ECO 561 Week 6 Final
ECO 561 Final Exam 3
1) The advent of DVDs has virtually demolished the market for videocassettes. This is an example of:
2) If the demand for farm products is price inelastic, a good harvest will cause farm revenues to:
3) In a competitive market economy firms will select the least-cost production technique because:
4) If price is above the equilibrium level, competition among sellers to reduce the resulting:
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) A firm that is motivated by self interest should:
9) A firm is producing an output such that the benefit from one more unit is more than the cost of producing that additional unit. This means the firm is:
10) 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:
11) In which of the following industries are economies of scale exhausted at relatively low levels of output?
12) Which of the following represents a long-run adjustment?
13) Paying an above-equilibrium wage rate might reduce unit labor costs by:
14) A firm can hire six workers at a wage rate of $8 per hour but must pay $9 per hour to all of its employees to attract a seventh worker. The marginal wage cost of the seventh worker is:
15) A profit-maximizing firm will:
16) Oligopoly is difficult to analyze primarily because:
17) In the long-run, a profit-maximizing monopolistically competitive firm sets it price:
18) Price is constant or given to the individual firm selling in a purely competitive market because:
19) Nonprice competition refers to:
20) Which of the following is not a possible source of natural monopoly?
21) The practice of price discrimination is associated with pure monopoly because:
22) A monopolistically competitive industry combines elements of both competition and monopoly. The monopoly element results from:
23) In an oligopolistic market:
24) Assume the several manufacturers of ceramic tile in a city reach a verbal agreement to establish the price of their product at 55 cents per tile. This best describes:
25) When economists view technological change as internal to the economy, they mean that it:
26) Those who contend that oligopolists are less likely than more competitive firms to engage in R&D say that:
27) Other things equal, a price discriminating monopolist will:
28) Inflation is undesirable because it:
29) The industries or sectors of the economy in which business cycle fluctuations tend to affect output the most are:
30) Suppose that nominal wages fall and productivity rises in a particular economy. Other things equal, the aggregate:
31) Expansionary fiscal policy is so named because it:
32) Kara voluntarily quit her job as an insurance agent to return to school full-time to earn an MBA degree. With degree in hand she is now searching for a position in management. Kara presently is:
33) Given the annual rate of inflation, the "rule of 70" allows one to:
34) Other things equal, a 10 percent decrease in corporate income taxes will:
35) Stabilizing a nation's price level and the purchasing power of its money can be achieved:
36) In a fractional reserve banking system:
37) ___________ 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.
38) Exchange rates are determined in the long-run by:
39) The quantity theory of the demand for money states that a country's money supply is proportional to: