Econ_198_Spr_05_Exam__2

Econ_198_Spr_05_Exam__2 - Introduction to Microeconomics...

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Introduction to Microeconomics Allen R. Sanderson Economics 19800 Spring 2005 SECOND HOUR EXAMINATION Name (Please Print): ______________________________________ [40 Points Possible] Part I. Multiple Choice. Circle letter corresponding to your answer. One point each; 20 points total. 1. A monopoly can earn economic profits in the long run: a. if its competitors rent-seek. b. as long as it can continue to face an inelastic demand. c. by producing efficiently. d. if it can maintain barriers to entry. e. because it has no fixed costs in the long run. 2. When the cost of producing a unit of a good decreases as its output increases, this is the standard or traditional definition of: a. perfect competition. b. economies of scale. c. transactions costs. d. diminishing returns. e. economic efficiency. 3. In a famous antitrust case, the government charged that DuPont was attempting to monopolize the cellophane industry. The company argued that while it was the major producer of cellophane, it was competing in the broader market or industry for/of “flexible packaging,” in which waxed paper, aluminum foil and other products, all produced by competing firms, were an integral part. In determining if DuPont were indeed a monopolist, one would be most interested in: a. the cross-elasticity of demand between cellophane and other potential flexible wraps. b. the per unit cost of cellophane. c. whether the supply elasticity for cellophane was elastic or inelastic. d. the income elasticity of demand for cellophane. e. whether DuPont was legally organized as a corporation, partnership or proprietorship. 4. We generally associate the development of the theory of the firm – why firms exist, what they do and why they do it, and the benefits of having firms in the first place – with: a. Coase. b. Hirfindahl. c. Nash. d. Sherman. e. Smith. 5. On June 30, 1999, Starbucks announced plans to expand its Internet retailing portfolio of beans and mugs to include frying pans, towels, picture frames and even sofas. The next day, the value of Starbucks stock fell 28 percent. Investors were most likely expressing a concern about which of the following economic principles or issues? a.
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Econ_198_Spr_05_Exam__2 - Introduction to Microeconomics...

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