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Unformatted text preview: Name: Student ID: Economics 205 Econ 205 - Midterm 3 April 27, 2009 Do not begin the exam until you are instructed to do so. You are permitted to only have a writing utensil, a non-programmable calculator, and scratch paper with you during the exam. Be sure you completely fill out your scantron, especially your Student ID number. The allotted time for the exam is 110 minutes. Be aware that the time limit is strictly binding. Good luck! Exam: (100 points) Name: Class: Date: _ Econ 205 - Midterm 3 10: B Multiple Choice Identify t~oice that best completes the statement or answers the question. \)~. The players in a two-person game are choosing between Strategy X and Strategy Y. If the second player chooses Strategy X, the first player's best outcome is also to select X. If the second player chooses Strategy Y, the first player's best outcome is to select X. For the first player, Strategy X is called a a. tit-for-tat strategy dI- dominant strategy c. tacit strategy d. collusive strategy e. repeated-trial strategy C, >< 2. A firm maximizes its profit by producing that quantity of output for which a. marginal revenue equals total revenue b. marginal cost equals average cost price is the greatest distance above average total cost d. the difference between total revenue and total cost is the greatest . marginal revenue exceeds marginal cost by the greatest amount .E ~ Jim's Shoe Shine Shop operates in a perfectly competitive market. If its marginal revenue is $5 per shine, then a. price is less than $5 b. price is equal to total revenue at all output levels c. the next shine will bring in more than $5 in additional revenue d. the next shine will bring in less than $5 in additional revenue ~ (6J the market price per shine is $5 L I \ . 4. A natural monopoly is producing an output level of 1,000 units per day. If the monopoly is broken up into 5 firms, then average total cost for each of the 5 firms a. will fall below the monopolist's average total cost b. may equal or fall below the monopolist's average total cost <!) may equal or exceed the monopolist's average total cost d. will exceed the monopolist's average total cost . will equal the monopolist's average total cost A>(5. In a long-run perfectly competitive equilibrium, @ barriers to entry are established by entrenched firms b. marginal cost and marginal revenue are the greatest distance apart c. the typical firm will earn an economic profit ~ . price and marginal cost are equal to minimum short-run and long-run average total cost 11 I . average total cost is rising ..QJ 6. In the long run, perfectly competitive firms earn zero economic profit; this means that each firm is & content to stay in its market. b. earning negative accounting profit....
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