1. If I get 10 units of pleasure from my first ice cream cone and 2 less units than before from each succeeding cone, I will buy ____ cones and gain _____ units of consumer surplus if the price of a cone is equal to 5 units of pleasure.
(A) 4； 28
(B) 6； 30
(C) 2； 18
(D) 3； 9

2. Say the demand curve for cigarettes was given by Q = 164 - 0.38P. When P = 20, a further increase in the price will (A) increase total revenue. (B) decrease total revenue. (C) leave total revenue the same. (D) we can't answer with the information given.

3. Comparing the income effects between salt and housing, the (A) income effect for salt will be greater. (B) income effect for housing will be greater. (C) two income effects will be about the same. (D) two income effects will be in the opposite direction.

4. Which of the following gambles should be considered more attractive? (A) If heads, you win $200； if tails, you lose $198. (B) If heads, you win $5； if tails, you lose $10. (C) If heads, you win $6； if tails, you lose $4. (D) If heads, you win $9； if tails, you lose $6.

5. When Jeff bought a house he also bought homeowners insurance, but when he bought a new dishwasher he refused to buy the repair insurance policy the store offered. Assuming Jeff is rational in his choices, which of the following is the most likely cause of his behavior? (A) He switches back and forth between risk averse and risk loving preferences. (B) He doesn't trust appliance insurers because they have no agent to relate to. (C) The probability of his house burning is greater than the probability a dishwasher failure. (D) The expected loss from dishwasher failure is less than the insurance premium and he can afford to absorb smaller losses.

6. Suppose you have been assigned to complete a group project with one of your classmates. Each of you can choose to Shirk or Work. If one or more of you chooses to Work, the project is completed and provides each with extra credit valued at 4 payoff units each. The cost of completing the project is that 6 total units of effort (measured in payoff units) divided equally among all players who choose to Work and this is subtracted from their payoff. If both of you Shirk, then neither of you have to expend any effort but the project is not completed, giving each a payoff of 0. The teacher can only tell whether the project is completed and not which students contributed to it. What is the dominant strategy for you? (A) Work (B) Shirk (C) There is no dominant strategy. (D) Work if your friend also works.

7. Suppose you are using 10 units of labor in your short-run production process. At this point, the average product of your labor is 10, and the marginal product of the last unit of labor was 14. Given this, we know that the (A) average product of labor must be increasing. (B) average product of labor must be decreasing. (C) marginal product of labor must be increasing. (D) marginal product of labor must be decreasing.

8. Output for a simple production process is given by Q = 2KL, where K denotes capital, and L denotes labor. The price of capital is $25 per unit and capital is fixed at 8 units in the short run. The price of labor is $5 per unit. What is the total fixed cost of producing 80 units of output? (A) $200 (B) $33 (C) $25 (D) $85

9. Joe is self-employed in a store that has a rental value of $500 a month which he pays, but he can vacate the building without giving notice. His other expenses are $100 a month for maintenance. He makes $25,000 a year on net sales (total revenue minus the wholesale cost of the product). If he quit his job and worked the same number of hours elsewhere at a job he liked equally well, he estimates that he could make $20,000 a year. No one else can be hired to work in the store. Suppose that the store owner gave Joe the store. Now what should he do? (A) Quit his job. (B) Keep the job. (C) Work part-time. (D) It is impossible to say with the information given in the problem.

10. I get $200 revenue from the sale of my product each day. I rent the factory that I use for $90 a day. The raw materials of the operation cost $115 a day. I do all the work myself. Both jobs are equally attractive as far as the work is concerned. Recently, a competitor offered me $30 a day to work for him. My accounting profit is ____, and my economic profit is _____. (A) -5； -35 (B) -35； -35 (C) 25； -5 (D) 110； -30

11. When factor supply is fixed and quantity of the factor is graphed on the horizontal axis while factor price is graphed on the vertical axis, the factor: (A) supply curve is horizontal. (B) supply curve is vertical. (C) supply curve slopes up to the right. (D) demand curve slopes up to the right.

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