ECON Final Exam

In the graph, calculate the value of consumer surplus in this market. A) $5 B) $50 C) $100 D) $240

B) $50

Consider the following numbers at which a monopolist is producing, where MR = MC: Quantity = 20; Price = $9; Average Total Cost = $6. What is the total revenue and profit? A) $180; $60 B) $200; $192 C) $160; $200 D) $360; $200

A) $180; $60

In the market for surfboards in the graph, with a $100 tariff per imported surfboard, the government collects a total of _____ in tariff revenues. A) $4,000 B) $7,000 C) $16,000 D) $28,000

A) $4,000

In the graph, which shows a firm in a perfectly competitive market, calculate the total profit. A) $80 B) $90 C) $420 D) $525

A) $80

Based on this table, the opportunity cost of one kilogram of coffee in Kenya is: A) 0.33 kilograms of cocoa. B) 3 kilograms of cocoa. C) 30 kilograms of cocoa. D) 40 kilograms of cocoa.

A) 0.33 kilograms of cocoa.

(Figure) What would be a reason why an economy is operating at point D? A) A reduction in business investment causes unemployment to increase. B) There is a new technological breakthrough in the production of energy-efficient airplanes. C) An economy uses all of its inputs efficiently but changes the ratio of the goods produced. D) An economy experiences an influx of immigrants seeking jobs.

A) A reduction in business investment causes unemployment to increase.

Which statement is NOT a characteristic of a corporation? A) Its investors face unlimited liability. B) It produces more value of goods and services than any other type of business structure. C) It has the ability to issue stock to raise capital. D) It usually consists of many owners (in some cases, tens of thousands of owners or more).

A) Its investors face unlimited liability.

. A firm in a perfectly competitive industry would exhibit which characteristic? I. An ability to produce as much output as the firm desires at the market price II. No economic profits in the short run but possible economic profits in the long run A) Only I B) Only II C) Neither I nor II D) Both I and II

A) Only I

Why might the following quote not make economic sense: "The round of golf I just finished was so much fun and worth the money that I should play another round before going back to work"? A) The marginal benefit of the second round of golf in the same day is likely to be less than the first round. B) The total benefit from both rounds of golf is likely to be smaller than just the first round. C) The opportunity cost of the second round from not going to work is likely to be smaller than the opportunity cost of the first round. D) The total cost of playing both rounds of golf is likely to be smaller than just the first round.

A) The marginal benefit of the second round of golf in the same day is likely to be less

Which of the inputs can be altered in the short run? A) The number of hours that existing employees work. B) The amount of heavy machinery used in the plant. C) The capacity of the plant. D) The total number of plants in operation.

A) The number of hours that existing employees work.

Which statement is true regarding the total product and marginal product curves? A) The total product curve reaches its peak when marginal product is zero. B) The total product curve begins to fall when marginal product begins to fall. C) The marginal product curve is upward sloping whenever total product is rising. D) The total product and marginal product curves both reach their maximum point at the same level of labor

A) The total product curve reaches its peak when marginal product is zero.

Which point would represent a vicious cycle if a firm stays there too long? A) a B) b C) c D) d

A) a

In which situation would consumers bear the highest incidence of a tax? A) an inelastic demand with an elastic supply B) an inelastic demand with an inelastic supply C) an elastic demand with an inelastic supply D) an elastic demand with an elastic supply

A) an inelastic demand with an elastic supply

Under monopolistic competition, entry typically causes price to _____ and profits to _____. A) decrease; decrease B) decrease; increase C) increase; increase D) increase; decrease

A) decrease; decrease

Which of these is a pure public good? A) environmental protection B) a public park C) I-95 D) flu shots

A) environmental protection

If the supply of loanable funds increases, the marginal revenue product of capital (MRPK) that would be needed in order to break even would: A) fall. B) stay the same. C) rise. D) become negative

A) fall.

In which situation can a Prisoner's Dilemma outcome most likely be avoided? A) if the game is repeated over and over under the same conditions B) if the players involved choose not to cooperate with one another C) if each player plays its best-response strategy D) if the game is only played once with no opportunity for retaliation

A) if the game is repeated over and over under the same conditions

Compared with a competitive market, a cartel as a whole will produce: A) less output in order to increase prices. B) more output in order to increase prices. C) less output in order to decrease prices. D) more output in order to decrease prices.

A) less output in order to increase prices.

The main advantage of issuing stock to raise financial capital is: A) limited liability of risk B) ability to retain complete ownership C) not having to share profits with investors D) the ability to keep company information and data private

A) limited liability of risk

Which labor supply curves will bend backward at high wages? A) only the individual labor supply curve B) only the market labor supply curve C) both the individual and market labor supply curve D) neither the individual nor the market labor supply curve

A) only the individual labor supply curve

Which of these is not a common cause of income inequality? A) the choice of city where one lives B) differences in human capital C) economic labor discrimination D) number of earners in a household

A) the choice of city where one lives

If the poverty threshold for a family of four is $24,000 and the Shoenfelds earned $21,000, their income deficit is _____ and their ratio of income to poverty is _____. A) $3,000; 1.14 B) $3,000; 0.875 C) $45,000; 1.14 D) $45,000; 0.875

B) $3,000; 0.875

The local convenience store advertises 50% off frozen slushies. As a result of the sale, the store sells 80% more slushies, but 20% fewer fountain drinks. The cross elasticity between slushies and fountain drinks is _____. A) 0.25 B) 0.4 C) 2.5 D) 4.0

B) 0.4

At an amusement park, Sue achieves an enjoyment value of 10 on her first roller coaster ride and an enjoyment value of 6 on her second ride. Her marginal benefit from her second ride is: A) 4. B) 6. C) 8. D) 16.

B) 6.

The approximate value of deadweight loss created by this profit-maximizing monopolist is: A) 5 B) 7.5 C) 15 D) 24

B) 7.5

Which of these would be least likely to increase economic growth? A) An increase in investment in infrastructure such as new roads and rail lines. B) An increase in tariffs to protect domestic industries from foreign competition. C) An expansion of financial aid options to college students. D) Protecting intellectual property rights (such as patents) to provide incentives for innovation.

B) An increase in tariffs to protect domestic industries from foreign competition.

In this game table, the Nash equilibrium is: A) Fancy, Fancy = (3, 6) B) Casual, Fancy = (4, 8) C) Fancy, Casual = (7, 2) D) Casual, Casual = (9, 7)

B) Casual, Fancy = (4, 8)

Suppose your bank opens up a dozen more branches throughout the city, making it much easier to find an ATM. What happens to the demand and supply curves for this network as it expands? A) Demand and supply both shift left. B) Demand and supply both shift right. C) Demand shifts right and supply shifts left. D) Demand shifts left and supply shifts right.

B) Demand and supply both shift right.

Which statement is not a common argument against free trade? A) It causes jobs to be lost to foreign competition. B) It causes prices of imported goods to rise. C) It prevents infant industries from becoming competitive in world markets. D) It causes environmental damage due to fewer regulations abroad.

B) It causes prices of imported goods to rise.

Which of the following is not possible for two countries who trade computers and automobiles with one another? A) One of the countries has an absolute advantage in the production of both products. B) One of the countries has a comparative advantage in the production of both products. C) One country has an absolute advantage in one product and a comparative advantage in the other product. D) One country does not have an absolute advantage in either product but has a comparative advantage in one product.

B) One of the countries has a comparative advantage in the production of both products.

Some of the mangos from your neighbor's mango tree drop into your yard. You don't like mangos and the fallen mangos make it harder to mow your lawn. Your neighbor values the tree at $300, and your cost of dealing with it is $500. If your neighbor has the legal right to keep the tree, what would be an efficient outcome according to the Coase theorem? A) You call city officials to have the tree cut down. B) You pay your neighbor $400 to cut the tree down. C) Your neighbor pays you $400 to not have the tree cut down. D) Your neighbor pays you $200 to not have the tree cut down.

B) You pay your neighbor $400 to cut the tree down.

Which factor would NOT cause the demand curve for green tea to shift to the right? A) a decrease in the price of lemons, a complement to green tea B) a decrease in the price of green tea C) new research showing that drinking green tea reduces the risk of illnesses D) All of these will shift the demand for green tea to the right.

B) a decrease in the price of green tea

Which of the following periods describes when companies can alter output but not their plant capacity? A) market period B) in the short run C) in the long run D) infinity period

B) in the short run

As more people rely on a travel app to book reservations, the quality of the app improves, encouraging more people to use the app. This type of network is best described as a _____ network. A) physical B) virtual C) external D) internal

B) virtual

If the amount of emissions being produced is E1, what would be the area representing the deadweight loss to society? A) Area 0eCe B) Area eESE0 C) Area eba D) Area beEsE1

C) Area eba

Which of these is not a problem caused by an effective price ceiling being placed on the price of electricity? A) a misallocation of resources B) a shortage of electricity C) a reduction in deadweight loss D) a reduced effort to improve quality of service

C) a reduction in deadweight loss

Poverty is least likely to be eliminated when using which form of measurement? A) an absolute poverty threshold B) the World Bank's $2 per day measure C) a relative poverty threshold D) a fixed annual dollar amount measure

C) a relative poverty threshold

Which of these does not describe the trend of labor markets over the past 50 years? A) an increase in labor force participation by women B) a shift from manufacturing to service sector jobs C) an increase in trade protectionism policies to restrict outsourcing of jobs D) a greater reliance on real time production methods

C) an increase in trade protectionism policies to restrict outsourcing of jobs

An increase in the price of one product but not the other: A) shifts the budget line parallel to the left. B) shifts the budget line parallel to the right. C) changes the slope of the budget line. D) doesn't affect the budget line because income remains constant.

C) changes the slope of the budget line.

If there is a lack of competition in a market, a market failure results because the quantity of goods sold is ___ than the optimal level while prices are ___ than the optimal level. A) lower; lower B) higher; higher C) lower; higher D) higher; lower

C) lower; higher

When an economy uses the most efficient means of farming to grow as much corn as possible, this economy has achieved: A) production efficiency and allocative efficiency. B) neither production efficiency nor allocative efficiency. C) production efficiency but not necessarily allocative efficiency. D) allocative efficiency but not necessarily production efficiency

C) production efficiency but not necessarily allocative efficiency.

An important tradeoff that entrepreneurs face in their decision making is _____ versus _____. A) profit; revenues B) costs; resources C) profit; risk D) efficiency; equity

C) profit; risk

A form of regulation that controls a firm's prices and profits based on its costs and capital investments is called: A) price cap regulation. B) antitrust regulation. C) rate of return regulation. D) HHI regulation.

C) rate of return regulation.

Tim woke up this morning with a stomachache and decided to skip class in order to get more rest. What is the opportunity cost of Tim's decision to sleep in? A) the improvement in how he feels by getting more rest B) the level of pain he endured from the stomachache C) the value of attending the class he decided to miss D) the actual enjoyment of lying in bed instead of sitting in class

C) the value of attending the class he decided to miss

Suppose that the five residents of a small village have the following incomes: $10,000; $20,000; $30,000; $40,000; $50,000. The proportion of total income earned by the lowest two quintiles is _____ and the proportion earned by the highest two quintiles is _____. A) 30%; 90% B) 20%; 100% C) 30%; 40% D) 20%; 60%

D) 20%; 60%

Jack owns a pumpkin patch and has been selling pumpkins for $10. As Halloween approaches, he worries about having too many unsold pumpkins, so he lowers the price by 20%. If the price elasticity for pumpkins is 1.5, how many more pumpkins will Jack sell? A) 10% more B) 13.3% more C) 25% more D) 30% more

D) 30% more

The following shows the costs associated with the number of pets groomed by Janee's Mobile Pet Grooming Service. What is the value of X? A) 50 B) 56 C) 61 D) 66

D) 66

Which statement is generally NOT true with regard to the effect of trade on wages in developing countries? A) Wages offered by foreign companies are generally higher than wages offered by local companies. B) Foreign companies generally pay lower wages in developing countries than they do back home. C) Working conditions, although often less pleasant than in developed nations, are generally improved with foreign investment. D) Foreign companies tend to reduce the overall number of jobs available in developing countries.

D) Foreign companies tend to reduce the overall number of jobs available in developing countries.

Which statement is NOT true when a market is in equilibrium? A) Every consumer willing and able to pay for a good is able to do so. B) There is no surplus or shortage. C) The market has cleared. D) Sellers have enough inventory to satisfy all buyers and some left over for future demand

D) Sellers have enough inventory to satisfy all buyers and some left over for future demand

If the average total cost is $10 and the price is $8 at the profit-maximizing quantity, what will happen in the long run in a perfectly competitive market? A) More firms will enter the market, pushing the market price lower B) More firms will enter the market, pushing the market price higher C) Some firms will exit the market, pushing the market price lower D) Some firms will exit the market, pushing the market price higher

D) Some firms will exit the market, pushing the market price higher

Which of these would NOT be considered a factor of production? A) mineral deposits B) a large copy machine at the office C) college graduates seeking a job D) a bank loan used to start a new business

D) a bank loan used to start a new business

Which factor would shift the supply of skateboards to the right? A) a new rule banning all skateboards on college campuses B) an increase in incomes among skateboard enthusiasts C) a decrease in the price of skateboards D) a large reduction in the price of wheels used to produce skateboards

D) a large reduction in the price of wheels used to produce skateboards

Which policy is MOST likely to contribute to improved standards of living over time? A) addressing teacher shortages by closing schools and busing students to other schools B) allowing individuals the freedom to circumvent laws due to personal objections to them C) reducing the years that drug patents are valid to speed up production of generic versions D) adding after-school art and music programs to promote creativity

D) adding after-school art and music programs to promote creativity

Jack works for a large lumber company. Although he chose not to join the union for personal reasons, he is still required to pay union dues. Jack's company is represented by which form of union? A) closed shop B) open shop C) union shop D) agency shop

D) agency shop

Which strategy makes price discrimination more difficult for a firm? A) making airline tickets nontransferable B) requiring student ID to qualify for movie ticket discounts C) using a local language instead of English for textbooks D) allowing unwanted concert tickets to be sold on StubHub

D) allowing unwanted concert tickets to be sold on StubHub

Helping a friend struggling to pass a math class despite it taking valuable time away from your own studies is an example of: A) framing. B) sunk cost. C) overconfidence. D) altruism.

D) altruism.

Jessica lists her faulty treadmill for sale on craigslist but does not disclose the problems with it. If Blake buys the treadmill believing that it's problem-free, this is an example of market failure due to: A) the existence of external costs B) the existence of public goods C) the lack of competition D) asymmetric information

D) asymmetric information

As a consumer moves downward to the right on an indifference curve, she is willing to give up less of the other good because of: A) increasing marginal utility. B) constant opportunity costs. C) decreasing elasticity. D) diminishing marginal utility.

D) diminishing marginal utility.

In a perfectly competitive industry, short-run economic profits will lead firms to _____ the market, causing market price to _____. A) exit; increase B) exit; decrease C) enter; increase D) enter; decrease

D) enter; decrease

Movies are typically only shown in theaters for months before they are released on online streaming sites at a lower price. This is an example of: A) a teaser strategy. B) a switching cost. C) a lock-in strategy. D) intertemporal pricing.

D) intertemporal pricing.

Another way of referring to a market economy is as a: A) demand economy. B) command economy. C) ceteris paribus. D) price system.

D) price system.

As one progresses through his or her working life, the average income tends to _____, holding the level of education constant. A) constantly rise B) constantly fall C) fall then rise D) rise then fall

D) rise then fall

Which of these is not a major cause of greenhouse gas emissions? A) deforestation B) burning fossil fuels C) livestock production D) soybean farming

D) soybean farming

What would happen to wages and labor if worker safely regulations were abolished, making work conditions more dangerous? A) both wages and labor quantity would rise B) both wages and labor quantity would fall C) wages would fall and labor quantity would rise D) wages would rise and labor quantity would fall

D) wages would rise and labor quantity would fall