Econ 201 Third Exam 2008

Econ 201 Third Exam 2008 - Econ 201 Examination 3 Page 1...

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Econ 201 Examination 3 Page 1 John Vahaly Name: Econ 201 Spring 2008 THIRD HOURLY EXAMINATION I. PART I. MULTIPLE CHOICE (50%) Directions: Mark in pencil on the answer sheet provided the letter corresponding to the one best answer to each question. 1. For some reason, starting in the mid-1990s, Americans began drinking a lot more wine, resulting in a. falling wine prices that added to the wine-drinking phenomenon b. higher prices and the entry of new firms. c. the lowering of the U.S. national drinking age from 21 to 18. d. an increase in AFC as additional wine was produced by existing firms. 2. Which of the following rules applies to fixed costs for short-run decision making? a. “There is no free lunch”. b. “A fool and his money are soon parted.” c. “Sunk costs are irrelevant in the short run.” d. “Fixed costs are the result of diseconomies of scale.” 3. Which of the following is not a requirement for competition? a. Imperfect knowledge. b. No entry barriers. c. No control over price. d. Identical or homogenous products. 4. Scale economies can be an example of a. diminishing returns. b. an entry barrier. c. diminishing marginal utility. d. why marginal productivity of fixed inputs rises. 5. Urban highway congestion (I-264 at 5:15 pm) is an example of a. perfect competition. b. monopoly equilibrium. c. oligopoly markets in which game theory is used to analyze markets. d. consumers imposing (time) costs on other drivers.
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Econ 201 Examination 3 Page 2 6. In economics and accounting, the concept of profit a. is the same. b. both mean a surplus the government can tax away with no resource allocation effects. c. differs because of opportunity cost. d. both have to do with the exploitation of labor. 7. A normal profit is a. a cost. b. a competitive rate of return on an investment. c. a normal rate of return on an investment. d. all of the above. 8. An economic profit is a. any positive (TR - TC) amount. b. any negative (TR - Accounting Cost) amount. c. a cost. d. all of the above. 9. An accounting profit is calculated: Total Revenue minus a. explicit costs. b. implicit costs. c. explicit + implicit costs. d. fixed costs. 10. In the 1970s, IBM earned a 40% rate of return. In antitrust court, IBM claimed this was a. all economic profit. b. a normal profit. c. a negative accounting rate of return. d. a good reason to allow Apple to start a competitive business in the computer market. 11. In CASE I, P > ATC min , we know a. economic profits are created in the short run. b. the firm will just breakeven. c. the firm will lose money but stay in operation. d. the shutdown point has been reached. 12. In CASE II, P = ATC min , we know
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Econ 201 Examination 3 Page 3 a. economic profits are created in the short run. b. the firm will just breakeven.
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This note was uploaded on 05/01/2008 for the course ECON 201 taught by Professor Vahaly during the Spring '08 term at University of Louisville.

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Econ 201 Third Exam 2008 - Econ 201 Examination 3 Page 1...

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