Econ 202 Final 2

7. Refer to the diagram for a monopolistically competitive firm in short-run equilibrium. This firm's profit-maximizing price will be: A. $10. B. $13. C. $16. D. $19.

$16.

Refer to the given data. If the government provides a per-unit subsidy of 2 to suppliers of this product, equilibrium price and quantity would be: A. $9 and 3,000 B. $7.50 and 2,250 C. $8.50 and 2,750 D. $7 and 3,000

$7 and 3,000

Refer to the above table. If demand is represented by columns 3 and 2 and supply is represented by columns 3 and 5, equilibrium price and quantity will be: A. $10 and 60 units B. $9 and 50 units C. $8 and 60 units D. $7 and 50 units

$8 and 60 units

Refer tot the diagram. At output level Q total cost is: A. 0BEQ B. BCDE C. 0BEQ+ BCDE D. 0AFQ+ BCDE

0BEQ+ BCDE

19. Refer to the data. If all the firms in the industry merged into a single firm, the Herfindahl index would become: A. 100. B. 1,000. C. 10,000. D. 100,000.

10,000

Refer to the data. The marginal product of the sixth worker is? A. 180 units of output B. 30 units of output C. 15 units of output D. negative

15 units of output

Refer to the given data. What are limits of the terms of trade between gamma and sigma? A. 1tea=2pots to 1 tea=6pots B. 1tea=3pots to 1 tea= 6pots C. 1tea=2pots to 1 tea=3.5pots D. 1tea=1pot to 1tea=3pots

1tea=1pot to 1tea=3pots

Which of the following statements concerning the relationship between total product (TP), average product (AP), and marginal product (MP) is not correct? A. AP continues to rise so long as TP is rising B. AP reaches a maximum before TP reaches a maximum C. TP reaches a maximum when the MP of the variable input becomes Zero D. MP cuts AP at the maximum AP

AP continues to rise so long as TP is rising

In the diagram, the range of diminishing marginal returns is: A. 0Q3 B. 0Q2 C. Q1Q2 D.Q1Q3

Q1Q3

2. Which of the following is not a basic characteristic of monopolistic competition? A. The use of trademarks and brand names. B. Recognized mutual interdependence. C. Product differentiation. D. A relatively large number of sellers.

Recognized mutual interdependence.

Indy currently earns 50,000 in taxable income and pays 8,00 in taxes. Suppose that Indy faces marginal tax rate of 25 percent and his boss offers him a raise of 2,000 per year. indy should: A. accept the raise because his after-tax income will rise by 1,500 B. reject the raise because his after-tax income will fall 3,000 C. reject the raise because his after-tax income will fall 4,500 D. reject the raise because his after-tax income will fall 6,000

accept the raise because his after-tax income will rise by 1,500

If in the short run a firm's total product is increasing, then its: A. marginal product must also be increasing B. marginal product must be decreasing C. marginal product could either increasing or decreasing D. average product must all be increasing

marginal product could either increasing or decreasing

Refer to the diagram. If price falls from 10 to 2, total revenue; A. rises from a+b to a+b+d+c and demand is elastic B. falls from a+d to b+c and demand is inelastic C. rises from c+d to b+a and demand is inelastic D. falls from a+b to b+c and demand is inelastic

falls from a+b to b+c and demand is inelastic

In the diagram, curves 1, 2, and 3 represent the: A. average, marginal, and total product curves respectively B. marginal, average, and total product curves respectively C. total, average, and marginal product curves respectively D. total, marginal, and average product curves respectively

marginal, average, and total product curves respectively

On the basis of the given information: A gamma should export both tea and pots to sigma B. sigma should export tea to gamma and gamma should export pots to sigma C. gamma should export tea to sigma and sigma should export pots to gamma D. gamma should export tea to sigma, but it will not be profitable for the two nations to exchange pots

gamma should export tea to sigma and sigma should export pots to gamma

Refer to the above diagram. Which of the following is a positive statement? A. a point inside the production possibilities curve is superior to a point on the curve because the former requires less work effort B. because any society should stress economic growth as its major goal, point D is superior to point C C. point B is preferable to point C because the ultimate goal of economic activity is to maximize consumption D. given its resources and technology, this society is incapable of simultaneously producing 3 units of tractors and 15 units of bread

given its resources and technology, this society is incapable of simultaneously producing 3 units of tractors and 15 units of bread

The term laissez-fair suggests that: A. land and other natural resources should be privately owned, but capital should be publicly owned B. land and other natural resources should be publicly owned, but capital should be privately owned C. government should not interfere with the operation of the economy D. government action is necessary if the economy is to achieve full employment and full production

government should not interfere with the operation of the economy

4. A monopolistically competitive firm has a: A. highly elastic demand curve. B. highly inelastic demand curve. C. perfectly inelastic demand curve. D. perfectly elastic demand curve.

highly elastic demand curve.

Suppose that at prices $5, $4,$3, $2 and $1 for product Z, the corresponding quantities supplies are 3, 4, 5, 6 and 7 units, respectively. Which of the following would increase the quantities supplied of Z to, say, 6, 6, 10, 12, and 14 units at these prices? A. improved technology for producing Z B. an increase in the prices of the resources used to make Z C. an increase in the excise tax on product Z D. increases in the incomes of the buyers of Z

improved technology for producing Z

The price of product X is reduced from 100 to 90 and, as a result, the quantity demand increases from 50 to 60 units. Therefore, demand for X in the price range: A. has declined B. is of unit elasticity C. is Inelastic D. is elastic

is elastic

Consumer surplus; A. is the difference between the maximum prices consumers are willing to pay for a product and the lower equilibrium price B. the difference between the maximum prices consumers are willing to pay for a product and the minimum prices producers are willing to accept C. the difference between the minimum prices producers are willing to accept for a product an the higher equilibrium price D. rises as equilibrum price rises

is the difference between the maximum prices consumers are willing to pay for a product and the lower equilibrium price

In the theory of comparative advantage, a good should be produced in the nation where: A. the production possibilities line lies further to the right than the trading possibilities line B. its costs is least in terms of alternative goods that might otherwise be produced C. its absolute cost in terms of real resource used is least D. its absolute money cost of production is least

its costs is least in terms of alternative goods that might otherwise be produced

Refer to the data. If this demand schedule were graphed, we would find that: A. its slope is diminishes as we move southeast down the curve B. the slope diminishes as we move northwest up the curve C. its slope is constant throughout D. the data are inconsistent with the law of demand

its slope is constant throughout

The diagram concerns supply adjustments to an increase in demand (D1 to D2) in the immediate market period, the short run, and the long run. Supply curves S1, S2 and S3 apply to the: A. immediate market period, long run, and short run respectively B. immediate market period, short run, and long run respectively C. long run, short run, and immediate market period respectively D. short run, long run, and immediate market period respectively

long run, short run, and immediate market period respectively

When entering a building, Sam diverts his path to go through an open door rather than make the physical effort to open the closed door that is directly in his path. This is an example of? A. irrational Behavior B. a lazy person C. marginal benefit-marginal cost analysis D. programmed learning

marginal benefit-marginal cost analysis

The three most important sources of federal tax revenue in order of descending importance are: A. sales, payroll, and personal income taxes B. personal income,, corporate income, and sales taxes C. personal income, corporate income, and payroll taxes D. personal income, payroll, and corporate income taxes

personal income, payroll, and corporate income taxes

Refer to the data. On the basis of cost-benefit analysis, government should undertake: A. plan d B. plan c C. plan b D. plan a

plan b

When total product is increasing at an increasing rate, marginal product is: A. positive and increasing B. positive and decreasing C. constant D. negative

positive and increasing

The law of demand states that? A. price and quantity demanded are inversely related B. the larger the number of buyers in a market, the lower will product price C. price and quantity demanded are directly related D. consumers will buy more of a product at high prices than at low prices

price and quantity demanded are inversely related

Market failure is said to occur whenever: A. private markets do not allocate resources in the most economically desirable way B. Price rises C.some consumers who want a good do not obtain it because the price is higher than they are willing to pay. D. government intervenes in the function of private markets

private markets do not allocate resources in the most economically desirable way

The law of supply indicates that; A. producers will offer more of a product at high prices than they will at low prices B. the product supply curve os downsloping C. consumers will purchase less of a good at high prices than they will at low prices D. producers will offer more of a product at low prices than hey will at high prices

producers will offer more of a product at high prices than they will at low prices

3. A monopolistically competitive industry combines elements of both competition and monopoly. The monopoly element results from: A. the likelihood of collusion. B. high entry barriers. C. product differentiation. D. mutual interdependence in decision making.

product differentiation.

The tax is represented is: A. optimal B. proportional C. regressive D. progressive

progressive

Which of the following is most likely to be fixed cost? A. shipping charges B. property insurance premiums C. wages for unskilled labor D. expenditures for raw materials

property insurance premiums

Which of the following is a fundamental characteristic of the market system? A. property rights B. central planning by government C. unselfish behavior D. government-set wages and prices

property rights

The law of diminishing returns describes the: A. relationship between total costs and total revenues B. profit-maximizing position of a firm C. relationship between resources inputs and product outputs in the short run D. relationship between resources inputs and product outputs in the long run

relationship between resources inputs and product outputs in the short run

A production possibilities curve illustrates? A. scarcity B.market prices C. consumer preferences D. the distribution of income

scarcity

Refer to the above diagram. A decrease in demand is depicted by a: A. move from point x to point y B. shift from D1 to D2 C. shift from D2 to D1 D. move from point y to point

shift from D2 to D1

An increase in the excise tax on cigarettes raises the price of cigarettes by shifting the: A. demand curve for cigarettes rightward B. demand curve for cigarettes leftward C. supply curve for cigarettes rightward D. supply curve for cigarettes leftward

supply curve for cigarettes leftward

The train of the Transcontinental Railway Company, when shipping goods, sometimes emit sparks that starts fires along the tracts and damage the property of others. If Transcontinental does not pay for the damage it causes, what has occurred? A. positive externality B. demand-side market failure C. supply-side market failure D. all of these

supply-side market failure

14. Suppose that total sales in an industry in a particular year are $600 million and sales by the top four sellers are $200 million, $150 million, $100 million, and $50 million, respectively. We can conclude that: A. price leadership exists in this industry. B. the concentration ratio is more than 80 percent. C. this industry is a differentiated oligopoly. D. the firms in this industry face a kinked demand curve

the concentration ratio is more than 80 percent

We would expect; A. the demand for Coke to be less price elastic then the demand for soft drinks in general B.the demand for Coke to be more price elastic than the demand for soft drinks in general C. no relationship between the price elasticity of demand for Coke and the price elasticity of demand for soft drinks in general D. none of these to hold true

the demand for Coke to be more price elastic than the demand for soft drinks in general

When the price of a product increases, a consumer is able to buy less of it with a given money income. This describes: A. the cost effect B. the inflationary effect C. the income effect D the substitution effect

the income effect

The economic perspective refers to? A, macroeconomics phenomena, but not microeconomics phenomena B. microeconomics phenomena, but not macroeconomics C. the making of purposeful decisions in a context of marginal costs and marginal benefits D. unlimited resources in a context of limited economic wants

the making of purposeful decisions in a context of marginal costs and marginal benefits

Refer to the diagram, in which solid arrows reflect real flows; broken are monetary flows. flow 5 might represent: A. personal income tax revenues B. the provision of public schools by local governments C. the purchase of laptop computers by the state of Iowa D. transfer payments to unemployed workers

the provision of public schools by local governments

Refer to the diagram, In which solid arrows reflect real flows; broken arrows are monetary flows. Flow 4 might represent: A. the services of NASA astrophysicists B. the purchase of stealth bombers C. the personal income taxes D. investment spending by private cororations

the services of NASA astrophysicists

It takes a considerable amount of time to increase the production of pork. This implies that: A. a change in the demand for pork will not effect its price in the short run B. the short-run supply curve for pork is less elastic than the long-run supply curve for pork. C. an increase in the demand for pork will elicit a larger supply response in the short run than in the long run D. the long-run supply curve for pork is less elastic than the short-run supply curve for pork

the short-run supply curve for pork is less elastic than the long-run supply curve for pork.

If two nations have straight-line production possibilities curves: A. then their trading possibilities curves must lie inside the production possibilities curves B. there will be no basis for mutually advantageous trade C. there will be a basis for mutually advantageous trade whether the slopes are equal or not D. there will be a basis for mutually advantageous trade provided the slopes differ

there will be a basis for mutually advantageous trade provided the slopes differ

Which of the following is most likely to be an inferior good? A. fur coats B. ocean cruise C. used clothing D. steak

use clothing

Refer to the diagrams. The solid lines are production possibilities curves; the dashed lines are trading possibilities curves. The data suggest that: A. west lothian should specialize in, and export, beer B. both countries will be better off if they do not engage in specialization and trade involving these two products C. west lothian should specialize in, and export, pizza D. east lothian should specialize in, and export, beer

west lothian should specialize in, and export, beer

16. Assume six firms comprising an industry have market shares of 30, 30, 10, 10, 10, and 10 percent. The Herfindahl index for this industry is: A. 2,000. B. 1,600. C. 2,200. D. 80.

2,200

The price elasticity of demand for widgets is .80. Assuming no change in the demand curve for widgets, a 16 percent increase in sales implies a" A. 1 percent reduction in price B. 12 percent reduction in price C. 40 percent reduction in price D. 20 percent reduction in price

20 percent reduction in price

Refer to the data. Crispy Crisp's accounting profit is? A. 150,000 B. 380,000 C. 230,000 D. 294,000

230,000

Refer to the data. Creamy Crisp's total economic costs are? A. 286,000 B.150,000 C. 94,000 D. 156,000

286,000

Alex, Kara , and Susie are the only three people in a community and Alex is willing to pay 20 for the fifth unit of a public good; Kara, 15; and Susie, 25. Government should produce the fifth unit of public good if the marginal cost is less than or equal to: A. 25 B. 15 C. 60 D. 300

60

Refer to the data. The marginal cost of producing the sixth unit of output is: A. 24 B. 12 C. 16 D. 8

8

Refer to the data. If columns (1) and (3) of the demand data shown are this firm's demand schedule, the profit-maximizing level of output will be: A. 12 units. B. 8 units. C. 10 units. D. 9 units.

8 units

18. Refer to the data. The four-firm concentration ratio for the industry is: A. 100 percent. B. indeterminate since we don't know which four firms are included. C. 80 percent. D. 20 percent.

80 percent

20. Refer to the data. The four-firm concentration ratio for this industry is: A. 90 percent. B. 95 percent. C. 100 percent. D. indeterminate because we don't know which four firms are included

95 percent

Refer to the diagram. If the price falls from P1 to P2, total revenue will become area(s): A. A+B B. C+D C. A+C D. C

A+B

Examples of command economies are: A. the United States and Japan B. Sweden and Norway C. Mexico and Brazil D. Cuba and North Korea

Cuba and North Korea

refer to the above tables. Suppose that technology and the quality of resources are the same in both countries. We can conclude that? A. Duckistan has more resources than Herbania B. Herbania has more resorces than Duckistan C. Duckistan has greater oppurtunity cost than Herbania D. Prices are twice as high in Herbania as in Duckistan

Herbania has more resorces than Duckistan

15. If you sum the squares of the market shares of each firm in an industry (as measured by percent of industry sales), you are calculating the: A. four-firm concentration ratio. B. Herfindahl index. C. degree of collusion. D. Lerner index.

Herfindahl index

9. Which of the following statements concerning a monopolistically competitive industry is correct? A. If there are short-run losses, firms will leave the industry and the demand curves of the remaining firms will shift to the right. B. If there are short-run economic profits, firms will enter the industry and the demand curves of existing firms will shift to the right. C. If there are short-run losses, firms will leave the industry and the demand curves of the remaining firms will shift to the left. D. If there are short-run economic profits, firms will leave the industry and the demand curves of the remaining firms will shift to the right.

If there are short-run losses, firms will leave the industry and the demand curves of the remaining firms will shift to the right

If the demand for bacon is relatively elastic, a 10 percent decline in the price of bacon will: A. decrease the amount demanded by more than 10 percent B. Increase the amount demanded by more than 10 percent C. decrease the amount demanded by less than 10 percent D. increase the amount demanded by less than 10 percent

Increase the amount demanded by more than 10 percent

In the past few years, the demand for donuts has greatly increased. This increase in demand might best be described by: A. an increase in the cost of making donuts B. an increase in the price of coffee C. consumers expecting donut prices to fall D. a change in buyer tastes

a change in buyer tastes

Amanda buys ruby for $330 for which she was willing to pay $340. the minimum acceptable price to the seller, tony, was $140. Amanda experiences: A. a consumer surplus of $10 and Tony experiences a producer surplus of $190 B. a producer surplus of 200 and tony experiences a consumer surplus of 10 C. a consumer surplus of 670 and tony experiences a producer surplus of 200 D. a producer surplus of 10 and tony experiences a consumer surplus of 190

a consumer surplus of $10 and Tony experiences a producer surplus of $190

The shift of the budget line from cd to ab in the above figure is consistent with? A. decreases in the prices of both M and N B. an increase in the price of M and a decrease in the price of N C. a decrease in money income D. an increase in money income

a decrease in money income

12. Oligopolistic industries are characterized by: A. a few dominant firms and substantial entry barriers. B. a few dominant firms and no barriers to entry. C. a large number of firms and low entry barriers D. a few dominant firms and low entry barriers.

a few dominant firms and substantial entry barriers.

11. The term oligopoly indicates: A. a one-firm industry. B. many producers of a differentiated product. C. a few firms producing either a differentiated or a homogeneous product. D. an industry whose four-firm concentration ratio is low.

a few firms producing either a differentiated or a homogeneous product.

1. Monopolistic competition means: A. a market situation where competition is based entirely on product differentiation and advertising. B. a large number of firms producing a standardized or homogeneous product. C. many firms producing differentiated products. D. a few firms producing a standardized or homogeneous product.

a market situation where competition is based entirely on product differentiation and advertising.

Refer to the above table. For this economy to produce a total of 3 units of capital goods and 13 units of consumer goods it must? A. achieve economic growth B. use its resources more efficiently than the data in the table now indicated C. allocate its available resources most efficiently among alternative uses D. achieve the full employment of available resources

achieve economic growth

Refer to the diagram in which D is the market supply curve and S1 is a supply curve comprising all costs of production, including external costs. Assume that the number of people affected by these external costs is large. Without government interference, this market will reach: A. an optimal allocation of society's resources B. an underallocation of resources to this product C. an overallocation of resources to this product D. a higher price than is consistent with an optima allocation of resources

an overallocation of resources to this product

Refer to the diagram. If actual production and consumption occur at Q1: A. efficiency is achieved B. consumer surplus is maximized C. and efficiency loss (or deadweight loss) of b+d occurs D. and efficiency loss ( or deadweight loss) of e+d occurs

and efficiency loss (or deadweight loss) of b+d occurs

The basic difference between the short run and the long run is? A. all costs are fixed in the short run, but all costs are variable in the long run B. the law of diminishing returns applies in the long run but not in the short run C. at least one resource is fixed in the short run, while all resources are variable in the long run D. economies of scale may be present in the short run but not in the long run

at least one resource is fixed in the short run, while all resources are variable in the long run

Suppose Elroy's budget line is as shown on the above diagram. If his tastes changes in favor of Coke and against popcorn, the budget line will? A. become steeper B. become flatter C. shift rightward D.be uneffected

be uneffected

The price elasticity of demand coefficient measures: A. buyer responsiveness to price changes B. the extent to which a demand curve shifts as incomes change C. the slope of the demand curve D. how far business executives can stretch their fixed costs

buyer responsiveness to price changes

Suppose that Julia receives a $20 gift card for the local coffee shop, where she only buys lattes and muffins. If the price of a latte is $4 and the price of a muffin is $2, then we can conclude that Julia? A. should only buy muffins B. should only buy lattes C. can buy 5 lattes or 10 muffins if she chooses to buy only one of the two goods D. can buy 5 lattes and 10 muffins with her $20 gift card

can buy 5 lattes or 10 muffins if she chooses to buy only one of the two goods

8. The monopolistically competitive firm shown in the figure: A. is in long-run equilibrium. B. might realize an economic profit or a loss, depending on its choice of output level. C. cannot operate profitably in the short run. D. can realize an economic profit.

cannot operate profitably in the short run

Which of he following is a distinguishing feature of a command system? A. private ownership of all capital B. central planning C. heavy reliance on markets D. wide-spread dispersion of economic power

central planning

Countries engaged in international trade specialize in production based on: A. relative levels of GDP B. comparative advantage C. relative exchange rates D. relative inflation rates

comparative advantage

Average fixed cost: A. equals marginal cost when average total cost is at its minimum B. may be found for any output by adding average variable cost and average total cost C. graphs as a U-shaped curve D. declines continually as output increases

declines continually as output increases

Suppose we find that the price elasticity of demand for a product is 3.5 when its is increased by 2 percent. We can conclude that quantity demanded: A. increased by 7 percent B. decreased by 7 percent C. decreased by 9 percent D. decreased by 1.75 percent

decreased by 7 percent

Refer to the above diagram. The variable X and Y are A. inversely related B. directly related C. unrelated D. negatively related

directly related

The total revenue test for elasticity: A. is equally applicable to both demand and supply B. does not apply to demand because price and quantity are inversely related C. dose not apply to supply because price and total revenue always move together D. applies to the short-run supply curve but not to the long-run supply curve

dose not apply to supply because price and total revenue always move together

13. The mutual interdependence that characterizes oligopoly arises because: A. the products of various firms are homogeneous. B. the products of various firms are differentiated. C. each firm in an oligopoly depends on its own pricing strategy and that of its rivals. D. the demand curves of firms are kinked at the prevailing price.

each firm in an oligopoly depends on its own pricing strategy and that of its rivals

In order for mutually beneficial trade to occur between two otherwise isolated nations: A. each nation must be able to produce at least one good absolutely cheaper then the other B. each nation must be able to produce at least one good relatively cheaper than the other C. each nation must face constant costs in production of the good it exports D. One nation's production must be labor-intensive while the other nation's production is capital-intensive

each nation must be able to produce at least one good relatively cheaper than the other

Which of the following definitions are correct? A. Accounting profit+ economic profit = normal profit B. economic profit- accounting profit= explicit costs C. economic profit= accounting profit + implicit costs D. economic profit - implicit costs = accounting profits

economic profit= accounting profit + implicit costs

Suppose the total revenue curve is derived from a particular linear demand curve. That demand curve must be: A. inelastic for price declines that increases quantity demanded from 2 units to 3 units B. elastic for price declines that increases quantity demanded from 5 units to 6 units C. inelastic for price increases that reduce quantity demanded from 4 units to 3 units D. elastic for price increases that reduce quantity demanded from 4 units to 3 units

elastic for price increases that reduce quantity demanded from 4 units to 3 units

17. Suppose the Herfindahl indexes for industries A, B, and C are 1,200, 5,000, and 7,500 respectively. These data imply that: A. market power is greatest in industry A. B. market power is greatest in industry B. C. market power is greatest in industry C. D. industry A is more monopolistic than industry C.

market power is greatest in industry C

The two general types of economic systems that exist today are? A. market systems and capitalism B. socialism and central planning C. market systems and command systems D. laissez faire systems and pure command systems

market systems and command systems

5. In the short run, the price charged by a monopolistically competitive firm attempting to maximize profits: A. must be less than ATC. B. must be more than ATC. C. may be either equal to ATC, less than ATC, or more than ATC. D. must be equal to ATC.

may be either equal to ATC, less than ATC, or more than ATC.

6. Monopolistically competitive firms: A. realize normal profits in the short run but losses in the long run. B. incur persistent losses in both the short run and long run. C. may realize either profits or losses in the short run but realize normal profits in the long run. D. persistently realize economic profits in both the short run and long run.

may realize either profits or losses in the short run but realize normal profits in the long run

The demand for most products caries directly with changes in consumer incomes. Such produces are known as? A. complementary goods B. competitive goods C. inferior goods D. normal goods

normal goods