Econ_198_Spr_07_Exam__2 - Introduction to Microeconomics...

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Introduction to Microeconomics Allen R. Sanderson Economics 19800 Spring 2007 SECOND HOUR EXAMINATION Name (Please Print): ______________________________________ [41 Points Possible] Part I. Multiple Choice. Circle letter corresponding to your answer. One point each; 21 points total. 1. Most supply curves have positive slopes because: a. if consumers are willing to pay higher prices for some goods, firms are more than happy to charge them more. b. most businesses are either monopolies or oligopolies. . c. marginal costs tend to increase as output increases. d. firms need to make a profit to stay in business. e. of diseconomies of scope. 2. Oligopolies are difficult to analyze because: a. firms in an oligopolistic market are so large and complicated. b. of the uncertainty surrounding how firms will respond to price or quantity changes by rivals. c. there is so much price discrimination, predatory pricing and other anti-competitive practices going on all the time. d. the principles, structure and logic of game theory don’t apply very well to oligopoly markets. e. revenue and cost curves simply don’t exist for these types of industries. 3. Consumers benefit from monopolistic competition by: a. being able to choose from products more closely suited to their tastes. b. paying the same price as everyone else and not being discriminated against. c. paying a price for a product that is the lowest possible (that is, minimum ATC). d. the product’s price just being equal to the marginal cost of production. e. being able to be price searchers in a market populated by many choices/alternatives. 4. I would expect the price elasticity of demand for a monopoly producer of a good with virtually no substitutes to be approximately: a. zero; b. -0.2; c. -1.0; d. -2.0 e. -5.0. 5. Successful price discrimination requires or will result in all of the following except : a. segmenting the market into different buyer groups who have different elasticities of demand. b. that the firm face a downward-sloping demand curve and thus has some market power. c. making it difficult for buyers to resell the product. d. some consumer surplus being converted into profit, which means profits will be greater. e. that the firm be a monopolist. 6. The fact that the University of Chicago sublet (or “outsourced”) its bookstore operations to Barnes & Noble, the coffee shop to Starbucks and its food services to Aramark suggest that: a. we didn’t think we could exploit our monopoly power indefinitely. b.
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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_Spr_07_Exam__2 - Introduction to Microeconomics...

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