Econ 1 Practice Final

# Econ 1 Practice Final - FINAL Tuesday, December 11th, 2007...

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FINAL Last Name: ______________________________ Tuesday, December 11th, 2007 Econ 1 First Name: ______________________________ Student ID: ______________________________ DO NOT OPEN YOUR EXAM UNTIL INSTRUCTED TO DO SO!!! INSTRUCTIONS 1. Make sure you have all pages (40 multiple choice, 5 short answer). 2. Answer all multiple choice questions in the space provided below. 3. For the short answer, show all work. We reserve the right to deduct points from answers that are hard to read. 4. You may NOT use a calculator. 5. There are a total of 100 points. DO NOT WRITE IN BOX Question Points MC Q1 Q2 Q3 Q4 Q5 Total MULTIPLE CHOICE ANSWERS (1 point each) 1. ______ 2. ______ 3. ______ 4. ______ 5. ______ 6. ______ 7. ______ 8. ______ 9. ______ 10. ______ 11. ______ 12. ______ 13. ______ 14. ______ 15. ______ 16. ______ 17. ______ 18. ______ 19. ______ 20. ______ 21. ______ 22. ______ 23. ______ 24. ______ 25. ______ 26. ______ 27. ______ 28. ______ 29. ______ 30. ______ 31. ______ 32. ______ 33. ______ 34. ______ 35. ______ 36. ______ 37. ______ 38. ______ 39. ______ 40. ______

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MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question. 1) Larry consumes at a point on his budget line where his marginal rate of substitution is less than the magnitude of the slope of his budget line. As Larry moves toward his optimum point, he will move to a A) lower indifference curve. B) lower budget line. C) higher budget line. D) higher indifference curve. 2) The average total cost curves for plants A, B, C and D are shown in the above figure. Which plant is best to use to produce 80 units per day? A) plant A B) plant B C) plant C D) plant D 3) A competitive firm is more likely to shut down during a recession, when the demand for its product declines, than during an economic expansion, because during the recession it might be unable to cover its A) external costs. B) depreciation due to machinery becoming obsolete. C) fixed costs. D) variable costs. 4) If the federal government is concerned primarily with efficiency, it is likely to impose taxes on goods that have A) close substitutes. B) low elasticity of demand. C) high elasticity of demand. D) negatively sloped supply curves. 1
5) In the above figure, the firm ʹ s initial average total cost curve is SRAC . If the price is P 1 ., in the long run the firm will A) reduce its plant size. B) retain the same plant size. C) expand its plant size. D) exit the industry. 6) In the above figure, the firm ʹ s initial average total cost curve is SRAC with an initial marginal cost curve of SRMC . The price of the product is P 1 . In the short run the firm will produce output equal to the amount A) Q 1 .B ) Q 3 .C ) Q 2 .D ) Q 4 . Cost schedule Labor (workers) Output (units per day) Total variable cost (dollars) Total cost (dollars) 00 0 3 0 1 3 20 50 2 8 40 70 31 2 6 0 9 0 4 14 80 110 5 15 100 130 7) In the above table, the total fixed cost is A) \$20. B) \$0. C) \$30. D) \$50. 8) In the above table, when output increases from 8 to 12 units, the marginal cost of one of those 4 units is A) \$2.00. B) \$1.20. C) \$5.00. D) \$15.00. 9) The vertical distance between a firm ʹ s average total cost curve, ATC , and its average variable cost curve, AVC , A) is equal to its total fixed cost, TFC . B) decreases as output increases. C) is equal to its marginal cost, MC ) i s equal to its average product.

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## Econ 1 Practice Final - FINAL Tuesday, December 11th, 2007...

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