Review Exam 2 - PRACTISE QUESTIONS FOR MIDTERM II I...

Info iconThis preview shows pages 1–3. Sign up to view the full content.

View Full Document Right Arrow Icon
PRACTISE QUESTIONS FOR MIDTERM II I. Multiple Choice Questions 1) Police protection is a good usually provided by government because a) police officers must sometimes use force. b) everyone benefits equally from the good. c) it is a good that is hard to finance through voluntary contributions. d) police officers are representatives of the state. Answer: c 2) A discriminating price searcher is best represented by one of the following. a) A consumer who is very careful about the quality of the goods s/he buys. b) A producer who is very careful about prices of the resources it buys. c) A consumer who chooses which store to shop at, based on prices charged in the past. d) A producer who has sufficient market power to charge different prices to different classes of customers. e) A producer who has no market power and thus must be careful to charge the same price as other producers. Answer: d 3) Which of the following is part of a firm’s explicit costs? I. wages II. electricity costs III. interest on a bank loan IV. interest forgone on funds used to buy capital equipment a) I and II. b) III and IV. c) I, II and III. d) I, III and IV. Answer: c 4) The distinction between price takers and price searchers is that price takers a) are always small firms, and price searchers are always large firms b) never enjoys grants of exclusive legal privileges, whereas price searchers always do c) are buyers, whereas price searchers are sellers d) cannot raise their prices without losing all their sales, whereas price searchers can.
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Answer: d 5) Fill in the blanks: A legally-mandated minimum wage is an example of a price _____ and tends to generate a ________ of unskilled labor. a) ceiling; shortage b) floor; shortage c) floor; surplus d) ceiling; surplus Answer: c 6) Sellers have less power to raise their prices above their costs a) the poorer the substitutes and the more elastic the demand for their product b) the better the substitutes and the more elastic the demand for their product c) the poorer the substitutes and the less elastic the demand for their product
Background image of page 2
Image of page 3
This is the end of the preview. Sign up to access the rest of the document.

This note was uploaded on 04/30/2008 for the course PSYCH 101 taught by Professor Houser during the Spring '08 term at Clark University.

Page1 / 5

Review Exam 2 - PRACTISE QUESTIONS FOR MIDTERM II I...

This preview shows document pages 1 - 3. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online