econ 202 Final Exam

assume the amounts of all non-labor resources are fixed:

15 units of output

Refer to the data. Creamy crisps explicit costs are

150,000

Refer to data- at 6 units of output total fixed cost is _ and total cost is _

150,300

Refer to the same data above. The average total cost of producing 3 units of output is

16.00

a 3 percent increase in the price of tea cuases a 6 percent increase in the demand for coffee. The cross elasticity of demand for coffee with respect to the price of tea is

+2.0

Suppose that a 20% increase in price of normal good, Y, causes a 10% increase in the quantity demanded of normal good X. Coefficient of cross-elasticity of demand is:

-positive and therefore these goods are subsitutes

suppose that a pure monopolist can sell 4 units at $@

.75 or less

you are given market data that says when the price of pizza is $4, the quantity demanded of pizza slices and the quantity demanded of cheese bread is 100 pieces. When the price of pizza is $2, the quantity demanded of pizza is 80 slices and the quantity demanded of cheese bread is 70. What is the price elasticity of the pizza?

0.429

P Q $20 12 18 17 16 20 14 24 12 30 10 36 8 40 6 44 4 48 What is the price elasticity of demand over the range of $8 to $10?

0.47

refer to chart: which area of the graph represents the portion of total costs that the form can recoup by continuing t produce rather than shutting down

0BEG

assume Manfred hires labor, its only variable input, under purely competitive conditions. Shoe shines are also sold competitively. Refer to the given data. At what price does each shoe shine sell?

3

Answer the question on the basis of the above cost data. Refer to the data. The total cost of producing 5 units is

37.00

total cost for 5th output is

390

using the same data chart above, what is the marginal product of the 6th unit?

4

refer to budget line shown in diagram. If consumers money income is $20, which of the following combinations of goods is unattainable

4 units of C and 6 units of D

suppose that a pure monopolist can sell 20 units of output at$10 per unit and 21 units at 9.75 per unit marginal revenue of 21st is:

4.75

(CHART) total fixed cost is:

50

(chart) refer to the above data. If the firm closed down in the short run and produced zero units of output, its total cost would be

50

if the four-firm concentration ratio for industry x is 80

80% of total sales

using the same chart, what is the marginal revenue of the 6th product?

9

refer to data: four firm concentration ratio is:

95%

1. For a purely competitive firm, total revenue: A. is a price times quantity sold B increases by a constant absolute amount as output expands C graphs as a straight upsloping line from the origin D Has all of these

D. HAS ALL OF THESE

Suppose the Herfindahl indexes for industries A, B, and C are 1,200, 5,000, and 7,500 respectively.

These data imply that: market power is greatest in industry C

. which of the following will not cause demand for product k to change..

change in price of product k

We would expect an industry to expand if firms in that industry are:

earning economic profits

when total utility reaches a maximum, then marginal utility is

equal to zero

which of the following is true concerning purely competitive industries

in the short run, firms may incur economic losses or earn economic profits, but long run they earn normal profits.

. increase in price of product A will

increase demand for substitute product B

. which of the following would cause a shift in coffees demand

increase in consumer prices

demand curve:

indicates the quantity demanded at each price in a series of prices

cartels are difficult to maintain in the long run because

individual members may find it profitable to cheat on agreements

. invisible hand promotes societies interests b/c

individuals pursuing their self interest will try and produce goods and services that people in society want and are willing to purchase

refer to diagram- output of q1:

neither productive not allocative efficiency is achieved

. in terms of circular flow diagram, households make expenditures in the ____ market and receive income through the _____ market:

product; resource

in which of the following industry structure is the entry of new firms the most difficult?

pure monopoly

Refer to diagram marginal revenue will be at zero at output:

q2

there is a shortage in a market for a product when

quantity demanded is greater than quantity supplied

other things the same, if a price change causes Total revenue to change in the opposite direction, demand is:

relatively elastic

other things the same, if a price change causes total revenue to change in the opposite direction, demand is

relatively elastic

the price elasticity of demand is a measure of the

responsiveness of buyers of a good to changes in its price

price elasticity of demand is a measure of the:

responsiveness of buyers of a good to changes in price

the money income of households consists of all the following, except

revenues

Refer to the data. If Firm B merged with Firm C, the industry's four-firm concentration ratio would ____ and its Herfindahl index would ____.

rise, rise

what will happen in the long run to industry supply and the equilibrium price, p pf the product?

s will decrease, p will increase

which of the following factors will make the demand for a product relatively elastic?

the time interval considered is long

refer to diagram- economist of scale

develop over the 0q1 range of output

P Q 10 30 9 40 8 50 7 60 6 70 What is price elasticity of demand when price declines from $8-$6

$1.16

A monopolistic firm has a sales schedule such that it can sell 10 prefabricated garages per week at $10,000 each, but if it restricts its output to 9 per week it can sell these at $11,000 each. The marginal revenue of the tenth unit of sales per week is

$1000

refer to graph: which of the following statements are true?

A representative firm is experiencing economic losses.

which area of the graph represents the portion of total loss?

BCDE

productive efficiency level

K

If the firm in the diagram lowers price form p1-p2 it will:

Lose p1-p2 b-a in revenue from the price but increase revenue by q1-b-c-q2

when a monopolistically competitive firm is in the long run equilibrium

MR = MC and P > minimum ATC.

socially optimal price level

N

refer to the diagram- profit max level of output will be

OAJE

Profit maximizing total cost:

OBHE

. if two goods are complements

a decrease in the price of one will increase demand for another

If two goods are complements:

a decrease in the price of one will increase the demand

. other things equal, which of the following would shift an economies production possibilities curve to the left..

a law requiring mandatory retirement from the labor force at 55

a purely competitive seller is:

a price taker

a purely competitive firm should produce firm in the short run if its total revenue is sufficient to cover its:

a total variable costs

which of the following is correct?

a. if demand is elastic, an increase in price will increase total reveneue b. if demand is elastic, a decrease in price will decrease total revenue c. if demand is elastic, a decrease in price will increase total revenue d. if demand is inelastic, an increase in price will decrease C

non-price competitor refers to:

advertising...

. which of the following will cause a decrease in market equilibrium price and an Increase in equilibrium quantity

an increase in supply

in the long run equilibrium under pure competition, all firms will produce at:

average total cost

which diagram correctly portrays a nondiscrimination pure monopolist demand

b

economics is a social science that studies how individuals, institutions, and society May..

best use resources to maximize satisfaction of economic wants

according to the circular flow model, product markets are where

businesses earn their revenues from households

which of the following is correct? a. there is no firm mathematical relationship between marginal utility and total utility b. total utility is equal to the change in marginal utility from consuming an additional unit of a product c. if marginal utility is diminishing and is a positive amount, total utility will increase d. if marginal utility is diminishing, total utility must also be diminishing

c. if marginal utility is diminishing and is a positive amount, total utility will increase

Marginal Utility is the:

change in total utility obtained by consuming one more unit of a good

the kinked demand curve of an oligopolist is based on the assumption that

competitors will follow a price cut but ignore a price increase.

the cross elasticity of demand for product X with. Respect to the price of product Y is -1.2. it can be inferred that X and Y are

complementary products

the basic difference between consumer goods and capital goods is that

consumer goods satisfy wants directly, while capital goods satisfy wants indirectly

currently each of the firms in this market Is earning positive economic profit. In the long run, as adjustments occur in the industry, we can expect the market price of ball bearing to

decrease and individual firms' profits to decrease

an increase in price of product A will:

decrease the marginal utility per dollar spent on A

if the demand for product X is inelastic, a 4% increase in price of X will

decrease the quantity of X demanded by less than 4%

which of the following distinguishes the short run from long run in pure competition?

firms can enter and exit the market in the long run but not short run

Which of the following is most likely to be an implicit cost for company x?

forgone rent from the building owned and used by company x

. productive efficiency refers to:

full employment of all available resources

a significant benefit of monopolistic competition compared with pure competition is

greater product variety

in resource market:

households sell resources to businesses

in the accompanying diagram. Demand is relatively elastic

in the p2 p4 price range

if there is a surplus of a product, its price...

is above equilibrium level

. a normative statement is one that:

is based on valued judgements

The larger the number of firms and the smaller the degree of product differentiation the

more elastic is the monopolistically competitive firm's demand curve

four factors of production:

land, labor, capital, entrepreneurial ability

monopolistic competition is characterized by

large number of firms and low entry barriers

When economists say that people act rationally in their self-interest, they mean that individuals

look for and pursue opportunities to increase their utility

in the long run, a pure monopolist will max. profits by producing that output at which marginal cost= to?

marginal revenue

production possibility curve shows:

maximum amounts of two goods that can be produced, assuming full use of available resources

in the short run, a monopolistic economic profits:

may be positive or negative depending on market demand and cost conditions.

if total utility is increasing, then marginal utility

may either be increasing or decreasing, but it must be greater than 0

An industry comprising a very large number of sellers producing a non-standardized product is known as

monopolistic competition

Supply curves tend to be:

more elastic in long run b/c there is time for firms to enter or leave the industry

Refer to diagram: if a regulatory commission seeks to achieve the socially optimal allocation of resources to this line of production, it will set a price pf :

p2

if the industry can price max price quantity will be

p3 and q3

the basic formula for the price elasticity of demand coefficient is

percent change in quantity demanded//percent change in price

. a demand curve that is parallel to the horizontal axis is

perfectly elastic

the demand schedule or curve confronted by the individual, purely competitive firm is

perfectly elastic

. supply curve shows relationship between

price and quantity supplied

The profit max output of a pure monopoly is not socially optimal because in equilibrium

price exceeds marginal cost

if shortage of product X occurs, and the price is free to change....

price of the product will rise

which of the following instances will total revenue decline?

price rises and demand is elastic

in which of the following cases will total revenue increase

price rises and demand is inelastic

which of the following is not a characteristic of pure competition?

price strategies and firms

P QD $13 1000 11 2000 9 3000 7 4000 5 5000 3 6000 Refer to the information and assume the stadium capacity is 5000. If the mudhen's management wanted a full house for the game, it would

set ticket prices at $5

. an improvement in production technology will

shift supply curve to right

if the income elasticity of demand for store brand macaroni and cheese is -3.00, this means that

store brand macaroni and cheese is an inferior good

total utility may be determined by

summing the marginal utilities of each unit consumed

compared to coffee, we would expect the cross elasticity of demand for

tea to be positive, but negative for cream

Normal profit is

the average profitability of an industry over the preceding 10 years

opportunity cost exist because

the decision to engage in one activity means forgoing some other activity

which situation is consistent with the law of diminishing marginal utility?

the more pizza joe eats, the less he enjoys an additional slice

creative destruction is

the process by which new forms and new products replace existing dominant firms and products.

diminishing marginal returns become evident with the addition of the

third worker

. market systems answer to "who will get the goods and services?" is...

those willing and able to pay for them

a purely competitive firm should produce in the short run if its total revenue is sufficient to cover its:

total variable cost

which of the following outcomes is consistent with a purely competitive market in the long-run equilibrium?

we would expect all of these to occur in the long run in a purely competitive market

product market is in equilibrium when:

whenever there is no shortage or surplus

If a nondiscrimination imperfectly competitive firm is selling 100th unit of output fpr 35, marginal revenue

will be less than 35

a pure monopolist

will realize an economic profit of price exceeds atc at the profit max/loss min level of output.