increase in input... Labor is the only input listed, so it's B.</p>
<h1>34 Total revenue test:</h1>
<ul>
<li>if the price and total revenue change in opposite directions, demand is elastic</li>
<li>if price and total revenue stay the same, demand is unit elastic</li>
<li>if price and total revenue change in same direction, good is inelastic</li>
</ul>
<p>I'm not sure what formula you're using, but the formula you might be thinking of is Percentage change in <em>quantity demanded</em>/ percentage change in price.</p>
<p>The question did not give you a percentage change in demand, so you cannot use that formula.</p>
<p>(To be honest, that question would have gotten me too. I wish us both luck on this darn exam!)</p>
<p>I have some problems with the 2000 MC for micro econ...hoping that someone can explain the reason for the correct answer to me</p>
<ol>
<li> A factor of production will NOT earn economics rent when its supply is</li>
</ol>
<p>A. elastic
B. inelastic
c. unit elastic
D. perfectly elastic
E. perfect inelastic</p>
<h2>Answer = D according to the key. I dont know wat economics rent is</h2>
<ol>
<li> AP perfectly competitive frim, earning economic profits produces and sells 100 units of output at a price of 20 dollars per unit. If its marginal cost of increasing output to a rate of 101 units is 18 dollars, which of the following statement is correct?</li>
</ol>
<p>Answer is:</p>
<h2>B. the total profit from selling 101 units is 2 dollars more than the total profit from selling 100 units</h2>
<ol>
<li>Assume that total fixed cost are 46 dollars, that the average product of labor is 5 units when 10 units of output are produced, and that the wage rate is 12 dollars. If labor is the only variable input, what is the ATC of producing 10 units of output</li>
</ol>
<p>A. 2
B. 5
C. 7
D. 9
E. 12</p>
<h2>Answer = C</h2>
<ol>
<li> In which of the following cases is the government's action appropriate for reducing inefficiency?</li>
</ol>
<p>A. Taxation of the output of a chocolate factory that emits an aroma that residents of the city enjoy
B. Regulation that reduces the output of monopoly
C. A lump sum tax on a monopolist
D. A subsidy for the consumption of a good produced by a plant that emits a pollutant as a by product
E. A toll on a congested bridge</p>
<p>Answer = E </p>
<p>those are pretty much all the ones i missed. Thx for ur help</p>
<p>Let me take a stab at this.
Economic rent is those paid by the economy for some kind of special aspect.
Like basketball players are paid over millions of dollars in rent because their next best job might be being a commentary that is only worth 200,000 dollars.
Therefore, perfectly elastic supply will not have any economic rent as if a supplier had risen his prices (to earn economic rent), he or she will lose all customers.</p>
<p>Assume constant price, marginal cost = price to produce the next unit. So
Profit = revenue - cost = 20 - 18 =2</p>
<h2>B. the total profit from selling 101 units is 2 dollars more than the total profit from selling 100 units</h2>
<ol>
<li>Assume that total fixed cost are 46 dollars, that the average product of labor is 5 units when 10 units of output are produced, and that the wage rate is 12 dollars. If labor is the only variable input, what is the ATC of producing 10 units of output</li>
</ol>
<p>My attempt
46 + 12wage rate * (5 units / for every 10) * X so X * 10 which I get to be
46 + 12 * 5 = 106/10 =10.6 which is obviously wrong. So I dont know.</p>
<hr>
<ol>
<li>In which of the following cases is the government's action appropriate for reducing inefficiency?
E. A toll on a congested bridge
Because inefficiency = the traffic jam. To get rid of that you need to make it less desirable. TO do this, you increase price, shifting demand cuve to the left.</li>
</ol>
<p>43.
When 10 units are produced, only 5 can be produced by one worker on avrg. therefore, we will require 2 workers intotal. 2 X 12 = 24 in wages.
46 + 24 = 70 -> TC
ATC = 70/10 = 7.</p>
<ol>
<li>
Since a toll will put a price on the bridge, those who do not wish to pay the toll will have to find an alternate route, causing the decrease in traffic.</li>
</ol>