First Semester Exam

Question 1

When one decision is made, the next best alternative not selected is called

Answer 1

Opportunity cost

Question 2

The value of the best alternative forgone when a decision is made defines the concept of

Answer 2

Opportunity cost

Question 3

If the country is currently producing at point c, it can produce more computers by doing which of the following

Answer 3

Moving to point d

Question 4

How might point e be attained?

Answer 4

If improvements in technology occurred in either the computer sector or the farming sector

Question 5

The PPC of the country would be most likely to shift to the right if the country were producing at which of the following points?

Answer 5

Point d

Question 6

According to the theory of comparative advantage, a good should be produced where

Answer 6

It’s opportunity costs are least

Question 7

“If you want to have anything done correctly, you have to do it yourself.” This quote violates the principle of which of the following economic concepts?

Answer 7

Comparative advantage

Question 8

Economics is best defined by which of the following?

Answer 8

The science of scarcity

Question 9

If hotdogs are an inferior good, an increase in income will result in

Answer 9

A decrease in the demand for hotdogs

Question 10

An increase in the price of gasoline will cause the demand curve for tires to shift in which direction?

Answer 10

To the left, because gasoline and tires are compliments

Question 11

On the graph above, what area represents consumer surplus when the price is $10?

Answer 11

C

Question 12

On the graph above, what area represents producer surplus when the price is $10?

Answer 12

B

Question 13

Producer surplus is the

Answer 13

Amount the seller is paid less the cost of production

Question 14

Which of the following will occur if a legal price floor is placed on a good below its free market equilibrium?

Answer 14

The equilibrium price will ration the good

Question 15

Assume that coal is a normal good. If the price of coal increases and the quantity sold increases, which of the following is consistent with these observations?

Answer 15

The price of oil increased, oil and coal being substitutes

Question 16

Which of the following will not cause the demand curve for Nike shoes to shift?

Answer 16

A decrease in the price of Nike shoes

Question 17

Economic costs can be defined as

Answer 17

Compensations that must be received by resource owners to insure their continued supply

Question 18

To the economist total cost includes

Answer 18

Explicit and implicit costs, including normal profit

Question 19

Implicit costs are

Answer 19

Non expenditure costs

Question 20

Explicit costs are

Answer 20

A money payment made for resources not owned by firm

Question 21

The long run is characterized by

Answer 21

The ability of a firm to change its plant size

Question 22

Marginal product is

Answer 22

The increase in total output attributable to the employment of one more worker

Question 23

Refer to the data above. Diminishing marginal returns becomes evident with the addition of the

Answer 23

3rd worker

Question 24

Refer to the data above. The marginal product of the 6th worker is

Answer 24

15 units of output

Question 25

The basic characteristic of the short run is that

Answer 25

The firm doesn't have sufficient time to change the size of its plant

Question 26

At output level Q, total variable cost is

Answer 26

0BEQ

Question 27

At output level Q, total fixed cost is

Answer 27

BCDE

Question 28

At output level Q, total cost is

Answer 28

0BEQ plus BCDE

Question 29

At output level Q, average fixed cost

Answer 29

Is measured by both QF and ED

Question 30

The crucial problem of economics is

Answer 30

Allocating scarce productive resources to satisfy wants

Question 31

At output level Q

Answer 31

Marginal product is falling

Question 32

Economists would describe the us automotive industry as

Answer 32

An oligopoly

Question 33

Which of the following industries most closely approximates pure competition?

Answer 33

Agriculture

Question 34

In which of the following industry structures is the entry of new firms the most difficult?

Answer 34

Pure monopoly

Question 35

An industry comprised of 40 firms, none of which has more than 3% of the market for a differentiated product is an example of

Answer 35

Monopolistic competition

Question 36

An industry comprised of a very large number of sellers producing a standardized product is known as

Answer 36

Pure competition

Question 37

An industry comprised of a small number of firms, each of which considers the potential reactions of its rivals in making price out decisions is called

Answer 37

Oligopoly

Question 38

A purely competitive seller is

Answer 38

A price taker

Question 39

The firm will earn a normal profit of its product price is

Answer 39

P3

Question 40

The firm will realize an economic profit if it's product price is

Answer 40

P4

Question 41

The firm will shit down at any price less than

Answer 41

P1

Question 42

The lowest point on a purely competitive firm's short run supply curve corresponds to

Answer 42

The min point on its ATC curve

Question 43

Pure monopoly means

Answer 43

A single firm producing a product for which there are no close subs

Question 44

A purely monopolistic industry

Answer 44

Earns only a normal profit in the LR

Question 45

The monopoly price will be

Answer 45

C

Question 46

The monopoly output will be

Answer 46

F

Question 47

The supply curve for a monopolist

Answer 47

Doesn't exist because prices aren't "given" to a monopolist

Question 48

The game theory

Answer 48

Is the analysis of how people (or firms) behave in strategic situations

Question 49

The herfindahl index for a pure monopolistic firm is

Answer 49

10,000

Question 50

If both firms follow a high price policy

Answer 50

Each will realize a $20 million profit

Question 51

If beta commits to a high price policy, alpha will gain the largest profits by

Answer 51

Adopting a low price policy

Question 52

With independent pricing the outcome of this duopoly will toward to cell

Answer 52

D

Question 53

If alpha and beta engage in collusion, the outcome of this game will be at cell

Answer 53

A

Question 54

The term oligopoly indicates

Answer 54

A few firms producing either a differentiated or standardized product

Question 55

OPEC provides an example of

Answer 55

An international cartel

Question 56

A profit maximizing firm employs resources to the point where

Answer 56

MRP=MRC

Question 57

MRC is

Answer 57

The increase in total resource cost associated with the hire of one more unit of the resource

Question 58

Real wages in the US are

Answer 58

Relatively high, but not as high as in some other industrial nations

Question 59

In monopsony

Answer 59

The wage rate paid by the employer varies directly with the number of workers employed

Question 60

Bilateral monopsony occurs when

Answer 60

A monopolistic employer bargains with an inclusive Union

Question 61

A monopsonistic labor market is represented by figure

Answer 61

3

Question 62

The case of bilateral monopoly is represented by figure

Answer 62

5

Question 63

The economic impact of occupational licensing can best be demonstrated through figure

Answer 63

1

Question 64

Inclusive unionism is practiced mostly by

Answer 64

Industrial unions

Question 65

Occupational licensing can be best understood in terms of

Answer 65

The exclusive unionism model

Question 66

The tactics of exclusive unionism are portrayed in figure

Answer 66

1