1. Suppose that Jill spends all her allowance on only two goods whose prices are equal. To maximize utility Jill will
A. Spend the same total dollar amount on each good
B. Purchase the same number of units of each good
C. Purchase a combination of the two goods so that the utility of each good is the same
D. Purchase a combination of the two goods so that the marginal utility of the last unit purchased of each good is the same
E. Purchase a combination of the two goods so that the marginal utility of the last unite purchased of each good divided by the price is equal to one
2. Stanley owns a hardware store. At the end of the year, operation of the store has incurred explicit costs of $55,000. By choosing to operate the hardware store, Stanley has forgone other opportunities with value of $30,000. If Stanley has earned revenue of $75,000 from sales at the store, Stanley is earning
A. An economic profit equal to $20,000
B. An economic profit equal to $45,000
C. An accounting profit equal to $10,000
D. Am accounting profit equal to $20,000
E. A normal profit equal to $20,000
3. Which of the following is true of a monopolistically competitive firm in the long-run equilibrium?
A. Marginal revenue is equal to marginal cost and price is equal to average total cost
B. Marginal revenue is greater than marginal cost, and price is equal to average total cost
C. Price is greater than marginal revenue, and marginal cost is greater than average total cost
D. Price is greater than marginal cost, and marginal revenue is equal to average total cost
E. Price is greater than marginal revenue, and marginal cost is equal to average total cost
4. Which of the following is most probable to cause the demand curve for home care nurses to shift to the right?
A. A decrease in the demand for home care nursing services
B. An increase in the license fee for certification of nurses
C. The establishment of new business providing home care
D. A decrease in the marginal productivity of home care nurses
E. An improvement of the health of older people
5. Which of the following would necessarily lead to an increase in the price of leather shoes?
A. A decrease in the wages of shoemakers
B. A decrease in the expected future price of leather shoes
C. A decrease in the demand for cows
D. An increase in the price of cow hide which is an input used in the production of leather
E. A decrease in the price of sneakers which are a substitute and an increase in the price of socks which are a compliment