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Sample_Test_3 - MICROECONOMCS — ECON 103 — Name it...

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Unformatted text preview: MICROECONOMCS — ECON 103 — Name it George Mason Uruversitv -— Fairfax Campus Last Name, First Name Not Student ID 3rd Interim Exam ~ Fall 2008 - Section 003 — 7:30 to 8:45 AM. Tues. 6: Thurs. — Instructor. EC. Holt 13 November 2008,, Chapters 10 thru 13. When finished, Dleas-e Sign pledge below and turn in both this test and vow- Scantron. HON OR PLEDGE: I have neither given nor received aide cm this exam. Signed: (Student's Simatum) MULTIPLE CHOICE. Choose the one alternative that best completes the stamt or answers the question. 1)'Ihelongmnisatimeperiodinwhich 1) A) all inputs are fixedv B) one year or less elapses. 7 C) there is at. least one fixed input and at least one vmiable input D) all inputs are vaxjable‘, 2)Theshortrunisaperiodoffimemwluch 2] A) the quantities of some resources the firm uses are fixed. B) nothing the firm does can be altered Q prices and wages are fixed. , D) the amount of output is fixed- Output [units per day} G I 2 3 A 5 6 Labor [workers per day] - :_-"- 'Ard‘ 2;: was:,.v-.-‘»-:f.r:-,r,'n ‘51-; '4 .r‘s-x-N'm .V-L‘v’wt :"d'J-HJK- H. w. v’,‘"-.'.id.\1h-ui rVr-f“. 3) In the figure above, the marginal product of the second worker is 3) A) 10 units. B) 1 units. C) 2 units. D) 5 units. B'C'l SBSSEBEEDL ONE] HdLD=8 8002 BB “BF 4) The law of diminishing returns implies that, with the use of capital fixed, as the use of labor rises, 4) A) the maxginal product of labor will Eall eventually. B) the production pmcess will become technologically inefficimt eventually. C) total product will fall eventuallvn D) the total uroduct of labor will fall below file-marginal product of labor. 5) Totalcostisthesumoffixedcostsand - 5) A) implicit costs. B) explicit costs. C) variable costs. D) accounting costs. 6) A company could produce 100 units of a good for $320 orproduce 101 units of the same good for 6) #324. The 54 difference in costs is A) both the marginal benefit and the marginal cost of producing the 10151? unit. B) the [marginal cost of producing the 1013t unit. C) the marginal benefit of moducimc the lUlst unit, D) neither the marginal benefit nor the marginal cost of producing the 1015t unit. 7) The above table gives some of the costs of the Delicious Pie Company. The marginal cost of 7) increasing pie output from 200 to 300 pies equals per pie. A) $6 B) $1.800 C) $8 D) $1,000 8) The above table gives some of the costs of the Delicious Pie Company. What is the manage total 8) cost of producing 200 pies? A) $6.50 B) $650 C) $5.00 D) More infoxmation is needed to (21:1th the average variable cost °d ssssesseoe nus HdLD=E some 32 uer Tomi variable ‘ cost, TVC Total fixed cost, 715C (dollars) 9) Using the data in the above table, the average fixed cost of producing 16 units is 9) A) $1.25 a unit. B) $1.11 a unit. C) $1.54 a unit. D) $2.22 a unit. 10) Using the data in the above table, when the firm increases its output from 4 to 9 units, the marginal 10) met nF a unit in A) $5-00 a unit. B) $00 a unit- C) $7.00 a unit D) $5.00 a unit 11) As output urn-eases, total cost , total fixed cost and total variable C051: . 11) A) does not change; increases; increases B) increases; does not change; increases C) increases; increases; increases D) increases; increases; does not change 9 -\ x ( .y \1 E. 5. v 3 v I Cast [dollars per unit) LRAC 0 51015 20 25 so Quantity (units per hour) 12) In the above figure, the long—run average cost curve exhibits economies of scale 12) A) between 10 and 20 units per hour. B) along the entire curve. C) between 5 and 10 units Der hour. D) between 20 and 25 units per hour. '5‘ SBSBESSEDL HHS] HdLEFE 5002 BE UE’L‘ 13) If the average total cost of producing 20 sweaters an hour falls when the firm doubles all its inputs 13) {hm flu:- A) short—run averaee total cost curve shifts upward because all inputs have increased. B) firm mommoes econonues of scale. C‘) firm moves along in; short-run averaee total cost curve. D) lone—run average cost curve shifts downward. 14) In perfect competition. the product of a single firm 1% A) is sold to different customers at different prices. B) has many perfect complemmls produced by other firms. C) hasmanv perfect substitutes produced bv other films. D) is sold under manv differing brand names. 15) In perfect competifion, each individual firm faces demand curve. 15) A) an upward sloping B) a downward sloping C) a perfectly elastic D) an inelastic 16) In the above table, if the firm sellsS units of output, its total revenue is 16) A) 515. B] $90. C) 3575. D) $30. 17) Economic profit is . 17) A) equal to total revenue minus total opportunity cost B) included in the firm's total opportunity cost C) equal tonormal Dmfit minus total ommmiw cost D) equal totmal revenue minus maternal cost '01 QSSBEBBEDL [ll-l3 HdLD=Z 8008 83 UEE‘ 18) In the above table, thefirm 18) A) must be in a perfectly competitive industry because its marginal revenue is constant B) cannot be in a perfectly competitive industry because its long—run economic profits are greater than zero. C} mustbe in a perfecflv competitive industrv because its unrefined cost cm've eventuallv rises. D) cannot be in a perfectly competitive industry because its short—run economic profits are greater than zero. enigma 4573-7'-‘1;:-'~:»'r::.'.s‘r‘i:..~:w-s;. -' 7-". 41-; .179 {rt-13:. a H i A x e ‘0 $1 33 a o D. 1'": § 400 TR 3 g 350 t; 300 3 T9 250 2 200 '2 o 150 g 100 II.) i so i i I? i__.- j_i. .J_ ,3 O 10 20 30 40 50 60 7O 80 90100 Quantity [bushels of corn per year in thousands] 19) Given the total cost and total revenue curves in the above figure, what are the output levels at 19) which the perfect competitor will earn economic profits? A) between 30,000 and 80,000 bushels B) over 80,000 bushels Clfi‘omOlDfiODOQbushels lemmo tOSOiDOObushels 20) A firm will expand the amount of output it produces as long as its 20] A) marginal revenue exceeds its marginal cost. B) average total revenue exceeds its average total cost C] marginal cost exceeds its mareiml revenue- D) avera ee total revenue moeeds its even 2e variable cost 'Ol SSSBEBBEDL [ll-15] HdBD:E 8003 BE “Bf Output Average total cost {sandwiches per hour) ($ per sandwich) 21) The table above shows output and costs of Evan's Subs, a typical pedectly competitive firm in a 21) local market for sandwiches Evan‘s fixed cost is $9 per hour. The current market price of a sandwich is 36. What is Evan‘s maximum short— run economic profit? A} $6 021' hour B] ~36 Der hour Cl $1 per hour D) zero Etc-z n‘..\";~3::;’3 :-:=r‘.-':c -,- \n'lvcynrré-u‘: mtg: Md "I‘."‘)‘J.-d a: :J,‘ xxx-«151,5. mm: A 17 -=.'z,\;a;-. if’fi-wg‘m Price and cost [dollars per frame] u. E 5: 2‘3 8 25' 8 8 8 8 E n 100 200 300 400 500 Quantity [frames per week] ”L. :1“ 'KeAffigq’anq-a memwvergpg-m;>,gu,n;u:_e A: at». ragga“ 0:161?!“Rflufikh‘m”"r.¥ 2‘? 9-71 B ’i- - ~ O a,:' 22) The figure illustrates the short—run costs of Paul's Picture Frames Inc. The pictuna- frame market is 22) perfectly competitive and the market price is $30 a frame. Paul produces frames each week, makes of total revenue, and makes zero profit. A) 300: $9,000: normal Bl 300: $9.000: economic C) 200; M000: normal D) 200: $4.000: econorrfic _...—_... L'd 5555555504 nus) u550=z 5002 52 uen‘ issgz'; :MC:ATC loot 3‘50 8 2.50 .." a 2,00 ' ' 3.50 050. ...... L_rl_lfi4nwl“_g_m~4m4__Lhi_a. G l 00 200 300 400 500 Quantity (thousands of bushels per yew? Price and cost ldollors per bushel) 23) The figure above shows a typical perfectly competitive com farm, whose marginal cost curve isMC 23) and average total cost curve isATC. The market is initially in a long—run equilibrium, where the mice is £53.00 oer bushel Then. the market demand for corn decreases and. in the short run the price falls to $2.50 per bushel. Com production is a constant—cost industry- In the new short—run eouiljbxium the farm Drodums W bushels of corn and sells corn at par busheL A) 300.000: $2.50 B) 200,000: $2.50 C) 250,000; $3.00 D) 250,000; $2.50 24) Web of the following statements about a monopoly is FAISE? 24) A) The good produced by a monopoly has no close substitutes. B) Monopolies have no barriers to entry or exit C} A mononolv is the onlv producer of the good. D} None of the above: that is. all of the above answers are true statements about a mononulva 25) Which of the following is true of a natural monopoly? 25) A) Economies of scale exist to only a very low level of output. B) Its long—run average cost curve slopes 11pr as it intersects the demand Cum. C3 The firm can supplv the entire market at a Iowa- cost than could two or more firms. D) The firm is not protected bv arw barrier to errtrv. B'd SBSBEBSEDL HHS HdBD=2 8002 BE UE’L‘ Price and marginal revenue [dollars per unit] Quantity [units per year) rh~q~ » ,-;._m nuw Lia-2N ..-u ”firi‘if'ym-‘mw'w-l\ngi-‘I-VKJV‘VgV‘nhgul'l'ifzmv'l :m’u": .44 .rr‘u-r-awxr-u 26) The figure above shows a monopoly firm's demand curve. If the price and quantity ofhajrcuts 26) move from point t to point r, the monopoly‘s A) marginal revenue will decrease. B) total revenue will rise. 0 total revenue will remain the same. D} total revenue will fall. «:3. . _.I.. _; , Lam-pmfléfl,’ gnaww :.,r‘.- yaw"AfiMP‘L'M-‘fii'flmw. ‘ :‘->,\'if w»; mm. v ~ Price and costs [dollars per unit] D . , . O 2 4 6 8 I 0 l 2 Guanfiiy (unfls per year} 27) For the unregulated, single—price monopoly shown in the figure above, when its profit is 2'7) maximized, output will be A)6mfitsperyearandthepficewillbe$4. B)4unitsperyearandthepricgwillbe$4. O 4 units per vear and the price will be $6. D1 None of the above answers is correct. '0‘ SSSBEBSEDL HHS HdBU‘Z 8003 BE UEE‘ 01' 28) The unregulated, single—price monopoly shown in the figure above has a total economic profit of 28) A) $8. B) $4. C) $16. D) $24. . '7“ Shun?“ Alan: .‘23'=1.!;";=4~:'-:é'=4 -" -*'--.’r.f:Z-;.J*J‘<:: @7394qu L»; .u‘: _-«, . .11»: Price and costs [dollars per unit] 0 MR Quantity {thousands of units per year] 2-wee- Pfhfi‘J mower ezfiifo-u'gehzrtgen -::-er».Ayer:-- 7+“ /‘ '.-3-’Harz‘.\'re.-na!.y“u;w :7 ~3"&‘.J:«-"-z ‘ "(rat-1'57 29) Which area in the above figure shows the consumer surplus at the price and quantity that would be 29) attained if the industrv wen.- oexfecflv competitive? A)F+G+H B)A+B+C+D+E+F+G+H ClA+B+C+D DlA+B+C+D+E 30) Inthe above figure, wlfidlarea is the deadweight loss Emma angle—price monopoly? 30) A)E+H+K+I BJE+H+K C)E D)E+H 31) Monopolisls are able to price discfinfinate because 31} A) of differing average willingness-to-pay among mnwmers. Bl thev have constant marginal cost. C) of differlne Brice elasticities of sunnlm D} Ehev have constant average cost 32) In the case of a perfectly Induce—discriminating monopoly, there is no 32) A) long—run economic profit. B) transfer of consumer surplus to the producer. Cl short—run economic orofiL Dl deadweieht loss 01 9555555501. nus Hdeo=a 5002 82 UE’E‘ 33] Which of the following is part of the market structure for monopolistic competition? 33) A) barriers to entry B) each firm produces a differentiated pmduct C) a large number affirms compete D) Both 21115me 311de correct 34) Firms in monopolistic competition always will 34) A) set their price equal to their marginal cost. B) produoe at the minimum average total cost C) set their price above their marginal cost D) earn an economic profit < Price and casts (dollars per unit) 0 '20 110 60 80 100 120 Quonfity {units per day} $3315}: .*-.-i.— mum-1:25;," :‘cawg‘fi 35] In the above figure, the monopolisticaliy competitive firm earns an economic profit of 35) A} $0. B)between$0and$50perday. C) greater than $10001 per day. D) between $50.01 and $100 per day. 10 'd BSSSESSEDL nus Hd80=8 5002 88 uec 31' 8 MC AFC .p. on (.J O- 24 Prlce and costs [dollars per unit} l2 A K o o O A 8 l0 l2 16 2O 24 Quantity [unils per day) 36) The above figure shows a fixm in monopolistic competition. What is the profit maxinfizing level of 36) output the firm will produce? A] Sunits per day C) 4 units per day B) 16 units per day D) 10 units verday 37) The above figure shows a firm in monopolistic competition What price will the firm Charge? 37) A) $12 B) $36 C) $24 D) None of the above answers is correct. 38) In the dominant firmmodel of oligopoly, the smaller firms act as if they were A) perfect competitors. C) oligopolists- 1! d SSSSEBBEDL B) monopolists- D} monopolistic competitors. (”451 38} NdBEHE 8003 88 “BE Answer Key TestnamerNITI'LEDl 6 4 /J'{9 1) D 2) A 3) D :1) A 5) C 6) B 7) C B) A 9) A 10)A 11) B 12) C 13) B 14) C 15) C 16)C 17)A 1s) A 19)A 20) A 21) B 22) B 23)D 24) B 25) C 25) D 27) C 28)A 29) D 30) D 31m 32) D 3.3)1) 34) C 35) B 36) A 37) B as) A 12 EI'd SBSSEBBEDL HHS NdBD38 5003 BE UHF ...
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