BE 301 Final Exam - Conceptual Multiple Choice

b. monopolistically competitive markets

As discussed in class, most service industries (like child daycare, lawn-mowing services, legal services, etc..) operate in... a. perfectly competitive markets b. monopolistically competitive markets c. oligopoly markets d. monopoly markets

c. corn and soybeans

As discussed in lecture, which of the following is the best example of two products that are substitutes in production? a. diet coke and diet pepsi b. beef and leather c. corn and soybeans d. a KU MBA and a K-State MBA

c. responsiveness

As specifically mentioned in class, which word could substitute for "elasticity" in our discussion of demand and price changes? a. reflectiveness b. restfulness c. responsiveness d. readiness

c. a Baskin Robbins store expanding its size

As we discussed in class, which of the following would be an example of moving from the short run to the long run? a. Baskin Robbins store employing four workers instead of three b. Baskin Robbins store increasing the hours it stayed open c. a Baskin Robbins store expanding its size d. none of the above

d. MP of the 9th worker = 1

Assume you have this Cobb Douglas production function, similar to many we saw in lecture: Q= 2*K^.5*L^.5 Assume "K" is temporarily fixed at K=9. What is the marginal product of your 9th worker? a. MP of the 9th worker = 6 b. MP of the 9th worker = 4 c. MP of the 9th worker = 2 d. MP of the 9th worker = 1

b. fewer substitues make demand more elastic

Based on our discussions in lecture, which of the following is INCORRECT? a. when two firms merge in a horizontal merger ( like sprint and t-mobile) it reduces the number of substitutes b. fewer substitues make demand more elastic c. elasticity and market power are inversely related d. horizontal mergers (like sprint and t-mobile) are evaluated by the Department of Justice and the Federal Trade Commission

c. only statement 3 correctly describes perfect competition

Consider these three statements: 1. Firms can earn profits in the short run and in the long run 2. In the long run, P will be greater than MC 3. Demand curve for an individual firm is horizontal, not downward sloping Which of the following is most accurate? a. only statement 1 correctly describes perfect competition b. only statement 2 correctly describes perfect competition c. only statement 3 correctly describes perfect competition d. actually none of the statements correctly describes perfect competition

a. of the three statements, only 1 and 2 describe monopolistic competition

Consider these three statements: 1. market is served by a large number of firms 2. it is easy to enter this market as a seller 3. firms sell products that are essentially identical; there is NO product differentiation Which is correct? a. of the three statements, only 1 and 2 describe monopolistic competition b. of the three statements, only 2 and 3 describe monopolistic competition c. of the three statements, only 1 and 3 describe monopolistic competition d. All three statements describe monopolistic competition

a. in this production function capital and labor can be perfect substitution for each other

Consider this production function, similar to some we saw in class: Q=4*K^5+3*L^.5 Which statement below is the most accurate? a. in this production function capital and labor can be perfect substitution for each other b. in this production function capital and labor can substitute for each other but not 100% c. In this production function capital and labor cannot substitute for each other at all d. none of the above

D. Goods; utility; inputs; output

Every point on an indifference curve shows a combination of ______ that produce the same amount of ______, but every point on an isoquant shows a combination of _______ that produce the same amount of _______

raise

If a demand is elastic and you ________ the price, your revenues will decrease

lower

If a demand is elastic and you ________ the price, your revenues will increase

lower

If demand is inelastic and you ________ the price, your revenues will decrease

c. the price of capital is $180 and the firm is operating on the isocost line that contains point B

If the price of labor is $120 per unit, and the firm is spending $54,000, which of the following is correct? a. the price of capital is $180 and the firm is operating on the isocost line that contains point C b. the price of capital is $200 and the firm is operating on the isocost line that contains point B c. the price of capital is $180 and the firm is operating on the isocost line that contains point B d. the price of capital is $200 and the firm is operating on the isocost line that contains point C

raise

If you demand in inelastic and you _______ the price, your revenues will increase

d. actually all three of the above are correct

In a Sweezy oligopoly, which of the following is correct? a. we assume if 1 firm increases its price the other firms will not follow b. we assume if 1 firm decreases its price all the other firms will follow c. It is possible for costs to change (especially marginal cost) and this will not cause a change in the price d. actually all three of the above are correct

d. Both a) and b) are correct but not c)

In a monopolistically competitive market, which of the following is correct? All firms have entered and/or exited a. Firms will charge a P = ATC b. Firms will charge a P > MC c. Firms will still be able to earn excess profits d. Both a) and b) are correct but not c)

a. every point in Stage 2 allows you to produce at a lower per-unit cost than every point in Stage 1 or Stage 3

In class we discussed "stage 2" of production extensively. Which of the following is correct about stage 2 of production? a. every point in Stage 2 allows you to produce at a lower per-unit cost than every point in Stage 1 or Stage 3 b. stage 2 begins where margin product turns negative (or equals zero, same thing) c. both a) and b) are correct d. neither a) nor b) is correct

a. the entry of other firms into the market

In our first lecture we went through an extensive example of the frozen pizza industry and the introduction of rising crust pizza. Which of the following "factors affecting probability" (from chapter 1) was illustrated by this example? a. the entry of other firms into the market b. the potential power of input suppliers c. the ability of firms to secure adequate financing d. the power of buyers (the ability of buyers to set the terms/conditions of the purchase)

your per unit costs decrease as your output increases

In plain english, what is the definition of economies of scale?

diminishing marginal rate

In plain english: You own a lawn mowing business. In the past year you went from having 5 employees to 6, and then went from having 6 to 7. When you had 5 employees you could produce 20 mowed lawns per week. When you added the 6th employee that total went from 20-23........... What is the term we learned in lecture for this phenomenon, where your output increases but at a decreasing rate as you add more units of input?

c. an oligopoly

The recorded music industry is dominated by three very large firms: Warner Music Group, Sony BMG, and Universal Music Group. An Industry like this which is dominated (and essentially controlled) by such a small number of firms, where it is difficult to enter the industry as a seller, is generally considered: a. perfectly competitive b. monopolistically competitive c. an oligopoly d. a monopoly

d. both b) and c) but not a)

Which is correct regarding indifference curves, as we discussed in class. "Indifference curves....." a. show all the combinations of two goods that consumers can purchase with the same budget b. show all the combinations of two goods that provide consumers with the same level of utility c. are often "curved" but can also be straight lines d. both b) and c) but not a)

b. the distance between c and b

Which of the following accurately describes profit-per-unit? a. the distance between a and b b. the distance between c and b the distance between c and a d. none of the above

d. this is the demand and supply function of apple pies, and the price of apples (an input) decreases

Which of the following could cause a shift FROM curve D to curve C? a. this is the demand and supply function of hotdogs, and the price of hot dog buns increases b. this is the demand and supply function of chips, and the price of salsa decreases c. this is the demand and supply function of houses, and incomes increase d. this is the demand and supply function of apple pies, and the price of apples (an input) decreases

D. Both a) and c) but not b)

Which of the following could cause a shift from curve A to curve B? A. This is the demand and supply of houses (a normal good) and incomes increase B. This is the demand and supply of SUVs (a normal good) and incomes decrease C. This is the demand and supply of coffee, and the price of tea (a demand substitute) increases D. Both a) and c) but not b)

d. actually, none of the statements above are correct

Which of the following is a correct statement: a. in a demand function you would never find a term for "Price of a related good" b. in a supply function you would never find a term for "price of an input" c. in a demand function you would never find a term for "income" d. actually, none of the statements above are correct

a. Z is the marginal revenue curve

Which of the following is correct? a. Z is the marginal revenue curve b. X is the marginal cost curve c. Both a) and b) are correct d. neither a) nor b) is correct

d. actually both b) and c) are correct but not a)

Which of the following is correct? a. if McDonalds and Burger King merged that would be an example of a vertical merger b. if McDonalds and Burger King merged that would be an example of a vertical merger c. If McDonalds merged with a cattle ranch that raised cattle for beef to be used in their hamburgers, that would be an example of a vertical merger d. actually both b) and c) are correct but not a)

b. the more elastic demand is the less market power the firm has

Which of the following is most accurate based on our discussions in class regarding market power? a. the more elastic demand is the more market power the firm has b. the more elastic demand is the less market power the firm has c. the greater the number of substitutes the more market power the firm has d. both a) and c) are correct but not b)

d. actually we discussed all of the above

Which of the following was (were) examples of rivalry that we find in markets that we discussed in lecture and in chapter 1 of the text? a. consumer producer rivalry b. consumer consumer rivalry c. producer producer rivalry d. actually we discussed all of the above

a. hot dogs and hot dog buns

Which of these combinations of goods is most likely to have a cross-price elasticity that is negative? a. hot dogs and hot dog buns b. diet coke and diet pepsi c. both a) and b) would have cross price elasticity that is negative d. neither a) nor b) would have cross price elasticity that is negative

b. demand for your good is most likely elastic, so if you want to increase revenues you should lower your price

You are a product manager for a good that is generally considered a luxury and is a large part of your average consumers budget. Based on this information alone, which of the following is correct? a. demand for your goods is most likely elastic, so if you want to increase revenues you should raise your price b. demand for your good is most likely elastic, so if you want to increase revenues you should lower your price c. demand for your good is most likely inelastic, so if you want to increase revenues you should raise your price d. demand for your good is most likely inelastic, so if you want to increase revenues you should lower your price

d. demand will shift right, supply will shift right, and equilibrium quantity will increase

You are looking at a graph of supply and demand for hotdogs. You hear that two things are happening at the same time: The price of hot dog buns has decreased significantly. And the price of beef, which is an input to hot dogs, has decrease as well. What will happen on the graph your looking at (the graph for hotdogs)? a. demand will shift right, supply will shift left, and the equilibrium price will increase b. demand will shift left, supply will shift right, and equilibrium price will increase c. demand will shift left, supply will shift left, and equilibrium quantity will decrease d. demand will shift right, supply will shift right, and equilibrium quantity will increase

a. the expansion path shows the most efficient combination of inputs for the firm to use as it produces different levels of output

You are looking at a graph that displays expansion path, as we discussed in lecture. Which of the following are correct regarding the Expansion Path and the graph that displays it? a. the expansion path shows the most efficient combination of inputs for the firm to use as it produces different levels of output b. a graph showing the expansion path will have indifference curves and budget lines on it c. both a) and b) are correct d. neither a) nor b) are correct

c. output

You are looking at a graph with isoquants on it. What exactly is increasing as you move from the "southwest" to the "northeast" on that graph? a. utility b. a typical consumer's budget c. output d. none of the above

b. the demand for your product is most likely inelastic, so if you want to increase revenues you should increase price

You are the product manager for a product that is generally viewed as a necessity and a small part of a consumer's budget. Knowing this, which of the following is correct? a. the demand for your product is most likely inelastic, so if you want to increase revenues you should decrease price b. the demand for your product is most likely inelastic, so if you want to increase revenues you should increase price c. the demand for your product is most likely elastic, so if you want to increase revenues you should decrease price d. none of the above

d. this merger may be challenged depending on how much the Herfindahl increases if the merger were to be allowed

You are working for the Department of Justice, reviewing a proposed merger between two firms. You've calculated the Herfindahl Index for this industry and it is 1950 before the merger takes place. Which of the following is correct based on our discussions in lecture? a. this merger will not be challenged b. the merger will definitely be challenged c. this merger may be challenged depending on how much the Herfindahl decreases if the merger were to be allowed d. this merger may be challenged depending on how much the Herfindahl increases if the merger were to be allowed

d. neither a) nor b) are correct

You have a lawn mowing business and you are currently employing 3 workers. Your total product (or Q, same thing) with three workers is 45. You hire a 4th worker and your total product is now 63. Which of the following is correct? a. if you were in stage 2 when you employed 3 workers hiring the 4th worker moved you out of stage 2 b. hiring the 4th worker reduced your average product (AP) c. both a) and b) are correct d. neither a) nor b) are correct

Expansion Path

You saw a slide like this several times in lecture. If we were to "connect the dots" A, B, and C, what is the term we learned in class for the line that does that?