Econ_198_Aut_06_Exam__2

Econ_198_Aut_06_Exam - Introduction to Microeconomics Economics 19800 SECOND HOUR EXAMINATION Allen R Sanderson Autumn 2006 Name(Please Print[40

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Introduction to Microeconomics Allen R. Sanderson Economics 19800 Autumn 2006 SECOND HOUR EXAMINATION Name (Please Print): ______________________________________ [40 Points Possible] Part I. Multiple Choice. Circle letter to indicate your answer. 1 point each; 20 points total. 1. When I see a newspaper ad or TV commercial featuring actress Catherine Zeta-Jones promoting a particular cell-phone service, this should remind me or suggest or point to: a. a perfectly competitive industry. b. that this firm’s costs will likely be higher because it has to pay Ms. Z-J a salary and buy advertising space and air time. c. monopolistic competition. d. that she and her company are trying to rent-seek. e. wow, she’s gorgeous. 2. The short-run ATC curve eventually slopes upward because: a. of increasing marginal costs and the law of diminishing returns. b. fixed costs get higher and higher with more output. c. of diseconomies of scale and scope. d. firms find it more profitable to supply more when the prices for their products increase. e. This is somewhat of a trick question because it’s only true for non-contestable markets. 3. “Market power” is generally thought of or measured by economists as: a. the ability of a firm to set or control its price(s) b. a firm being able to produce more efficiently and have a lower ATC than its competitors. c. the political influence of corporations or other monopoly firms. d. a firm’s absolute size – in terms of capital assets, sales or employment. e. when a firm can create and maintain an inelastic demand curve for its products. 4. ComEd, the supplier of electric power for the city of Chicago, would be best characterized as, or would be an example of: a. a non-profit, public-private partnership. b. a monopolistically competitive firm. c. a firm with an HHI lower than 2,500. d. a monopoly. e. a dominant firm in a cartel. 5. Across the entire industrial spectrum (Parkin’s Chapters 11, 12 and 13), which of the following would always be true for a rational, profit-maximizing firm in equilibrium? a. P = MC; b. P > MC; c. P = MR; d. AC = MC; e. MC = MR. 6.
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This test prep was uploaded on 04/07/2008 for the course ECON 198 taught by Professor Sanderson during the Spring '08 term at UChicago.

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Econ_198_Aut_06_Exam - Introduction to Microeconomics Economics 19800 SECOND HOUR EXAMINATION Allen R Sanderson Autumn 2006 Name(Please Print[40

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