In the table below, the capital stock is fixed at 40 units, the price of capital is $15 per unit, and the price of labor is $80 per unit. 
If the firm produces 40 units of output, what is average fixed cost?
A. $600
B. $120
C. $7.50
D. $25
E. none of the above
Answer: E
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A huge 50 percent off sale on golf clubs is advertised for next week. What happens this week in the market for golf clubs?
A) The supply of golf clubs decreases. B) The demand for golf clubs increases. C) The demand for golf clubs decreases. D) The supply of golf clubs increases. E) The demand for and the supply of golf clubs decreases.
Suppose a consumer's expected utility function given two possible states of nature A and B can be expressed in terms of consumption of food, F, in both states as U(FA, FB) = [0.6 × ln(FA)] + [0.4 × ln(FB)]. For this utility function, MUA is (0.6/FA) and MUB is (0.4/FB). Without insurance, the consumer can consume 200 in state A but only 50 in state B. The consumer can purchase insurance at a premium of 50 cents per dollar of benefit. Which of the following gives her budget line?
A. FA = 250 - FB B. FB = 250 - FA C. FA = 200 - FB D. FB = 50 - FA
A shortage is eliminated when a. a binding price ceiling is removed
b. a binding price ceiling is enacted. c. a nonbinding price ceiling is repealed. d. a nonbinding price ceiling is imposed.
Which of the following will definitely occur when there is an increase in demand for and a decrease in supply of milk?
A. a decrease in equilibrium price B. a decrease in equilibrium quantity C. an increase in equilibrium quantity D. an increase in equilibrium price