# Final Exam Microeconomics Fall 2009 Key

Size: px
Start display at page:

Download "Final Exam Microeconomics Fall 2009 Key"

Transcription

2 2. (p. 108) (Repeat answer on Scantron line 29.) An increase in price and an indeterminate change in quantity are consistent with a: A. leftward shift in demand and no shift in supply. B. leftward shift in supply and no shift in demand. C. rightward shift in supply and a leftward shift in demand. D. leftward shift in supply and a rightward shift in demand. Only a leftward shift in supply and a rightward shift in demand will result in a higher price, but indeterminate change in quantity. A leftward shift in supply and no shift in demand increase price, but also reduce quantity sold. AP: Yes BT: Analysis Colander - Chapter 05 Difficulty: Medium GTA Micro... #138 Learning Objective: 5-1 Microeconomics Fall... Skill: Comprehension 3. (p. 83) (Repeat answer on Scantron line 30.) The distinction between demand and the quantity demanded is best made by saying that: A. demand is represented graphically by a curve and quantity demanded as a point on that curve. B. the quantity demanded is represented graphically by a curve and demand as a point on that curve. C. the quantity demanded is in a direct relation with prices, whereas demand is in an inverse relation. D. the quantity demanded is in an inverse relation with prices, whereas demand is in a direct relation. Demand refers to a schedule of quantities that will be bought per unit of time at various prices. It refers to the entire demand curve. Quantity demanded refers to a specific amount that will be demanded per unit of time at a specific price. It refers to a point on a demand curve. AP: Yes BT: Analysis Colander - Chapter 04 Difficulty: Medium GTA Micro... #140 Learning Objective: 4-3 Microeconomics Fall... Skill: Comprehension

3 4. (p. 36) How does the text define the law of one price? A. It is illegal to pay different people different amounts for the same work. B. It is illegal to charge different people different amounts for the same product. C. Competition, combined with transferable goods and resources, drives prices of similar goods toward equality. D. There is a tendency for companies to keep prices fixed because the cost of making changes is often high. See the text. The text emphasizes the law of one price in labor markets, but it is quite general. BT: Knowledge Colander - Chapter 02 #98 Difficulty: Easy Learning Objective: 2-5 Skill: Recall 5. (p. 71) (Repeat your answer on Scantron line 31.) Japan, Germany, France, Britain, and the United States meet to try to coordinate their economic policies. This informal association is called: A. the WTO. B. the Group of Five. C. the IMF. D. the OECD. These countries belong to the Group of Five. BT: Knowledge Colander - Chapter 03 #137 Difficulty: Easy Learning Objective: 3-7 Skill: Recall

4 6. (Repeat your answer on Scantron lines 32 and 33.) If the price elasticity of demand equals 2 and the price elasticity of supply equals 3 then: 1) The sellers bear 40% of the burden. 2) The buyers bear 40% of the burden. 3) The sellers bear 60% of the burden. 4) The buyers bear 60% of the burden. 5) Buyers and sellers share the burden equally. A. Only statements 2 and 3 are correct. B. Only statements 1 and 4 are correct. C. None of the statements are correct. D. Only statement 5 is correct. E. Only statements 1 and 2 are correct. GTA Micro... # (p. 65) (Repeat answer on Scantron line 34.) The largest percentage of state and local expenditures is on: A. education. B. health and medical care. C. highways. D. income security. See Figure 3-4 in the text. AP: Yes BT: Knowledge Colander - Chapter 03 #165 Difficulty: Medium Learning Objective: 3-6 Skill: Recall Source: Study Guide 8. (Repeat your answer on Scantron line 35.) As you slide down a straight line demand curve (and assuming that the demand curve is not vertical): A. The own price elasticity of demand definitely rises. B. The own price elasticity of demand rises at first, reaches -1, and then falls. C. The elasticity of supply definitely rises. D. No other answer is correct. E. The own price elasticity of demand definitely falls. GTA Micro... #133 Microeconomics Fall...

5 9. (p. 67) (Repeat answer on Scantron line 36.) When my neighbors benefit from my cleaning up of my yard. They are experiencing a: A. Merit good B. Partnership C. Economic pressure D. Positive externality The cleanliness of my neighbor's lawn is a positive benefit to me for which I have to do nothing. Therefore, it is a positive externality. AACSB: Reflective Thinking AP: Yes BT: Analysis Colander - Chapter 03 #107 Difficulty: Easy Learning Objective: 3-6 Skill: Application Source: New 10. (p. 65) (Repeat answer on Scantron line 37.) Which two sources of revenue comprise most of federal government revenue? A. Corporate income taxes and social security taxes and contributions B. Corporate income taxes and excise taxes. C. Individual income tax and corporate income taxes. D. Individual income tax and social security taxes and contributions. From figure 3-4, one can see that individual income tax and social insurance taxes and contributions comprise most of federal tax receipts. AP: Yes BT: Knowledge Colander - Chapter 03 #90 Difficulty: Medium Learning Objective: 3-3 Skill: Recall

6 11. (Repeat your answer on Scantron lines 38 and 39.) Based on discussion in lecture (rather than potentially misleading information in the book), evaluate the following statements, then choose the best answer below. 1) An airline charges a large person twice as much for a ticket because the person needs two seats. This is an example of price discrimination. 2) An airline charges last minute travelers a higher price to travel between two cities than people who bought their tickets three weeks in advance. This is an example of price discrimination. 3) A movie theater gives my child a student discount when I take him to the movies. This is an example of price discrimination. 4) A movie theater charges a lower price for matinee tickets that evening tickets. This is an example of price discrimination A. Only 2 and 3 are examples of price discrimination. B. Only 1 and 2 are examples of price discrimination. C. Only 2, 3 and 4 are examples of price discrimination. D. Only 1 and 4 are examples of price discrimination E. No other answer is correct. Colander - Chapter 02

7 12. (p. 26) Refer to the graph above. Which of the curves shows decreasing marginal opportunity cost? A. A B. B C. C D. D Decreasing marginal opportunity costs means that in order to have more of something you must give up everdecreasing quantities of something else. On a production possibility curve, this would be shown as a decreasing slope as the quantity X increases. Curve C has this property AP: Yes BT: Analysis Colander - Chapter 02 #37 Difficulty: Hard Learning Objective: 2-2 Skill: Comprehension Type: Graph 13. (p. 31) According to Adam Smith, individuals are directed to do those things for which they have a comparative advantage by: A. their self interest. B. corporate management. C. government policy. D. the educational system. According to Smith, is not from the benevolence of the butcher, the brewer, or baker, that we expect our dinner, but from their regard to their own interest. AP: Yes BT: Knowledge Colander - Chapter 02 #62 Difficulty: Easy Learning Objective: 2-4 Skill: Recall Source: Revised

8 14. (p. 57) In the mercantilist system, A. markets rather than political forces make the central economic decisions. B. serfs make the central economic decisions. C. governments let the market decide what to produce. D. governments distributed the rights to produce. Mercantilism is an economic system in which government determines the what, how, and for whom decisions by doling out production rights. BT: Knowledge Colander - Chapter 03 #39 Difficulty: Medium Learning Objective: 3-2 Skill: Recall

9 15. (p. 30) Refer to the graph below. Which of the shifts explains what would happen to the production possibility curve if restrictions were imposed on tuna fishing? A. I B. II C. III D. IV Restrictions will decrease the production of tuna but will not alter the production of shrimp, making III the correct choice. AACSB: Reflective Thinking AP: Yes BT: Synthesis Colander - Chapter 02 #53 Difficulty: Medium Learning Objective: 2-1 Skill: Application Source: Revised Type: Graph

10 16. (p. 115) (Repeat your answer on Scantron line 39.) In a third-party-payer system: A. the person who chooses the product pays the entire cost. B. the quantity demanded would be lower than it otherwise would be. C. the quantity demanded will be higher than it otherwise would be. D. consumers are hurt. In a third-party payer market, the consumer pays only part of the cost of the product, increasing quantity demanded. Third parties pay part or all of the cost, helping the consumer of the good. BT: Analysis Colander - Chapter 05 Difficulty: Easy GTA Micro... #139 Learning Objective: 5-5 Microeconomics Fall... Skill: Comprehension Source: Study Guide 17. (p. 33) (Repeat your answer on Scantron line 40.) Mexico has a comparative advantage in producing corn: A. if its opportunity cost of producing corn is higher than the opportunity cost in other countries. B. if its opportunity cost of producing corn is the same as the opportunity cost in other countries. C. if its opportunity cost of producing corn is lower than the opportunity cost in other countries. D. regardless of the opportunity cost in other countries. A country has a comparative advantage in the production of a good if its opportunity cost of producing that good is less than that of other countries. AP: Yes BT: Analysis Colander - Chapter 02 #68 Difficulty: Easy Learning Objective: 2-4 Skill: Comprehension

11 18. (p. 33) Suppose that in Slovakia, one unit of labor can produce either 16 tons of wheat or 32 tons of soy while in Poland, one unit of labor can produce either 4 tons of wheat or 2 tons of soy. Given this information, which of the following statements is true? A. Slovakia has a comparative advantage in producing neither wheat nor soy. B. Slovakia has a comparative advantage in producing both wheat and soy. C. Poland has a comparative advantage in producing soy but not wheat. D. Poland has a comparative advantage in producing wheat but not soy. Slovakia must give up 2 tons of soy to increase wheat production by 1 ton, while Poland only has to give up ton of soy, so Poland has a comparative advantage in producing wheat. AACSB: Reflective Thinking BT: Synthesis Colander - Chapter 02 #73 Difficulty: Hard Learning Objective: 2-4 Skill: Application Type: Calculation 19. If the demand curve is not at all responsive to price, the burden of a tax collected from suppliers is borne: A. entirely by the suppliers. B. entirely by the consumers. C. mostly by the suppliers, and partly by the consumers, if the demand curve is inelastic. D. partly by the suppliers, and mostly by the consumers, if the demand curve is elastic. GTA Subset... #8

12 20. Reference: Figure 7-17 (Repeat your answer on Scantron line 41.) Refer to the graph above and choose the best answer. The welfare loss associated with a price floor at Pf is equal to: A. rectangles E and D. B. rectangles C and F. C. triangles A and B. D. at least triangles A and B. E. at least triangles E and D. GTA Subset... # (Repeat your answer on Scantron line 42.) The demand curve faced by a perfectly competitive firm is the same as: A. its marginal cost curve. B. its marginal revenue curve. C. its average total cost curve. D. its average fixed cost curve. GTA Subset... #25

13 22. (Repeat answer on Scantron line 43.) Refer to the above diagrams, then choose the best answer. Which one of these diagrams might illustrate a child who was sitting around the house doing nothing, so the parents reduced the child's allowance but gave the child a higher hourly wage for doing chores, and now the child is doing more chores, and also the total cost to the parents (allowance plus weekly wages paid), is lower than before. (Hint 1: What would the diagram look like for a person who was not working? Hint 2: Where would you draw a horizontal line in the diagram to represent the total amount of money received per week by the child --allowance plus total wages paid for chores?) A. Figures 5, 7 and 8 all illustrate this situation. B. Figure 7 illustrates this situation. C. Figure 5 illustrates this situation

14 D. Figure 8 illustrates this situation. E. None of Figures 5, 7 or 8 illustrates this situation. GTA Micro...

15 23. (Repeat your answer on Scantron line 44 and 45.) The curves in the diagram above have not been labeled but you know what they are from their shapes. Decide which of the following statements are correct, then choose the best answer from A through E below. 1) This firm will choose output level 1 in the long run. 2) At the moment, this firm is set up to produce output level 5 in the long run, but this is no longer the correct output level. 3) This firm will choose output level 2 in the short run. 4) This firm will choose output level 3 in the long run, and output level 4 in the short run. A. Only statements 2 and 4 are correct. B. Only statements 2 and 3 are correct. C. Only statements 1 and 3 are correct. D. Only statements 1, 2 and 3 are correct. E. Only statements 1 and 2 are correct. GTA Micro... #137 Microeconomics Fall...

16 24. (Repeat your answer on Scantron line 46.) Refer to the graph above, evaluate each of the following statements and choose the best answer: 1) This monopolist will select the price which generates the largest economic profit, namely \$ ) This monopolist will earn an economic profit of \$30 per time period. 3) The efficiency cost (welfare loss) caused by this monopolist is the large triangular area inside the 300 output level, the MC curve and the D curve. 4) The efficiency cost (welfare loss) caused by this monopolist is the small triangular area inside the AC curve, the MC curve and the D curve. A. Only statement 1 is correct. B. Only statements 1 and 2 are correct. C. Only statements 1, 2 and 3 are correct. D. Only statements 1, 2 and 4 are correct. E. None of these statements are correct. GTA Micro... Microeconomics Fall (Repeat your answer on Scantron line 47.) If the income elasticity of demand for a good is less than zero, the good is: A. A luxury good. B. A normal good. C. Both D) and E) are correct. D. A good of low quality. E. An inferior good. GTA Micro... #42

17 26. (Repeat your answer on Scantron lines 48 and 49.) Assume the demand for corn is very inelastic. Because of a corn eating beetle, every farmer loses 20% of the corn crop. Based on your economic analysis: A. farmers will experience a large decline in revenue when they sell their reduced crop. B. farmers will earn roughly the same amount of revenue as the prior year when they sell their reduced crop. C. farmers will experience a large increase in revenue when they sell their reduced crop, so the corn eating beetle has been good for the farmers. D. none of the other answers are correct GTA Micro... # Reference: Diagram SR vx LR ATC (Repeat your answer on Scantron line 50.) Refer to the graph above. If the firm originally set itself up to produce 300 and now desires to expand its output to 600 units, it will A. use the short run curve represented by SATC2 at first, but eventually (in the long run) start using SATC3 as the short run curve. B. use the short run curve represented by SATC2 both at first and after the long run completion of the expansion. C. use the short run curve represented by SATC3 both at first and after the long run completion of the expansion. D. use the short run curve represented by SATC1 at first, but eventually (in the long run) start using SATC2 as the short run curve. E. use some other short run curve, not shown, rather than use SATC1, SATC2, SATC3 or SATC4. GTA Micro... #68

18 Final Exam Microeconomics Fall 2009 Summary Category # of Questions 11 AACSB: Reflective Thinking 3 AP: Yes 9 BT: Analysis 6 BT: Knowledge 6 BT: Synthesis 2 Colander - Chapter 02 7 Colander - Chapter 03 5 Colander - Chapter 04 1 Colander - Chapter 05 2 Difficulty: Easy 6 Difficulty: Hard 2 Difficulty: Medium 6 GTA Micro GTA Subset... 3 Learning Objective: Learning Objective: Learning Objective: Learning Objective: Learning Objective: Learning Objective: Learning Objective: Learning Objective: Learning Objective: Learning Objective: Learning Objective: Microeconomics Fall... 6 Skill: Application 3 Skill: Comprehension 5 Skill: Recall 6 Source: New 1 Source: Revised 2 Source: Study Guide 2 Type: Calculation 1 Type: Graph 2 11

### MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question.

Chapter 11 Perfect Competition - Sample Questions MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question. 1) Perfect competition is an industry with A) a

### MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question.

Chapter 6 - Markets in Action - Sample Questions MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question. 1) The short-run impact of the San Francisco earthquake

### Practice Questions Week 3 Day 1

Practice Questions Week 3 Day 1 Figure 4-1 Quantity Demanded \$ 2 18 3 \$ 4 14 4 \$ 6 10 5 \$ 8 6 6 \$10 2 8 Price Per Pair Quantity Supplied 1. Figure 4-1 shows the supply and demand for socks. If a price

### MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question.

MBA 640 Survey of Microeconomics Fall 2006, Quiz 6 Name MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question. 1) A monopoly is best defined as a firm that

### Midterm Exam #1 - Answers

Page 1 of 9 Midterm Exam #1 Answers Instructions: Answer all questions directly on these sheets. Points for each part of each question are indicated, and there are 1 points total. Budget your time. 1.

### Chapter. Perfect Competition CHAPTER IN PERSPECTIVE

Perfect Competition Chapter 10 CHAPTER IN PERSPECTIVE In Chapter 10 we study perfect competition, the market that arises when the demand for a product is large relative to the output of a single producer.

### Chapter 6 Competitive Markets

Chapter 6 Competitive Markets After reading Chapter 6, COMPETITIVE MARKETS, you should be able to: List and explain the characteristics of Perfect Competition and Monopolistic Competition Explain why a

### 11 PERFECT COMPETITION. Chapter. Competition

Chapter 11 PERFECT COMPETITION Competition Topic: Perfect Competition 1) Perfect competition is an industry with A) a few firms producing identical goods B) a few firms producing goods that differ somewhat

### PAGE 1. Econ 2113 - Test 2 Fall 2003 Dr. Rupp. Multiple Choice. 1. The price elasticity of demand measures

PAGE 1 Econ 2113 - Test 2 Fall 2003 Dr. Rupp Multiple Choice 1. The price elasticity of demand measures a. how responsive buyers are to a change in income. b. how responsive sellers are to a change in

### 6. Which of the following is likely to be the price elasticity of demand for food? a. 5.2 b. 2.6 c. 1.8 d. 0.3

Exercise 2 Multiple Choice Questions. Choose the best answer. 1. If a change in the price of a good causes no change in total revenue a. the demand for the good must be elastic. b. the demand for the good

### Pre Test Chapter 3. 8.. DVD players and DVDs are: A. complementary goods. B. substitute goods. C. independent goods. D. inferior goods.

1. Graphically, the market demand curve is: A. steeper than any individual demand curve that is part of it. B. greater than the sum of the individual demand curves. C. the horizontal sum of individual

### SUPPLY AND DEMAND : HOW MARKETS WORK

SUPPLY AND DEMAND : HOW MARKETS WORK Chapter 4 : The Market Forces of and and demand are the two words that economists use most often. and demand are the forces that make market economies work. Modern

### Final Exam (Version 1) Answers

Final Exam Economics 101 Fall 2003 Wallace Final Exam (Version 1) Answers 1. The marginal revenue product equals A) total revenue divided by total product (output). B) marginal revenue divided by marginal

### Demand, Supply, and Market Equilibrium

3 Demand, Supply, and Market Equilibrium The price of vanilla is bouncing. A kilogram (2.2 pounds) of vanilla beans sold for \$50 in 2000, but by 2003 the price had risen to \$500 per kilogram. The price

### PART A: For each worker, determine that worker's marginal product of labor.

ECON 3310 Homework #4 - Solutions 1: Suppose the following indicates how many units of output y you can produce per hour with different levels of labor input (given your current factory capacity): PART

### Practice Multiple Choice Questions Answers are bolded. Explanations to come soon!!

Practice Multiple Choice Questions Answers are bolded. Explanations to come soon!! For more, please visit: http://courses.missouristate.edu/reedolsen/courses/eco165/qeq.htm Market Equilibrium and Applications

### MICROECONOMIC PRINCIPLES SPRING 2001 MIDTERM ONE -- Answers. February 16, 2001. Table One Labor Hours Needed to Make 1 Pounds Produced in 20 Hours

MICROECONOMIC PRINCIPLES SPRING 1 MIDTERM ONE -- Answers February 1, 1 Multiple Choice. ( points each) Circle the correct response and write one or two sentences to explain your choice. Use graphs as appropriate.

### A. a change in demand. B. a change in quantity demanded. C. a change in quantity supplied. D. unit elasticity. E. a change in average variable cost.

1. The supply of gasoline changes, causing the price of gasoline to change. The resulting movement from one point to another along the demand curve for gasoline is called A. a change in demand. B. a change

### ECON 103, 2008-2 ANSWERS TO HOME WORK ASSIGNMENTS

ECON 103, 2008-2 ANSWERS TO HOME WORK ASSIGNMENTS Due the Week of June 23 Chapter 8 WRITE [4] Use the demand schedule that follows to calculate total revenue and marginal revenue at each quantity. Plot

### 5. Suppose demand is perfectly elastic, and the supply of the good in question

ECON 1620 Basic Economics Principles 2010 2011 2 nd Semester Mid term test (1) : 40 multiple choice questions Time allowed : 60 minutes 1. When demand is inelastic the price elasticity of demand is (A)

### MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question.

Economics 103 Spring 2012: Multiple choice review questions for final exam. Exam will cover chapters on perfect competition, monopoly, monopolistic competition and oligopoly up to the Nash equilibrium

### Principle of Microeconomics Econ 202-506 chapter 6

Principle of Microeconomics Econ 202-506 chapter 6 MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question. 1) The buyers pay the entire sales tax levied on

### N. Gregory Mankiw Principles of Economics. Chapter 15. MONOPOLY

N. Gregory Mankiw Principles of Economics Chapter 15. MONOPOLY Solutions to Problems and Applications 1. The following table shows revenue, costs, and profits, where quantities are in thousands, and total

### Principles of Economics: Micro: Exam #2: Chapters 1-10 Page 1 of 9

Principles of Economics: Micro: Exam #2: Chapters 1-10 Page 1 of 9 print name on the line above as your signature INSTRUCTIONS: 1. This Exam #2 must be completed within the allocated time (i.e., between

### Demand, Supply and Elasticity

Demand, Supply and Elasticity CHAPTER 2 OUTLINE 2.1 Demand and Supply Definitions, Determinants and Disturbances 2.2 The Market Mechanism 2.3 Changes in Market Equilibrium 2.4 Elasticities of Supply and

### Chapter 7 Monopoly, Oligopoly and Strategy

Chapter 7 Monopoly, Oligopoly and Strategy After reading Chapter 7, MONOPOLY, OLIGOPOLY AND STRATEGY, you should be able to: Define the characteristics of Monopoly and Oligopoly, and explain why the are

### MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question on the accompanying scantron.

Principles of Microeconomics Fall 2007, Quiz #6 Name MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question on the accompanying scantron. 1) A monopoly is

### Monopoly WHY MONOPOLIES ARISE

In this chapter, look for the answers to these questions: Why do monopolies arise? Why is MR < P for a monopolist? How do monopolies choose their P and Q? How do monopolies affect society s well-being?

1 Monopoly Why Monopolies Arise? Monopoly is a rm that is the sole seller of a product without close substitutes. The fundamental cause of monopoly is barriers to entry: A monopoly remains the only seller

### 1. Supply and demand are the most important concepts in economics.

Page 1 1. Supply and demand are the most important concepts in economics. 2. Markets and Competition a. Market is a group of buyers and sellers of a particular good or service. P. 66. b. These individuals

### 4 THE MARKET FORCES OF SUPPLY AND DEMAND

4 THE MARKET FORCES OF SUPPLY AND DEMAND IN THIS CHAPTER YOU WILL Learn what a competitive market is Examine what determines the demand for a good in a competitive market Chapter Overview Examine what

### How To Calculate Profit Maximization In A Competitive Dairy Firm

Microeconomic FRQ s 2005 1. Bestmilk, a typical profit-maximizing dairy firm, is operating in a constant-cost, perfectly competitive industry that is in long-run equilibrium. a. Draw correctly-labeled

### Name Eco200: Practice Test 2 Covering Chapters 10 through 15

Name Eco200: Practice Test 2 Covering Chapters 10 through 15 1. Four roommates are planning to spend the weekend in their dorm room watching old movies, and they are debating how many to watch. Here is

### Econ 201 Exam 1 F2002 Professor Phil Miller Name: Student Number:

Econ 201 Exam 1 F2002 Professor Phil Miller Name: Student Number: Multiple Choice (3 points each) Directions: Identify the letter of the choice that best completes the statement or answers the question.

### Module 49 Consumer and Producer Surplus

What you will learn in this Module: The meaning of consumer surplus and its relationship to the demand curve The meaning of producer surplus and its relationship to the supply curve Module 49 Consumer

### Practice Questions Week 8 Day 1

Practice Questions Week 8 Day 1 Multiple Choice Identify the choice that best completes the statement or answers the question. 1. The characteristics of a market that influence the behavior of market participants

### MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question.

Chapter 11 Monopoly practice Davidson spring2007 MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question. 1) A monopoly industry is characterized by 1) A)

### Econ 202 Exam 3 Practice Problems

Econ 202 Exam 3 Practice Problems Principles of Microeconomics Dr. Phillip Miller Multiple Choice Identify the choice that best completes the statement or answers the question. Chapter 13 Production and

economicsentrance.weebly.com Basic Exercises Micro Economics AKG 09 Table of Contents MICRO ECONOMICS Budget Constraint... 4 Practice problems... 4 Answers... 4 Supply and Demand... 7 Practice Problems...

### Chapter 3. The Concept of Elasticity and Consumer and Producer Surplus. Chapter Objectives. Chapter Outline

Chapter 3 The Concept of Elasticity and Consumer and roducer Surplus Chapter Objectives After reading this chapter you should be able to Understand that elasticity, the responsiveness of quantity to changes

### Suppose you are a seller with cost 13 who must pay a sales tax of 15. What is the lowest price you can sell at and not lose money?

Experiment 3 Suppose that sellers pay a tax of 15. If a seller with cost 5 sells to a buyer with value 45 at a price of 25, the seller earns a profit of and the buyer earns a profit of. Suppose you are

### Chapter 3 Market Demand, Supply, and Elasticity

Chapter 3 Market Demand, Supply, and Elasticity After reading chapter 3, MARKET DEMAND, SUPPLY, AND ELASTICITY, you should be able to: Discuss the Law of Demand and draw a Demand Curve. Distinguish between

### MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question.

Practice for Perfect Competition Name MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question. 1) Which of the following is a defining characteristic of a

### QE1: Economics Notes 1

QE1: Economics Notes 1 Box 1: The Household and Consumer Welfare The final basket of goods that is chosen are determined by three factors: a. Income b. Price c. Preferences Substitution Effect: change

### CHAPTER 10 MARKET POWER: MONOPOLY AND MONOPSONY

CHAPTER 10 MARKET POWER: MONOPOLY AND MONOPSONY EXERCISES 3. A monopolist firm faces a demand with constant elasticity of -.0. It has a constant marginal cost of \$0 per unit and sets a price to maximize

### CHAPTER 13 MARKETS FOR LABOR Microeconomics in Context (Goodwin, et al.), 2 nd Edition

CHAPTER 13 MARKETS FOR LABOR Microeconomics in Context (Goodwin, et al.), 2 nd Edition Chapter Summary This chapter deals with supply and demand for labor. You will learn about why the supply curve for

### Employment and Pricing of Inputs

Employment and Pricing of Inputs Previously we studied the factors that determine the output and price of goods. In chapters 16 and 17, we will focus on the factors that determine the employment level

### ECON 600 Lecture 5: Market Structure - Monopoly. Monopoly: a firm that is the only seller of a good or service with no close substitutes.

I. The Definition of Monopoly ECON 600 Lecture 5: Market Structure - Monopoly Monopoly: a firm that is the only seller of a good or service with no close substitutes. This definition is abstract, just

### Chapter 14 Monopoly. 14.1 Monopoly and How It Arises

Chapter 14 Monopoly 14.1 Monopoly and How It Arises 1) One of the requirements for a monopoly is that A) products are high priced. B) there are several close substitutes for the product. C) there is a

### Econ 202 Exam 2 Practice Problems

Econ 202 Exam 2 Practice Problems Principles of Microeconomics Dr. Phillip Miller Multiple Choice Identify the choice that best completes the statement or answers the question. Chapter 6 1. If a binding

### chapter Perfect Competition and the >> Supply Curve Section 3: The Industry Supply Curve

chapter 9 The industry supply curve shows the relationship between the price of a good and the total output of the industry as a whole. Perfect Competition and the >> Supply Curve Section 3: The Industry

### MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question.

Chap 13 Monopolistic Competition and Oligopoly These questions may include topics that were not covered in class and may not be on the exam. MULTIPLE CHOICE. Choose the one alternative that best completes

### ELASTICITY Microeconomics in Context (Goodwin, et al.), 3 rd Edition

Chapter 4 ELASTICITY Microeconomics in Context (Goodwin, et al.), 3 rd Edition Chapter Overview This chapter continues dealing with the demand and supply curves we learned about in Chapter 3. You will

### Microeconomics Topic 7: Contrast market outcomes under monopoly and competition.

Microeconomics Topic 7: Contrast market outcomes under monopoly and competition. Reference: N. Gregory Mankiw s rinciples of Microeconomics, 2 nd edition, Chapter 14 (p. 291-314) and Chapter 15 (p. 315-347).

### MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question on the accompanying scantron.

Principles of Microeconomics, Quiz #5 Fall 2007 Name MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question on the accompanying scantron. 1) Perfect competition

### The Central Idea CHAPTER 1 CHAPTER OVERVIEW CHAPTER REVIEW

CHAPTER 1 The Central Idea CHAPTER OVERVIEW Economic interactions involve scarcity and choice. Time and income are limited, and people choose among alternatives every day. In this chapter, we study the

### Economic Efficiency, Government Price Setting, and Taxes

CHAPTER 4 Economic Efficiency, Government Price Setting, and Taxes Modified by: Changwoo Nam 1 Economic Efficiency, Government Price Setting, and Taxes A legally determined maximum price that sellers may

### NAME: INTERMEDIATE MICROECONOMIC THEORY SPRING 2008 ECONOMICS 300/010 & 011 Midterm II April 30, 2008

NAME: INTERMEDIATE MICROECONOMIC THEORY SPRING 2008 ECONOMICS 300/010 & 011 Section I: Multiple Choice (4 points each) Identify the choice that best completes the statement or answers the question. 1.

### MERSİN UNIVERSITY FACULTY OF ECONOMICS AND ADMINISTRATIVE SCİENCES DEPARTMENT OF ECONOMICS MICROECONOMICS MIDTERM EXAM DATE 18.11.

MERSİN UNIVERSITY FACULTY OF ECONOMICS AND ADMINISTRATIVE SCİENCES DEPARTMENT OF ECONOMICS MICROECONOMICS MIDTERM EXAM DATE 18.11.2011 TİIE 12:30 STUDENT NAME AND NUMBER MULTIPLE CHOICE. Choose the one

### Chapter 8 Application: The Costs of Taxation

Chapter 8 Application: The Costs of Taxation Review Questions What three factors must be taken into account in order to fully understand the effect of taxes on economic well-being? ANSWER: In order to

### Quantity of trips supplied (millions)

Taxes chapter: 7 1. The United tates imposes an excise tax on the sale of domestic airline tickets. Let s assume that in 2010 the total excise tax was \$6.10 per airline ticket (consisting of the \$3.60

### Maximising Consumer Surplus and Producer Surplus: How do airlines and mobile companies do it?

Maximising onsumer Surplus and Producer Surplus: How do airlines and mobile companies do it? This is a topic that has many powerful applications in understanding economic policy applications: (a) the impact

### Microeconomics Topic 6: Be able to explain and calculate average and marginal cost to make production decisions.

Microeconomics Topic 6: Be able to explain and calculate average and marginal cost to make production decisions. Reference: Gregory Mankiw s Principles of Microeconomics, 2 nd edition, Chapter 13. Long-Run

### BPE_MIC1 Microeconomics 1 Fall Semester 2011

Masaryk University - Brno Department of Economics Faculty of Economics and Administration BPE_MIC1 Microeconomics 1 Fall Semester 2011 Final Exam - 05.12.2011, 9:00-10:30 a.m. Test A Guidelines and Rules:

### AP Microeconomics 2003 Scoring Guidelines

AP Microeconomics 2003 Scoring Guidelines The materials included in these files are intended for use by AP teachers for course and exam preparation; permission for any other use must be sought from the

### Non Sequitur by Wiley Miller

SUPPLY & DEMAND Non Sequitur by Wiley Miller Graph Basics Movement change along the curve Shift the curve moves Increase to the right Decrease to the left Intersection of curves Price Label: both axis,

### ANSWERS TO END-OF-CHAPTER QUESTIONS

ANSWERS TO END-OF-CHAPTER QUESTIONS 23-1 Briefly indicate the basic characteristics of pure competition, pure monopoly, monopolistic competition, and oligopoly. Under which of these market classifications

### LIST OF MEMBERS WHO PREPARED QUESTION BANK FOR ECONOMICS FOR CLASS XII TEAM MEMBERS. Sl. No. Name Designation

LIST OF MEMBERS WHO PREPARED QUESTION BANK FOR ECONOMICS FOR CLASS XII TEAM MEMBERS Sl. No. Name Designation 1. Mrs. Neelam Vinayak V. Principal (Team Leader) G.G.S.S. Deputy Ganj, Sadar Bazar Delhi-110006

### Marginal cost. Average cost. Marginal revenue 10 20 40

Economics 101 Fall 2011 Homework #6 Due: 12/13/2010 in lecture Directions: The homework will be collected in a box before the lecture. Please place your name, TA name and section number on top of the homework

### 17. Suppose demand is given by Q d = 400 15P + I, where Q d is quantity demanded, P is. I = 100, equilibrium quantity is A) 15 B) 20 C) 25 D) 30

Ch. 2 1. A relationship that shows the quantity of goods that consumers are willing to buy at different prices is the A) elasticity B) market demand curve C) market supply curve D) market equilibrium 2.

### MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question.

MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question. 1) It is efficient to produce an additional shirt if A) the marginal benefit of producing the shirt

### Jacob: If there is a tax, there is a dead weight loss; why do we speak of a social gain?

Microeconomics, sales taxes, final exam practice problems (The attached PDF file has better formatting.) *Question 1.1: Social Gain Suppose the government levies a sales tax on a good. With the sales tax,

### I. Introduction to Taxation

University of Pacific-Economics 53 Lecture Notes #17 I. Introduction to Taxation Government plays an important role in most modern economies. In the United States, the role of the government extends from

### MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question.

MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question. 1) The law of demand states that, other things remaining the same, the lower the price of a good,

### Elasticity: The Responsiveness of Demand and Supply

Chapter 6 Elasticity: The Responsiveness of Demand and Supply Chapter Outline 61 LEARNING OBJECTIVE 61 The Price Elasticity of Demand and Its Measurement Learning Objective 1 Define the price elasticity

### Econ 201 Final Exam. Douglas, Fall 2007 Version A Special Codes 00000. PLEDGE: I have neither given nor received unauthorized help on this exam.

, Fall 2007 Version A Special Codes 00000 PLEDGE: I have neither given nor received unauthorized help on this exam. SIGNED: PRINT NAME: Econ 201 Final Exam 1. For a profit-maximizing monopolist, a. MR

### Macroeconomics, Fall 2007 Exam 3, TTh classes, various versions

Name: _ Days/Times Class Meets: Today s Date: Macroeconomics, Fall 2007 Exam 3, TTh classes, various versions Read these Instructions carefully! You must follow them exactly! I) On your Scantron card you

### Final Exam 15 December 2006

Eco 301 Name Final Exam 15 December 2006 120 points. Please write all answers in ink. You may use pencil and a straight edge to draw graphs. Allocate your time efficiently. Part 1 (10 points each) 1. As

### Problem Set #5-Key. Economics 305-Intermediate Microeconomic Theory

Problem Set #5-Key Sonoma State University Economics 305-Intermediate Microeconomic Theory Dr Cuellar (1) Suppose that you are paying your for your own education and that your college tuition is \$200 per

### or, put slightly differently, the profit maximizing condition is for marginal revenue to equal marginal cost:

Chapter 9 Lecture Notes 1 Economics 35: Intermediate Microeconomics Notes and Sample Questions Chapter 9: Profit Maximization Profit Maximization The basic assumption here is that firms are profit maximizing.

### Economics 335, Spring 1999 Problem Set #7

Economics 335, Spring 1999 Problem Set #7 Name: 1. A monopolist has two sets of customers, group 1 and group 2. The inverse demand for group 1 may be described by P 1 = 200? Q 1, where P 1 is the price

### 1. If the price elasticity of demand for a good is.75, the demand for the good can be described as: A) normal. B) elastic. C) inferior. D) inelastic.

Chapter 20: Demand and Supply: Elasticities and Applications Extra Multiple Choice Questions for Review 1. If the price elasticity of demand for a good is.75, the demand for the good can be described as:

### Midterm Exam #2. ECON 101, Section 2 summer 2004 Ying Gao. 1. Print your name and student ID number at the top of this cover sheet.

NAME: STUDENT ID: Midterm Exam #2 ECON 101, Section 2 summer 2004 Ying Gao Instructions Please read carefully! 1. Print your name and student ID number at the top of this cover sheet. 2. Check that your

### Pre-Test Chapter 10 ed17

Pre-Test Chapter 10 ed17 Multiple Choice Questions 1. Refer to the above diagrams. Assuming a constant price level, an increase in aggregate expenditures from AE 1 to AE 2 would: A. move the economy from

### Long-Run Average Cost. Econ 410: Micro Theory. Long-Run Average Cost. Long-Run Average Cost. Economies of Scale & Scope Minimizing Cost Mathematically

Slide 1 Slide 3 Econ 410: Micro Theory & Scope Minimizing Cost Mathematically Friday, November 9 th, 2007 Cost But, at some point, average costs for a firm will tend to increase. Why? Factory space and

### Monopoly and Monopsony Labor Market Behavior

Monopoly and Monopsony abor Market Behavior 1 Introduction For the purposes of this handout, let s assume that firms operate in just two markets: the market for their product where they are a seller) and

### Massachusetts Institute of Technology Department of Economics. 14.01 Principles of Microeconomics Exam 2 Tuesday, November 6th, 2007

Page 1 of 8 Massachusetts Institute of Technology Department of Economics 14.01 Principles of Microeconomics Exam Tuesday, November 6th, 007 Last Name (Please print): First Name: MIT ID Number: Instructions.

### Chapter 04 Firm Production, Cost, and Revenue

Chapter 04 Firm Production, Cost, and Revenue Multiple Choice Questions 1. A key assumption about the way firms behave is that they a. Minimize costs B. Maximize profit c. Maximize market share d. Maximize

### Chapter 27: Taxation. 27.1: Introduction. 27.2: The Two Prices with a Tax. 27.2: The Pre-Tax Position

Chapter 27: Taxation 27.1: Introduction We consider the effect of taxation on some good on the market for that good. We ask the questions: who pays the tax? what effect does it have on the equilibrium

### MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question.

Econ 201 Practice Test 1 Professor V. Tremblay MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question. 1) Scarcity can best be defined as a situation in which:

### Chapter 15: Monopoly WHY MONOPOLIES ARISE HOW MONOPOLIES MAKE PRODUCTION AND PRICING DECISIONS

Chapter 15: While a competitive firm is a taker, a monopoly firm is a maker. A firm is considered a monopoly if... it is the sole seller of its product. its product does not have close substitutes. The

### Supplement Unit 1. Demand, Supply, and Adjustments to Dynamic Change

1 Supplement Unit 1. Demand, Supply, and Adjustments to Dynamic Change Introduction This supplemental highlights how markets work and their impact on the allocation of resources. This feature will investigate

### AP Microeconomics Review

AP Microeconomics Review 1. Firm in Perfect Competition (Long-Run Equilibrium) 2. Monopoly Industry with comparison of price & output of a Perfectly Competitive Industry 3. Natural Monopoly with Fair-Return

### CHAPTER 5 WORKING WITH SUPPLY AND DEMAND Microeconomics in Context (Goodwin, et al.), 2 nd Edition

CHAPTER 5 WORKING WITH SUPPLY AND DEMAND Microeconomics in Context (Goodwin, et al.), 2 nd Edition Chapter Overview This chapter continues dealing with the demand and supply curves we learned about in

### Economics 201 Fall 2010 Introduction to Economic Analysis Problem Set #6 Due: Wednesday, November 3

Economics 201 Fall 2010 Introduction to Economic Analysis Jeffrey Parker Problem Set #6 Due: Wednesday, November 3 1. Cournot Duopoly. Bartels and Jaymes are two individuals who one day discover a stream

### AP Microeconomics 2011 Scoring Guidelines

AP Microeconomics 2011 Scoring Guidelines The College Board The College Board is a not-for-profit membership association whose mission is to connect students to college success and opportunity. Founded

### MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question.

MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question. 1) The four-firm concentration ratio equals the percentage of the value of accounted for by the four