mic201ptfin1315e10

mic201ptfin1315e10 - Micro 201 Pretest Final Chapters 13 &...

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Micro 201 Pretest Final Multiple Choice Identify the letter of the choice that best completes the statement or answers the question. ____ 1. When it is cheaper for one firm to produce a particular product, ____ exist(s). a. economies of scale b. economies of scope c. diminishing marginal returns d. cross-subsidization ____ 2. Economies of scope are savings acquired by a. producing many goods simultaneously. b. producing enough of one good to reach the minimum efficient scale of production. c. selling one product at a loss but selling other products at a profit. d. decreasing the regulation of an industry. ____ 3. Economies of scale imply: (i) a continuously falling AC curve; (ii) a larger output is more efficient than a smaller output. a. i and ii b. i but not ii c. ii but not i d. neither i nor ii ____ 4. Before the breakup of AT&T several years ago, profits on long-distance calls offset losses on basic residential service. This practice is known as a. abuse of monopolistic power. b. cream skimming. c. cross-subsidization. d. the Ramsey rule. ____ 5. The prices that are in the public's best interest will a. always allow the regulated firm to break even. b. always allow the regulated firm to make positive economic profits. c. sometimes leave the regulated firm with economic losses. d. leave the regulated firm with profits that are about 10 percent higher than those of other firms. ____ 6. Setting price equal to marginal cost in a natural monopoly will lead to a. excess profits for the firm. b. losses for the firm. c. zero profits for the firm. d. One cannot tell without further information. ____ 7. Airline deregulation has led to: (i) lower prices; (ii) a deterioration of service to isolated communities. a. i and ii b. i but not ii c. ii but not i d. neither i nor ii ____ 8. Policies that preclude the deliberate creation of monopoly and undesirable practices are called a. antitrust policies. b. anti-monopoly policies. c. anti-competitive policies. d. socialism.
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____ 9. Price discrimination by a firm is a. illegal under all circumstances. b. legal if the firm can show that the difference in the prices charged customers is justified by a difference in the costs of serving them. c. legal if the firm can show that the demand for its good is relatively elastic. d. legal under all circumstances. ____ 10. A firm that charges a very low price would be practicing predatory pricing if a. the price allowed only a small profit. b. the price would only be profitable if it succeeded in driving a rival out of the market. c. the price allowed profits that were positive but below those earned by other firms. d.
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This test prep was uploaded on 04/04/2008 for the course ECON 201 taught by Professor Joyce during the Spring '07 term at Drexel.

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mic201ptfin1315e10 - Micro 201 Pretest Final Chapters 13 &...

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