Practice Final

Practice Final - Econ 221 Final Multiple Choice Identify...

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Econ 221 Final Multiple Choice Identify the letter of the choice that best completes the statement or answers the question. ____ 1. Assume supply of X increased more than demand for X increased. The net effect would be a(n) a. increase in the equilibrium price and a decrease in the equilibrium quantity b. increase in the equilibrium price and an increase in the equilibrium quantity c. decrease in the equilibrium price and an increase in the equilibrium quantity d. decrease in the equilibrium price and a decrease in the equilibrium quantity e. none of the above ____ 2. Suppose supply falls in a market that was in equilibrium. Which of the following will happen if the price in that market does not change to its new equilibrium level? a. a surplus will arise b. a shortage will arise c. an equilibrium quantity will occur d. a shortage will arise at first, then followed quickly by a surplus e. none of the above ____ 3. Suppose a price ceiling of $6 per unit is placed on kiwi when the equilibrium price is $5 per unit. What would be the outcome of this ceiling? a. a shortage b. a surplus c. an equilibrium d. a floor e. can’t tell without more information ____ 4. Which of the following statements regarding deadweight loss is correct? a. deadweight loss rises as tax rates increase b. deadweight loss falls as tax rates increase c. deadweight loss is unrelated to rate of taxation d. taxes eliminate deadweight loss e. none of the above ____ 5. Suppose a monopolist produces at an output where its marginal cost intersects its marginal revenue curve. Which of the following is true? a. it can raise profit by selling more b. it can raise profit by selling less c. it cannot raise its profit by selling more or less d. none of the above e. insufficient information to choose one of the above ____ 6. A result of welfare economics is that the equilibrium price of a product is considered to be the best price because it a. maximizes total revenue for firms and maximizes the quantity supplied of the product.
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b. maximizes the combined welfare of buyers and sellers. c. minimizes costs and maximizes profits of sellers. d. minimizes the level of welfare payments to those who no longer live below the poverty line. ____ 7. Consumer surplus is a. the amount a buyer is willing to pay for a good minus the amount the buyer actually pays for it. b. the amount a buyer is willing to pay for a good minus the cost of producing the good. c. the amount by which the quantity supplied of a good exceeds the quantity demanded of the good. d. a buyer's willingness to pay for a good plus the price of the good. ____ 8. If a consumer places a value of $15 on a particular good and if the price of the good is $17, then a. the consumer has consumer surplus of $2 if he or she buys the good. b.
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This note was uploaded on 11/21/2011 for the course ECON 221 taught by Professor Williamson during the Winter '05 term at Cal Poly.

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Practice Final - Econ 221 Final Multiple Choice Identify...

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