ECO 365 Final Exam (90 Questions and Answers)

ECO 365 Final Exam (90 Questions and Answers)

1). The DeBeers company is a profit-maximizing monopolist that exercises monopoly power in the distribution of diamonds. If the company earns positive economic profits this year, the price of diamonds will:

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2). Using 100 workers and 10 machines, a firm can produce 10,000 units of output; using 250 workers and 25 machines, the firm produces 21,000 units of output. These facts are best explained by:

3). Suppose that college tuition is higher this year than last and that more students are enrolled in college this year than last year. Based on this information, we can best conclude that:

4). A monopoly firm is different from a perfectly competitive firm in that

5). The best example of positive externality is:

6). The theory that quantity supplied and price are positively related, other things constant, is referred to as the law of:

7). A reduction in the supply of labor will cause wages to:

8). Other things held constant in a competitive labor market, if workers negotiate a contract in which the employer agrees to pay an hourly of $17.85 while the market equilibrium hour rate is $16.50, the:

9). Alex is playing his music at full volume in his dorm room. The other people living on his floor found this to be a nuisance, but Alex doesn’t care. Alex’s music playing is an example of:

10). Oligopoly is probably the best market for technological change because:

11). A perfectly competitive firm facing a price of $50 decides to produce 500 widgets. Its marginal cost of producing the last widget is $50. If the firm’s goal is to maximize profit, it should:

12). Graphically, a change in price causes:

13). In 1997, the federal government reinstated a 10 percent excise tax on airline tickets. The industry tried to pass on the full 10 percent ticket tax to consumers but was able to boost fares by only 4 percent. From this you can conclude that the:

14). In 2011, the Department of Justice sued AT&T to block its merger with the cell phone service provider T-Mobile. To defend itself against the charge, AT&T argued that the:

15). The law of diminishing marginal productivity implies that the marginal product of a variable input:

16). Suppose OPEC announces it will increase production. Using supply and demand analysis to predict the effect of increased production on equilibrium price and quantity, the first step is to show the:

17). Many call centers that provide telephone customer services for U.S. companies have been established in India, but few or none have been established in China. Why?

18). Suppose people freely choose to spend 40 percent of their income on health care, but then the government decides to tax 40 percent of that person’s income to provide the same level of coverage as before. What can be said about deadweight loss in each case?

19). At one time, sea lions were depleting the stock of steelhead trout. One idea to scare sea lions away from the Washington coast was to launch fake killer whales, which are predators of sea lions. The cost of making the first whale is $16,000 ($5,000 for materials and $11,000 for the mold). The mold can be reused to make additional whales, and so additional whales cost $5,000 each. Based on these numbers, the production of fake killer whales exhibits:

20). There are many restaurants in the city of Raleigh, each one offering food and services that differ from those of its competitors. There is also free entry of sellers into the market, and each seller serves a very small fraction of the total number of meals served each day. The restaurant industry in Raleigh is best characterized as:

21). Suppose foreign shrimp prices drop by 32 percent and importers gain a 90 percent market share. From this information, what would economists strongly suspect about this industry?

22). For a monopolist, the price of a product:

23). When Ross Perot ran for president as a third party candidate in 1992, he argued that free trade with Mexico would result in massive job losses in the United States because Mexican wages were so low. Which of the following is the best explanation of why few economists agreed with Perot?

24). Mr. Woodward’s cabinet shop is experiencing rapid growth in sales. As sales have increased, Mr. Woodward has found it necessary to hire more workers. However, he has observed that doubling the number of workers has less than doubled his output. What is the likely explanation?

25). Price elasticity of demand is the:

26). Which of the following statements is true about a downward-sloping demand curve that is a straight line?

27). Strategic decision making is most important in:

28). Cartels are organizations that:

29). Microeconomics and macroeconomics are:

30). Microeconomics is the study of:

ECO 365 Sample Final 2

1. Because you can only obtain more of one good by giving up some of another good, the shape of a production possibility curve is _______________.

2. Refer to the table shown. The average product when eight workers are employed is _____6____

Number of workers Total Output

3. A resource is said to have a comparative advantage if

4. Refer to the graph shown. Initially, the market is in equilibrium with price equal to $3 and quantity equal to 100. Government imposes a tax on suppliers of $1 per unit. The effect of the tax is to ?

5. Refer to the table shown. Diminishing marginal productivity begins when the?

6. Refer to the graph shown. If this monopolistically competitive firm maximizes profit, it will

7. The price of a ticket to a rock concert is set at $35. All the tickets for the concert sell out 1 hour after they go on sale and there are still 1,000 fans who want to buy tickets. It follows that

8. Which of the following statements is true?

9. State what type of business combination is occurring in the following scenario: Samsung and Sony become partners in a flat screen manufacturing company.

10. Suppose a firm finds that an additional dollar spent on labor increases output more than does an additional dollar spent on machines. Under these conditions, the firm

11. Economists and laypeople see the pros and cons of international trade in different ways. Which of the following is one of those ways?

12. The morel is a prized mushroom that is often abundant in the Western United States in years after forest fires. Suppose two companies are buying morels from workers willing to find them. One company offers to pay workers $5.00 per pound, and the other company will pay workers only $4.00 per pound. Economists would say that

13. Which of the following is the best example of a macroeconomic externality?

14. If MR < MC, a monopolist should:

15. Opponents of government intervention in the economy argue that externalities

16. State what type of business combination is occurring in the following scenario: IBP meat processing firm buys American Cattle, a very large cattle ranch.

17. Refer to the graph shown. At which point is elasticity zero?

18. A Wall Street Journal headline reads: “Cigar Shortage Draws New Brands into Market.” The shortage resulted from a renewed interest in smoking cigars. What best describes the facts behind the headline?

19. Refer to the graph shown. If hamburger dinners are produced by a perfectly competitive industry with a market demand D:

20. State what type of business combination is occurring in the following scenario: Golf Smith, a golf supply retailer buys its competitor, Vango golf.

21. According to the text, Microeconomics, Colander (2013), economics is the study of how

22. Oligopoly is characterized by

23 When Ross Perot ran for president as a third party candidate in 1992, he argued that free trade with Mexico would result in massive job losses in the United States because Mexican wages were so low. Which of the following is the best explanation for why few economists agreed with Perot?

24. Refer to the graph shown. The figure shows the demand and supply curves for eggs and shows two equilibrium points, E1 and E2. An increase in demand from D1 to D2 would cause

25 Germany restricts the use of nonrefillable bottles and cans. The European Union argues that the rules aren’t just protecting the environment; they also are protecting German beverage makers from competition. The EU sees Germany’s environmentalism as _____________________.?

26. Oligopoly is probably the best market for technological change because

27. George Davis and Michael Wohlgenant estimate that for every 1 percent increase in the price of Christmas trees, quantity demanded falls by 0.6 percent. The demand for Christmas trees is __________________.

28. State what type of business combination is occurring in the following scenario: A tobacco

producer buys a carbonated beverage plant.

29. Suppose the minimum possible price of constructing homes is $50 per square foot. As a result of a sharp drop in the demand for home construction, the equilibrium price of home construction falls to $40 per square foot. Assuming the home construction industry is perfectly competitive and there are no specialized inputs, firms will

30 Refer to the table shown. At what level of employment is the marginal product of labor seven?

ECO 365 Sample Final 3

1. A Wall Street Journal headline reads: “Cigar Shortage Draws New Brands into Market.” The shortage resulted from a renewed interest in smoking cigars. What best describes the facts behind the headline?

2. State what type of business combination is occurring in the following scenario: IBP meat processing firm buys American Cattle, a very large cattle ranch.

3. State what type of business combination is occurring in the following scenario: Samsung and Sony become partners in a flat screen manufacturing company.

4. Suppose a firm finds that an additional dollar spent on labor increases output more than does an additional dollar spent on machines. Under these conditions, the firm

5. Oligopoly is characterized by

6. According to the text, Microeconomics, Colander (2013), economics is the study of how

7. When Ross Perot ran for president as a third party candidate in 1992, he argued that free trade with Mexico would result in massive job losses in the United States because Mexican wages were so low. Which of the following is the best explanation for why few economists agreed with Perot?

8. State what type of business combination is occurring in the following scenario: A tobacco producer buys a carbonated beverage plant.

9. Because you can only obtain more of one good by giving up some of another good, the shape of a production possibility curve is _______________.

10. Refer to the graph shown. Initially, the market is in equilibrium with price equal to $3 and quantity equal to 100. Government imposes a tax on suppliers of $1 per unit. The effect of the tax is to

11. Refer to the graph shown. At which point is elasticity zero?

12. A resource is said to have a comparative advantage if

13. Germany restricts the use of non refillable bottles and cans. The European Union argues that the rules aren’t just protecting the environment; they also are protecting German beverage makers from competition. The EU sees Germany’s environmentalism as _____________________.

14. Economists and laypeople see the pros and cons of international trade in different ways. Which of the following is one of those ways?

15. Refer to the table shown. Diminishing marginal productivity begins when the

16. Suppose the minimum possible price of constructing homes is $50 per square foot. As a result of a sharp drop in the demand for home construction, the equilibrium price of home construction falls to $40 per square foot. Assuming the home construction industry is perfectly competitive and there are no specialized inputs, firms will

17. Oligopoly is probably the best market for technological change because

18. State what type of business combination is occurring in the following scenario: Golf Smith, a golf supply retailer buys its competitor, Vango golf.

19. Which of the following is the best example of a macroeconomic externality?

20. Refer to the graph shown. If hamburger dinners are produced by a perfectly competitive industry with a market demand D:

21. The price of a ticket to a rock concert is set at $35. All the tickets for the concert sell out 1 hour after they go on sale and there are still 1,000 fans who want to buy tickets. It follows that

22. Refer to the graph shown. The figure shows the demand and supply curves for eggs and shows two equilibrium points, E1 and E2. An increase in demand from D1 to D2 would cause

23. If MR < MC, a monopolist should:

24. Opponents of government intervention in the economy argue that externalities

25. Refer to the table shown. The average product when eight workers are employed is _______.

26. Refer to the table shown. At what level of employment is the marginal product of labor seven?

27. The morel is a prized mushroom that is often abundant in the Western United States in years after forest fires. Suppose two companies are buying morels from workers willing to find them. One company offers to pay workers $5.00 per pound, and the other company will pay workers only $4.00 per pound. Economists would say that

28. Which of the following statements is true?

29. George Davis and Michael Wohlgenant estimate that for every 1 percent increase in the price of Christmas trees, quantity demanded falls by 0.6 percent. The demand for Christmas trees is __________________.

30. Refer to the graph shown. If this monopolistically competitive firm maximizes profit, it will