econmidterm2key

econmidterm2key - Economics 1, Fall 2007, Midterm 2...

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Economics 1, Fall 2007, Midterm 2 [VERSION A] Student Name __________________________________________Student ID#_____________________________________________ Please select one best answer from the choices provided and mark on your Scantron form. 1. Compared to a competitive market with the same cost and market-demand circumstances, monopoly results in: A. Higher prices and higher output. B. Higher prices and lower output. C. Lower prices and lower output. D. Lower prices and higher output. 2. Which of the following is consistent with a monopoly industry? A. Production and supplies are constrained. B. Barriers to entry keep potential competitors out of the market. C. No pressure to reduce costs or improve product quality. D. All of the above. 3. Natural monopolies are: A. Monopolies in agricultural markets. B. Markets with upward sloping ATC curves over the entire range of output. C. Markets that exhibit economies of scale over the entire range of output. D. Markets with low output because of diseconomies of scale. 4. If American Airlines engages in predatory pricing, it might: A. Lower fares when a new carrier enters the market and then raise fares as soon as the new carrier gains sufficient business. B. Lower fares permanently once a new carrier enters the market in order to keep up in the expanding airline industry. C. Raise fares when a new carrier enters the market and then lower fares once the new carrier leaves the market. D. Lower fares when a new carrier enters the market and then raise fares once the new carrier is driven out of business. 5. A HEADLINE article in the text, titled "Judge Says Microsoft Broke Antitrust Law," explains that Microsoft was found guilty of violating antitrust law. According to the headline article, which of the following was Microsoft guilty of? A. Bundling products to create a barrier to entry. B. Participating in illegal contracts. C. Excessive competition within the growing market. D. Producing more output than the market could support. 6. Ceteris paribus , the willingness and ability to work specific amounts of time at alternative wage rates in a given period of time is: A. Labor demand. B. Product demand. C. Labor supply. Economics 1 – Fall 2007 Midterm 2 Page (1 of 11)
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D. Product supply. 7. The opportunity cost of working is the: A. Expense of maintaining a household and maintaining a decent living. B. Wage rate. C. Amount of consumption that is made possible. D. Value of leisure time that must be given up. 8. Generally, as the number of hours worked increases, the marginal utility of leisure time tends to: A. Become zero or less. B. Remain the same. C. Increase. D. Decrease. 9. The diminishing returns to a variable factor may be due to: A. The declining utility of a good as we consume more of it. B. Crowding or overuse of other factors that are held constant as production is increased.
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This note was uploaded on 04/07/2008 for the course ECON 1 taught by Professor Crane during the Fall '08 term at UC Irvine.

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econmidterm2key - Economics 1, Fall 2007, Midterm 2...

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