SS201_251 Practice Problems for WPR2 AY08-02

SS201_251 Practice Problems for WPR2 AY08-02 - SS201...

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SS201 Practice Problems for WPR2 (Spring 08): This document contains practice problems for WPR2. The answers to the questions that follow will not be graded, but all cadets are required to complete the practice problems prior to the Lesson 20 Review . Working through the practice problems will set you up for success on the WPR. Practice Problems for WPR2: 1. Multiple Choice 1. Suppose that an MBA degree creates no externality because the benefits of an MBA are internalized by the student in the form of higher wages. If there are no government subsidies for MBAs, then which of the following statements is correct? a. The equilibrium quantity of MBAs will equal the socially optimal quantity of MBAs. b. The equilibrium quantity of MBAs will be greater than the socially optimal quantity of MBAs. c. The equilibrium quantity of MBAs will be less than the socially optimal quantity of MBAs. d. There is not enough information to answer the question. 2. A competitive firm earns positive economic profits in the short-run when the price it receives is: a. greater than average fixed cost b. greater than the minimum of average variable cost c. equal to the minimum of average total cost d. greater than the level of average total cost at its chosen level of output 3. When a good is excludable: a. one person’s use of the good diminishes another person’s ability to use it b. people can be prevented from using the good c. no more than one person can use the good at the same time d. everyone will be excluded from using the good 4. As the number of firms in an oligopoly increases: a. each firm raises the market price b. the output effect decreases. c. the total quantity of output produced by firms in the market gets closer to the socially efficient quantity. d. the oligopoly has more market power and firms earn a greater profit. 5. Bill owns 3 acres of beautiful wooded land. He has created a short walking trail through the woods. Because the terrain is hilly, the only safe entrance to the trail is at the front of Bill's property. When Bill decides to move to be closer to his grandchildren, he donates the land to the state with the understanding that the land will be used as a state park. Because the trail is short, only about 50 people can comfortably enjoy it. This state park is an example of a good that is: a. both rival in consumption and excludable. b. nonrival in consumption and excludable. c. rival in consumption and nonexcludable. d. A and B
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6. The container shipping industry continues to use larger and larger ships. The container shipping is likely characterized by: a. economies of scale b. diseconomies of scale c. neither economies nor diseconomies of scale (e.g. a flat average total cost curve in the long-run) d. none of the above 7. Which of the following statements is true regarding public goods?
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This test prep was uploaded on 04/16/2008 for the course SOSH SS201 taught by Professor Majkauffman during the Spring '08 term at West Point.

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SS201_251 Practice Problems for WPR2 AY08-02 - SS201...

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