DeVry ECON 312 Week 4 Midterm

 1.

Question :

(TCO 1) As a student of economics, when you speak of scarcity, you are referring to the ability of society to

Student Answer:

[removed] employ all of its resources.

[removed] consume all that is produced.

[removed] satisfy economic wants given limited resources.

[removed] continually make technological breakthroughs and increase production.

 2.

Question :

(TCO 1) Henry wants to buy a book.  The economic perspective suggests that Henry will buy the book if

 3.

Question :

(TCO 1) A nation can increase its production possibilities by

I

 4.

Question :

(TCO 1) Which expression is another way of saying "marginal benefit"?

I

 5.

Question :

(TCO 1) Which is not a factor of production?

 6.

Question :

(TCO 1) The Soviet Union economy of the 1980s would best be classified as

 7.

Question :

(TCO 1) Markets in which firms sell their output of goods and services are called

 8.

Question :

(TCO 1) Consumers express self-interest when they

 9.

Question :

(TCO 1) Which is not one of the five fundamental questions that an economy must deal with?

 10.

Question :

(TCO 1) The major "success indicator" for business managers in command economies like the Soviet Union and China in the past was

 11.

Question :

(TCO 2) An increase in demand means that

 12.

Question :

(TCO 2) A surplus of a product will arise when price is

 13.

Question :

(TCO 2) If an effective price ceiling is placed on hamburgers then

 14.

Question :

(TCO 2) Which would cause an increase in quantity supplied of Product A?

 15.

Question :

(TCO 2) Two months ago, the Marbury Shirt company sold 200 shirts at $30 per shirt.  Last month, the company raised its price to $35 per shirt and sold 300 shirts.  Evidently the company experienced a(n)

 16.

Question :

(TCO 2) If the price elasticity of demand for a product is equal to 0.5, then a 10 percent decrease in price will increase quantity demanded by

 17.

Question :

(TCO 2) When the price of movie tickets in a certain town was reduced, the movie-theaters' revenues did not change.  This suggests that the demand for movie tickets in that town has a price-elasticity coefficient of

 18.

Question :

(TCO 2) The demand for Cheerios cereal is more price-elastic than the demand for cereals as a whole.  This is best explained by the fact that

 19.

Question :

(TCO 2) A state government wants to increase the taxes on cigarettes to increase tax revenue.  This tax would only be effective in raising new tax revenues if the price elasticity of demand is

 20.

Question :

(TCO 2) Movie theaters charge lower prices to see a movie in the afternoon than in the evening because there is an

 21.

Question :

(TCO 3) Which would be an implicit cost for a firm?  The cost

 22.

Question :

(TCO 3) Suppose that a firm produces 200,000 units a year and sells them all for $10 each.  The explicit costs of production are $1,500,000 and the implicit costs of production are $300,000.  The firm earns an accounting profit of

 23.

Question :

(TCO 3) The long run is a period of time, or a time frame, in which

 24.

Question :

(TCO 3) The law of diminishing returns only applies in cases where

 25.

Question :

(TCO 3) The phrase "don't cry over spilt milk" could be rephrased in economic terms by saying

 26.

Question :

(TCO 3) A fast-food company spends millions of dollars to develop and promote a new hamburger on its menu only to find that consumers won't buy it because they don't like the taste.  From an economic perspective, the company should

1.

Question :

(TCO 3) Mutual interdependence would tend to limit control over price in which market model?

Student Answer:

[removed] Monopolistic competition

[removed] Pure competition

Pure monopoly

[removed] Oligopoly

 2.

Question :

(TCO 3) Local electric or gas utility companies mostly operate in which market model?

 3.

Question :

(TCO 3) The steel and automobile industries would be examples of which market model?

 4.

Question :

(TCO 3) In pure competition, the demand for the product of a single firm is perfectly

 5.

Question :

(TCO 3) T-Shirt Enterprises is selling in a purely competitive market.  It is producing 3,000 units, selling them for $2 each.  At this level of output, the average total cost is $2.50 and the average variable cost is $2.20.  Based on these data, the firm should

 6.

Question :

(TCO 3) A firm should always continue to operate at a loss in the short run if

 7.

Question :

(TCO 3) The short-run supply curve for a competitive firm is the

 8.

Question :

(TCO 3) The classic example of a private, unregulated monopoly is

 9.

Question :

(TCO 3) Barriers to entry

 10.

Question :

(TCO 3) One feature of pure monopoly is that the demand curve

 11.

Question :

(TCO 3) Which would definitely not be an example of price discrimination?

 12.

Question :

(TCO 3) Which of the following is a characteristic of monopolistic competition?

 13.

Question :

(TCO 3) Assume that in a monopolistically competitive industry, firms are earning economic profit.  This situation will

 14.

Question :

(TCO 3) In an oligopolistic market there are

 15.

Question :

(TCO 3) A high concentration ratio indicates that

 16.

Question :

(TCO 3) In which set of market models are there the most significant barriers to entry?

 17.

Question :

(TCO 1) The four factors of production are

 18.

Question :

(TCO 1) Refer to the diagram below which is based on the Circular Flow Model in Chapter 2.  Arrows (1) and (2) represent

 

Graph Description

(TCO 2) Refer to the diagram.  A decrease in quantity demanded is depicted by a

Graph Description

 20.

Question :

(TCO 2) Refer to the information and assume the stadium capacity is 5,000.  If the Mudhens' management charges $7 per ticket

 21.

Question :

(TCO 2) Which of the following goods (with their respective income-elasticity coefficients in parentheses) will most likely suffer a decline in demand during a recession?

 22.

Question :

(TCO 3) In the figure, Curves 1, 2, 3, and 4 represent the

Graph Description

 23.

Question :

(TCO 1) Refer to the diagram.  If society is producing nine units of bicycles and four units of computers and it now decides to increase computer output to six, the cost

Graph Description

 24.

Question :

(TCO 3) Assume that the owners of the only gambling casino in Wisconsin spend large sums of money lobbying state government officials to protect their gambling monopoly.  Economists refer to these expenditures as

 25.

Question :

(TCO 3) a.) A pure monopolist determines that at the current level of output the marginal cost of production is $2, average variable costs are $2.75, and average total costs are $2.95.  The marginal revenue is $2.75.  What would you recommend that the monopolist do to maximize profits?  b.) Why might a business owner keep their business open but let it deteriorate, rather than shut it down?  Will this profitability last?

 26.

Question :

(TCO 2) What effect should each of the following have on the demand for gasoline in a competitive market?  State what happens to demand.  Explain your reasoning in each case and relate it to a demand determinant.

(a)   an increase in the number of cars

(b)   the economy moves into a recession

(c)   an increase in the price of car insurance, taxes, maintenance

(d)   consumer expectations of substantial price increases in gasoline