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Micro Intro (ECON 1110) Final: ANSWER SHEET, Version A Name __________________ Date: ____________ 1. a b c d e 21. a b c d e 2. a b c d e 22. a b c d e 3. a b c d e 23. a b c d e 4. a b c d e 24. a b c d e 5. a b c d e 25. a b c d e 6. a b c d e 26. a b c d e 7. a b c d e 27. a b c d e 8. a b c d e 28. a b c d e 9. a b c d e 29. a b c d e 10. a b c d e 30. a b c d e 11. a b c d e 31. a b c d e 12. a b c d e 32. a b c d e 13. a b c d e 33. a b c d e 14. a b c d e 34. a b c d e 15. a b c d e 35. a b c d e 16. a b c d e 36. a b c d e 17. a b c d e 37. a b c d e 18. a b c d e 38. a b c d e 19. a b c d e 39. a b c d e 20. a b c d e 40. a b c d e Name: ________________________ Class: ___________________ Date: __________ ECON1110 ID: A Final Multiple Choice Identify the letter of the choice that best completes the statement or answers the question. ____ 1. The amount of money that a firm receives from the sale of its output is called a. total gross profit. b. total net profit. c. total revenue. d. net revenue. Scenario 13-5 Samantha has been working for a law firm and earning an annual salary of $80,000. She decides to open her own practice. Her annual expenses will include $15,000 for office rent, $3,000 for equipment rental, $1,000 for supplies, $1,200 for utilities, and a $35,000 salary for a secretary/bookkeeper. Samantha will cover her start-up expenses by cashing in a $20,000 certificate of deposit on which she was earning annual interest of $500. ____ 2. Refer to Scenario 13-5. According to Samanthas accountant, which of the following revenue totals will yield her business $50,000 in profits? a. $55,200. b. $105,200. c. $132,500. d. $185,700. Table 13-1 Alysons Pet Sitting Service Number of Output (number Workers of pet visits) 0 0 1 20 2 45 3 60 4 70 ____ 3. Refer to Table 13-1. What is the marginal product of the second worker? a. 15 b. 20 c. 22.5 d. 25 1 Name: ________________________ ____ ID: A 4. Suppose that for a particular firm the only variable input into the production process is labor and that output equals zero when no workers are hired. In addition, suppose that marginal cost of the third worker hired is $40, and the average total cost when three workers are hired is $50. What is the total cost of production when three workers are hired? a. $50 b. $90 c. $120 d. $150 Figure 13-4 ____ 5. Refer to Figure 13-4. Curve A is always declining because of a. diminishing marginal product. b. dividing fixed costs by higher and higher levels of output. c. the fact that increasing marginal product follows decreasing marginal product. d. the fact that decreasing marginal product follows increasing marginal product. 2 Name: ________________________ ID: A Figure 13-6 ____ 6. Refer to Figure 13-6. Which of the figures represents the production function for a firm? a. Figure 1 b. Figure 2 c. Figure 3 d. Figure 4 Table 14-6 Johns Vineyard COSTS REVENUES Quantity Produced Marginal Cost Quantity Demanded Price 0 1 2 3 4 5 6 7 8 ____ Total Cost $0 $50 $102 $157 $217 $285 $365 $462 $582 -- 0 1 2 3 4 5 6 7 8 Total Revenue $80 $80 $80 $80 $80 $80 $80 $80 $80 7. Refer to Table 14-6. What is the marginal revenue from selling the 1st unit? a. $30 b. $50 c. $80 d. $160 3 Marginal Revenue -- Name: ________________________ ID: A Table 14-7 Quantity 12 13 14 15 16 17 ____ ____ ____ ____ ____ Marginal Cost $5 $6 $7 $8 $9 $10 Marginal Revenue $9 $9 $9 $9 $9 $9 8. Refer to Table 14-7. If the firm is currently producing 14 units, what would you advise the owners? a. decrease quantity to 13 units b. increase quantity to 17 units c. continue to operate at 14 units d. increase quantity to 16 units 9. Profit-maximizing firms enter a competitive market when existing firms in that market have a. total revenues that exceed fixed costs. b. total revenues that exceed total variable costs. c. average total costs that exceed average revenue. d. average total costs less than market price. 10. In the long run, assuming that the owner of a firm in a competitive industry has positive opportunity costs, she a. should exit the industry unless her economic profits are positive. b. will earn zero accounting profits but positive economic profits. c. will earn zero economic profits but positive accounting profits. d. should ignore opportunity costs because they are a type of sunk cost that disappears in the long run. 11. In the long-run equilibrium of a competitive market, the number of firms in the market adjusts until the market demand is satisfied at a price equal to the minimum of a. average fixed cost for the marginal firm. b. marginal cost of the marginal firm. c. average total cost of the marginal firm. d. average variable cost of the marginal firm. 12. When firms are neither entering nor exiting a perfectly competitive market, a. total revenue must equal total cost for each firm. b. economic profits must be zero. c. price must equal the minimum of marginal cost for each firm. d. Both a and b are correct. 4 Name: ________________________ ID: A Figure 15-4 ____ 13. Refer to Figure 15-4. If the monopoly firm is currently producing Q3 units of output, then a decrease in output will necessarily cause profit to a. remain unchanged. b. decrease. c. increase as long as the new level of output is at least Q2. d. increase as long as the new level of output is at least Q1. Table 15-1 Quantity 1 2 3 4 5 6 7 8 9 10 Price $35 Total Revenue $35 $64 Average Revenue Marginal Revenue $32 $29 $29 $17 $11 $23 $120 $17 $99 $80 $11 $8 $-1 $-7 $-13 ____ 14. Refer to Table 15-1. When 4 units of output are produced and sold, what is average revenue? a. 17 b. 21 c. 23 d. 26 5 Name: ________________________ ID: A ____ 15. If a monopolist sells 100 units at $8 per unit and realizes an average total cost of $6 per unit, what is the monopolist's profit? a. $200 b. $400 c. $600 d. $800 Figure 15-7 ____ 16. Refer to Figure 15-7. What is the monopoly price and quantity? a. price = F; quantity = A b. price = G; quantity = B c. price = G; quantity = A d. price = D; quantity = A Figure 15-8 ____ 17. Refer to Figure 15-8. The deadweight loss caused by a profit-maximizing monopoly amounts to a. $150. b. $200. c. $250. d. $500. 6 Name: ________________________ ID: A ____ 18. A special kind of imperfectly competitive market that has only two firms is called a. a two-tier competitive structure. b. an incidental monopoly. c. a doublet. d. a duopoly. ____ 19. Which of the following statements is correct? a. When duopoly firms reach a Nash equilibrium, their combined level of output is the monopoly level of output. b. When oligopoly firms collude, they are behaving as a cartel. c. In an oligopoly, self-interest drives the market to the competitive outcome. d. An oligopoly is an example of monopolistic competition. ____ 20. The primary purpose of antitrust legislation is to a. protect small businesses. b. protect the competitiveness of U.S. markets. c. protect the prices of American-made products. d. ensure firms earn only a fair profit. ____ 21. Predatory occurs pricing when a firm a. exercises its oligopoly power by raising its price through the formation of a cartel. b. exercises its monopoly power by raising its price. c. cuts its prices in order make itself more competitive. d. cuts its prices temporarily in order to drive out any competition. ____ 22. Suppose that a competitive firm hires labor up to the point at which the value of the marginal product equals the wage. If the firm pays a wage of $700 per week and the marginal product of labor equals 20 units per week, then the marginal cost of producing an additional unit of output is a. $35 b. $70 c. $700 d. We do not have enough information to answer this question. ____ 23. Which of the following events could decrease the demand for labor? a. An increase in the number of migrant workers b. An increase in the marginal productivity of workers c. A decrease in demand for the final product produced by labor d. A decrease in the supply of labor ____ 24. Along the vertical axis of the production function we typically measure a. revenue. b. the marginal product of the input. c. the quantity of input. d. the quantity of output. 7 Name: ________________________ ID: A Table 18-3 Quantity of Labor 0 1 2 3 4 5 Number of Baseballs Per Day 0 100 240 360 440 500 ____ 25. Refer to Table 18-3. This table describes the number of baseballs a manufacturer can produce per day with different quantities of labor. Each baseball sells for $5 in a competitive market. What is the marginal revenue product of the third worker? a. 120 baseballs. b. $300 c. $400 d. $600 Figure 18-5 ____ 26. Refer to Figure 18-5. If the price of apples decreases, the a. demand for apple pickers will shift to the left. b. demand for apple pickers will shift to the right. c. supply of apple pickers will shift to the left. d. supply of apple pickers will shift to the right. ____ 27. Economists define capital as the a. accumulation of goods produced in the past that are being used in the present to produce new goods and services. b. the goods and services that are most affected by changes in technology. c. factors of production that can be rented by firms. d. factors of production that can be purchased by firms. 8 Name: ________________________ ID: A ____ 28. A difference in wages between a highly-educated worker and a less-educated worker is a. a compensating differential for the cost of becoming educated. b. a signal that the market is indifferent to a worker's level of human capital. c. considered unfair by economists. d. considered unfair by everyone. ____ 29. In recent years, the amount of international trade in which the United States engages has increased. Which of the following accurately describes the effect(s) on labor demanded by firms in the United States? a. The demand for both skilled and unskilled labor has increased. b. The demand for both skilled and unskilled labor has decreased. c. The demand for skilled labor relative to unskilled labor has risen. d. The demand for unskilled labor relative to skilled labor has risen. Scenario 19-5 Billy works for the local piano moving company part-time after school. Billy has worked for the company for two years but still hasn't received a wage increase, even though newer employees have received raises. Billy has threatened his employer with a lawsuit if he doesn't get a raise in the next few weeks. Billy believes he is a victim of labor-market discrimination. ____ 30. Refer to Scenario 19-5. Why might an economist be skeptical of Billy's discrimination complaint? a. Through antitrust laws, discriminating firms can be penalized with large fees. b. In a competitive market, employers pay employees based on their value to the firm. c. Discrimination leads to profit maximization. d. Only cost minimizers practice discrimination. Table 20-1 Group Top Quartile (25%) Second Quartile Third Quartile Bottom Quartile Annual Family Income $85,000 and over $50,000 to $84,999 $28,000 to $49,999 Under $28,000 ____ 31. Refer to Table 20-1. Fifty percent of all families have incomes below what level? a. $28,000 b. $50,000 c. $85,000 d. There is insufficient information to answer this question. 9 Name: ________________________ ID: A Figure 20-1 Number of Poor ____ 32. Refer to Figure 20-1. Between 1965 and 2001, during recessions (the shaded bars) the number of individuals in poverty has a. increased. b. decrease. c. not changed. d. decreased and then increased. ____ 33. Ms. Spring currently earns $100,000 a year, while her junior partner, Mr. Fall, earns $55,000 a year. From the perspective of a utilitarian, if both of their incomes are subject to diminishing marginal utility, taking a dollar from Ms. Spring and giving it to Mr. Fall will a. increase society's total utility. b. lower Ms. Spring's marginal utility of income. c. increase Mr. Fall's marginal utility of income. d. lower societys total utility. ____ 34. In-kind transfers are politically popular because a. they provide high quality food and shelter. b. they provide cash. c. allow resale of food stamps for cash, if needed. d. the public believes that the aid is not going to support addictions. ____ 35. Consider two goods, books and hamburgers. The slope of the consumer's budget constraint is measured by the a. consumer's income divided by the price of hamburgers. b. relative price of books and hamburgers. c. consumer's marginal rate of substitution. d. number of books purchased divided by the number of hamburgers purchased. 10 Name: ________________________ ID: A ____ 36. The following diagram shows two budget lines: A and B. Which of the following could explain the change in the budget line from A to B? a. a decrease in the price of X b. an increase in the price of Y c. a decrease in the price of Y d. More than one of the above could explain this change. ____ 37. The following diagram shows a budget constraint for a particular consumer. If the price of X is $5, what is the consumers income? a. $2 b. $10 c. $30 d. $300 11 Name: ________________________ ID: A Figure 21-7 ____ 38. Refer to Figure 21-7. Which of the following statements is correct? a. If a consumer moves from bundle C to bundle A, her loss of cake cannot be compensated for by an increase in donuts. b. Bundle E is preferred to all other points identified in the figure. c. Since more is preferred to less, bundle C may be preferred to bundle E in some circumstances for this consumer. d. Even though bundle E has more of both goods than bundle B, we could draw a different set of indifference curves in which bundle B is preferred to bundle E. ____ 39. All of the following are properties of indifference curves except a. higher indifference curves are preferred to lower ones. b. indifference curves are downward sloping. c. indifference curves do not cross. d. indifference curves are bowed outward. 12 Name: ________________________ ID: A Figure 21-11 ____ 40. Refer to Figure 21-11. Assume that the consumer depicted in the figure has an income of $80. If the price of chocolate chips is $4 and the price of marshmallows is $4, the optimizing consumer would choose to purchase a. 9 marshmallows and 6 chocolate chips. b. 10 marshmallows and 10 chocolate chips. c. 5 marshmallows and 5 chocolate chips. d. 3 marshmallows and 9 chocolate chips. 13 ... View Full Document

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