ECO 561 Final Exam

1) In a market economy the distribution of output will be determined primarily by:
2) Suppose that the price of peanuts falls from $3 to $2 per bushel and that, as a result, the total revenue received by peanut farmers changes from $16 to $14 billion. Thus:
3) If the demand for farm products is price inelastic, a good harvest will cause farm revenues to:
4) Suppose that in the clothing market, production costs have fallen, but the equilibrium price and quantity purchased have both increased. Based on this information we can conclude that:
5) Which of the following statements is true about productive and allocative efficiency?
6) Suppose that in 2007 Ford sold 500,000 Mustangs at an average price of $18,800 per car; in 2008, 600,000 Mustangs were sold at an average price of $19,500 per car. These statements:
7) If a firm in a purely competitive industry is confronted with an equilibrium price of $5, its marginal revenue:
8) If a profit-seeking competitive firm is producing its profit-maximizing output and its total fixed costs fall by 25 percent, the firm should:
9) A firm that is motivated by self interest should:
10) Which of the following represents a long-run adjustment?
11) In the short run the Sure-Screen T-Shirt Company is producing 500 units of output. Its average variable costs are $2.00 and its average fixed costs are $.50. The firm's total costs:
12) If a firm decides to produce no output in the short run, its costs will be:
13) Paying an above-equilibrium wage rate might reduce unit labor costs by:
14) The real wage will rise if the nominal wage:
15) Construction workers frequently sponsor political lobbying in support of greater public spending on highways and public buildings. One reason they do this is to:
16) A competitive firm will maximize profits at that output at which:
17) An industry comprised of a small number of firms, each of which considers the potential reactions of its rivals in making price-output decisions is called:
18) In the long-run, a profit-maximizing monopolistically competitive firm sets it price:
19) Nonprice competition refers to:
20) One would expect that collusion among oligopolistic producers would be easiest to achieve in which of the following cases?
21) Which of the following is not a possible source of natural monopoly?
22) Monopolistic competition means:
23) The term oligopoly indicates:
24) Suppose that an industry is characterized by a few firms and price leadership. We would expect that:
25) Other things equal, a price discriminating monopolist will:
26) Those who contend that oligopolists are less likely than more competitive firms to engage in R&D say that:
27) The profit-maximizing output of a pure monopoly is economically inefficient because in equilibrium:
28) The industries or sectors of the economy in which business cycle fluctuations tend to affect output the most are:
29) Suppose that nominal wages fall and productivity rises in a particular economy. Other things equal, the aggregate:
30) If personal taxes were decreased and resource productivity increased simultaneously, the equilibrium:
31) Suppose the price level is fixed, the MPC is .5, and the GDP gap is a negative $100 billion. To achieve full-employment output (exactly), government should:
32) Given the annual rate of inflation, the "rule of 70" allows one to:
33) A price ndex is:
34) Stabilizing a nation's price level and the purchasing power of its money can be achieved:
35) Other things equal, a decrease in the real interest rate will:
36) If the Fed were to purchase government securities in the open market, we would anticipate:
37) An increase in interest rates in the United States will lead to:
38) ___________ purchasing power parity states that the difference between changes over time in product-price levels in two countries will be offset by the change in the exchange rate over this time.
39) Suppose that US prices rise 4 percent over the next year while prices in Mexico rise 6%. According to the purchasing power parity theory of exchange rates, what should happen to the exchange rate between the dollar and the peso?