Final Exam Blue - Blue Final Exam Econ 251-002 Please read...

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Blue Final Exam Econ 251-002 Please read the questions carefully and choose the best answer. 1. Teagan is trying to decide how to spend her day. She can travel to Chicago which she values at $100. Or she can stay in West Lafayette and study economics which she values at $5. Teagan could also attend the Purdue football game with friends which she values at $70. She can only do one activity for the day. What is the opportunity cost for Teagan of going to Chicago? a. $70, the value of going to the Purdue football game b. $95, the difference between the value to studying economics and the value of traveling to Chicago c. $100, the value of going to Chicago d. $170, the sum of the value of going to Chicago and the value of going to the football game 2. Carolina consumers Pepsi and Coke. The above graph shows her budget line. Which of the following could have caused the budget line to change as depicted in the graph? a. An increase in Carolina’s income b. A decrease in the price of Coke and a decrease in the price of Pepsi c. An increase in the price of Pepsi d. An increase in the price of Coke 3. Which of the following is true in regards to the free-rider problem? a. Markets supply an inefficiently low quantity of the good or service b. People can obtain benefits without paying for the good because the good is nonexcludable c. If national defense was privatized, it would suffer the free rider problem. d. All of the above properly describe the free-rider problem 4. If lumber and sawdust are complements in production, a decrease in the price of lumber will result in a. A decrease in the supply of lumber b. A decrease in the supply of sawdust c. An increase in the demand for sawdust d. An increase in the demand for lumber 5. In which of the following markets do firms make zero profit in the long run?
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a. Perfect competition b. Monopoly c. Monopolistic competition d. Both a. and c. 6. Jonathan and Pete produce two goods, basketballs and footballs. In a day Jonathan can produce 20 basketballs or 5 footballs. Pete can produce either 6 basketballs or 2 footballs in a day. What is Jonathan’s marginal cost of producing a basketball? a. 5 footballs b. 2 footballs c. 1/3 of a football d. None of the above 7. Using the same information, _______ has an absolute advantage in producing basketballs and ________ has a comparative advantage in producing footballs. a. Jonathan, Jonathan b. Jonathan, Pete c. Pete, Jonathan d. Pete, Pete 8. A firm in an oligopoly might practice “limit pricing” if it a. Is concerned the government will begin taxing profits b. Wants to reduce barriers to entry in the industry c. Wants to deter entry of other firms into the industry d. Wants to relinquish monopoly control of a part of the industry 9. According to the graph below, at what level of output is total revenue maximized? a.
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Final Exam Blue - Blue Final Exam Econ 251-002 Please read...

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