CLEP Microeconomics chapter practice4 questions

02 Math and Graph Skills You Actually Need

These questions come directly from the chapter practice in the book. Choose the best answer, check your reasoning, and use the explanation to correct any gap.

Question 1

Question 1 of 4

Expanding output from 10 to 13 units adds $36 to a firm's total cost. The added cost per extra unit is

Total cost rises by 36 while output rises by three units, so marginal cost over the interval is 36/3=$12 per unit.
Show answer and explanation

C. $12

Total cost rises by 36 while output rises by three units, so marginal cost over the interval is 36/3=$12 per unit.

Question 2

Question 2 of 4

A graph places price on the vertical axis and quantity on the horizontal axis. Price rises from 8 to 12 while quantity falls from 60 to 40. What is the slope measured as change in price over change in quantity?

Slope is Δ P/Δ Q=(12-8)/(40-60)=4/(-20)=-0.20. Reversing the ratio produces a different unit.
Show answer and explanation

A. -0.20

Slope is Δ P/Δ Q=(12-8)/(40-60)=4/(-20)=-0.20. Reversing the ratio produces a different unit.

Question 3

Question 3 of 4

The price of a service rises from 20 to 22 while quantity demanded falls from 500 to 440. Using the original values as the percentage bases, the absolute value of price elasticity of demand is

Quantity changes by 12 percent and price changes by 10 percent, giving an elasticity magnitude of 12/10=1.20.
Show answer and explanation

E. 1.20

Quantity changes by 12 percent and price changes by 10 percent, giving an elasticity magnitude of 12/10=1.20.

Question 4

Question 4 of 4

A per-unit tax is $4 and the after-tax quantity is 75 units. Which calculation gives government tax revenue?

Tax revenue is the tax per unit multiplied by the quantity sold after the tax: $4×75=300$.
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B. 4(75)

Tax revenue is the tax per unit multiplied by the quantity sold after the tax: $4×75=300$.

Quiz complete