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ECON 2100 (Summer 2009 – Section 04) Quiz #3 Name _A. Key_______________________ Multiple Choice Questions: (2 points each) 1. Consider a market in which quantity demanded is 10,000 units when price is $15.00 per unit. Suppose that an increase in supply causes price in this market to decrease to $14.00. As a result of this change in equilibrium price, Total Consumers’ Surplus would: D. increase by more than $10,000. 2. Suppose that the income elasticity of demand for margarine is equal to (-0.20). Observing this value allows one to directly infer that C. an increase in consumer income would lead to a decrease in demand for margarine. 3. A “Production Possibilities Frontier” A. graphically illustrates the combinations of output that a society can produce, given the currently available resources and production technology. 4. If a firm made an Economic Profit of $225,000 last year, then the Accounting Profit of the firm A. must have been greater than $225,000. 5. Bob manages a company that makes hats. When producing 5,000 units of output, the company has “Average Total Costs” of $4.95 and “Average Variable Costs” of $3.80. From this information, it follows that C. “Average Fixed Costs” of producing 5,000 hats must be equal to $1.15.