FINALF10 - Name Test Form A Economics 1 Final Exam December...

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Unformatted text preview: Name Test Form A Economics 1 Final Exam December 7, 2010 True-False Questions: Fill in Bubble A for True, Bubble B for False. 1. If a monopolist is able to practice perfect price discrimination and it sets prices to maximize its profits, the outcome will be inefficient. 2. If a monopolist must charge the same price to everyone and its marginal cost is positive, demand will be elastic at the price it charges. 3. If a firm in a perfectly competitive market is selling its product for a price greater than the marginal cost of producing it, the firm can increase its profits by producing more. 4. In the theory of perfect competition, the pursuit of economic profits by firms entering an industry implies that all firms in the industry will have losses (negative profits) in the long run. 5. If a firm’s average cost declines when it produces more, its marginal cost is higher than its average cost. 6. In a competitive equilibrium, suppliers with low costs sell for a lower price than suppliers with high costs. 7. If the demand curve for a good is price inelastic, an inward shift in the supply curve for the good (less supplied at every price) will increase the total revenue of suppliers. 8. If the supply curve of a good is perfectly elastic, a per unit tax of $10 levied on sellers will increase the price of the good for buyers by less than $10. 9. When the production of a good causes a negative externality, the total profits of buyers and sellers will be increased if production of the good is prohibited. 10. If the marginal product of labor is lower than the average product of labor, the average product of labor will decline as more workers are hired. Economics 1 2 Multiple Choice Questions 11. In one of the two readers for this course, Timothy Taylor offers several examples of barriers to entry into an industry. Which of the following is one of his examples? (a) a union to which all workers in the industry belong (b) a patent held by a firm in the industry (c) a trade association to which all firms in the industry belong (d) a tax on sales of a good produced by firms in the industry 12. Bill Barriers is currently charging $150 for his computer software program. At that price, he sells 100 copies of the program. To sell one more copy, he must lower his price to $148. What is Bill’s marginal revenue? (a)- $52 (b) $148 (c) $150 (d)- $2 (e)- $200 13. Union Airways is the only airline flying from Santa Barberia (SBA) to Saint Francis (SFO). The demand function for flights from SBA to SFO is Q = 40- ( P/ 25) , where Q is the number of people who demand to fly from SBA to SFO each day and P is the fare for that flight. If the marginal cost of a flight from SBA to SFO is $500, what fare should Union Airways charge to maximize its profits?...
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This note was uploaded on 12/12/2011 for the course ECON 1 taught by Professor Bergstrom during the Fall '07 term at UCSB.

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FINALF10 - Name Test Form A Economics 1 Final Exam December...

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