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ECO_365 _final exam An economist who is studying the relationship between the money supply




Question;1) An economist who is studying the;relationship between the money supply, interest rates, and the rate of;inflation is engaged in;A. microeconomic research;B. macroeconomic research;C. theoretical research, because there;is no data on these variables;D. empirical research, because there is;no economic theory related to these variables;2) A basic difference between microeconomics;and macroeconomics is that microeconomics;A. focuses on the choices of;individual consumers, while macroeconomics considers the behavior of large;businesses;B. focuses on financial;reporting by individuals, while macroeconomics focuses on financial reporting;by large firms;C. examines the choices made;by individual participants in an economy, while macroeconomics considers the;economy's overall performance;D. focuses on national markets, while;macroeconomics concentrates on international markets;3) The distinction between supply and the;quantity supplied is best made by saying that;A. the quantity supplied is;represented graphically by a curve and supply as a point on that curve;associated with a particular price;B. supply is represented;graphically by a curve and the quantity supplied as a point on that curve;associated with a particular price;C. the quantity supplied is in;direct relation with prices, whereas supply is in inverse relation;D. the quantity supplied is in;inverse relation with prices, whereas supply is in direct relation;4) After several years of slow economic;growth, world demand for petroleum began to rise rapidly in the 1990s. Much of;the increase in demand was met by additional supplies from sources outside the;Organization of Petroleum Exporting Countries (OPEC). OPEC, during this time;was unable to restrain output among members in its effort to lift oil prices.;What best describes these events?;A. The rise in demand shifted;the demand for oil to the right. OPEC actions shifted the demand for oil back;to the left.;B. The rise in demand shifted;the demand for oil to the right. As price rose, the supply of oil also rose.;C. The rise in demand shifted;the demand for oil to the right. As price rose, the quantity of oil supplied;rose.;D. The rise in demand reflects;a movement down along the demand curve as supply shifted to the right when;suppliers produced more oil.;5) Price elasticity of demand is the;A. change in the quantity of a;good demanded divided by the change in the price of that good;B. change in the price of a good;divided by the change in the quantity of that good demanded;C. percentage change in price of;that good divided by the percentage change in the quantity of that good;demanded;D. percentage change in quantity demanded of a;good divided by the percentage change in the price of that good;6) If average movie ticket prices rise by;about 5 percent and attendance falls by about 2 percent, other things being;equal, the elasticity of demand for movie tickets is about;A. 0.0;B. 0.4;C. 0.6;D. 2.5;7) When labor is the variable input, the;average product equals the;A. marginal product divided by;the number of workers;B. marginal product multiplied by the;number of workers;C. number of workers divided;by the quantity of output;D. quantity of output divided;by the number of workers;8) The increase in output obtained by hiring;an additional worker is known as;A. the average product;B. the marginal product;C. the total product;D. value added;9) Which of the following is the best example;of a long-run decision?;A. An automobile manufacturing;company is considering whether or not to invest in robotic equipment to develop;a more cost-effective production technique.;B. An automobile;manufacturing company is considering whether or not to expand its existing;workforce, while keeping the same factory and equipment.;C. A business consulting firm;is considering whether or not to hire interns to assist with research and data;processing.;D. A business consulting firm;is considering whether or not to add new computers while maintaining the same;number of employees.;10) Other things being equal, when average;productivity falls;A. average fixed cost must;rise;B. marginal cost must rise;C. average total cost must;rise;D. average variable cost must;rise;11) According to economist Colin Camerer;of the California Institute of Technology, many New York taxi drivers decide;when to finish work by setting an income goal for themselves. If this is true;then on busy days when the effective hourly wage is higher, taxi drivers will;A. work the same number of;hours as they will on slower days;B. work fewer hours than they;will on slower days;C. work more hours than they;will on slower days;D. not work any hours;12) A firm's demand for labor is derived from;the;A. opportunity costs;associated with labor and leisure;B. desires and needs of the;entrepreneur;C. cost of labor inputs;D. demand for its output;13) Owen runs a delivery business and;currently employs three drivers. He owns three vans that employees use to make;deliveries, but he is considering hiring a fourth driver. If he hires a fourth;driver, he can schedule breaks and lunch hours so all three vans are in;constant use, allowing him to increase deliveries per day from 60 to 75. This;will cost an additional $75 per day to hire the fourth driver. The marginal;cost per delivery of increasing output beyond 60 deliveries per day;A. is $0 because Owen does not have;to purchase another van;B. is $5;C. is $75;D. cannot be calculated;without knowing Owen's total fixed costs;14) Expected economic profit per unit is equal;to;A. expected price;B. expected average total cost;C. the difference between expected average;price and expected average total cost;D. the difference between expected total;revenue and expected total cost;15) If a firm in a perfectly competitive;market experiences a technological breakthrough;A. other firms would find out;about it eventually;B. other firms would find out;about it immediately;C. other firms would not find;out about it;D. some firms would find out;about it, but others would not;16) A significant difference between monopoly;and perfect competition is that;A. free entry and exit is;possible in a monopolized industry, but impossible in a competitive industry;B. competitive firms control;market supply, but monopolies do not;C. the monopolist's demand;curve is the industry demand curve, while the competitive firm's demand curve;is perfectly elastic;D. profits are driven to zero;in a monopolized industry, but may be positive in a competitive industry.;17) A monopoly firm is different from a;competitive firm in that;A. there are many substitutes for a;monopolist's product while there are no substitutes for a competitive firm's;product;B. a monopolist's demand curve is;perfectly inelastic while a competitive firm's demand curve is perfectly;elastic;C. a monopolist can influence market price;while a competitive firm cannot;D. a competitive firm has a U-shaped;average cost curve while a monopolist does not;18) The difference between a perfectly;competitive firm and a monopolistically competitive firm is that a;monopolistically competitive firm faces a;A. horizontal demand curve and price;equals marginal cost in equilibrium;B. horizontal demand curve and price;exceeds marginal cost in equilibrium;C. downward-sloping demand curve and;price equals marginal cost in equilibrium;D. downward-sloping demand curve and;price exceeds marginal cost in equilibrium;19) As long as marginal cost is below marginal;revenue, a perfectly competitive firm should;A. increase production;B. hold production constant;C. decrease production;D. reconsider past production;decisions;20) Because a monopolistic competitor;has some monopoly power, advertising to increase that monopoly power makes;sense as long as the marginal;A. benefit of advertising is;positive;B. cost of advertising is;positive;C. benefit of advertising;exceeds the marginal cost of advertising;D. cost of advertising exceeds;the marginal benefit of advertising;21) In the Flint Hills area of Kansas;proposals to build wind turbines to generate electricity have pitted;environmentalist against environmentalist. Members of the Kansas Sierra Club;support the turbines as a way to reduce fossil fuel usage, while local chapters;of the Nature Conservancy say they will befoul the landscape. The Sierra Club;argues that wind turbines;A. are a source of negative;externalities;B. reduce negative;externalities elsewhere in the economy;C. create a free-rider problem;D. are a way of solving a;free-rider problem;22) When negative externalities are present;market failure often occurs because;A the marginal external cost resulting from;the activity is not reflected in the market price;B.;the marginal external cost;resulting from the activity is reflected in the market price;C.;the existence of imports from foreign countries takes jobs and income;away from U.S. citizen;D. consumers will consume the;good at a level where their individual marginal benefits exceed the marginal;costs borne by the firm producing the good;23) A merger between a textile mill and a;clothing manufacturing company would be considered a;A. horizontal merger;B. vertical merger;C. conglomerate merger;D. diagonal merger;24) A merger between a baby food company and a;life insurance company would be considered a;A. horizontal merger;B. vertical merger;C. conglomerate merger;D. diagonal merger;25) From the point of view of consumer and;producer surplus, what problem may be created when a country subsidizes the;cost of energy to consumers to help alleviate the burden of higher energy;costs?;A. It hurts the poor and benefits the rich.;B. It leads to less fuel being used than the;amount that maximizes consumer surplus.;C. It encourages the consumption of too much;fuel at the expense of other goods.;D. It has no effect, consumers gain a;surplus, but taxpayers lose the same amount because they must finance the;subsidy.;26) Suppose people freely choose to spend 40;percent of their income on health care, but the government decides to tax 40;percent of a person's income to provide the same level of coverage as before.;What can be said about deadweight loss in each case?;A. Taxing income results in;deadweight loss, while purchasing health care on one's own does not result in;deadweight loss.;B. Taxing income results in;less deadweight loss, because government knows better what health care coverage;is good for society.;C. There is no difference;because the goods are purchased in the market in either case.;D. There is no difference;because the total spending remains the same and the health care purchased;remains the same.;27) The U.S. textile industry is relatively;small because the US imports most of its clothing. A clear result of the;importation of clothing is;A. there is less variety;available than there would be without imports;B. the quality of clothing is;lower than it would be without imports;C. the price of clothing is;higher than it would be without imports;D. the price of clothing is;lower than it would be without imports;28) Countries can expect to gain from;international trade as long as they;A. keep production diversified;B. specialize according to their comparative;advantage;C. produce only those goods for which they;have a relatively high opportunity cost;D. use trade restrictions to reduce;competition for domestic producers;29) Which of the following is an example of;the law of one price?;A. Exchange rates tend to have;equivalent values. For example, one Italian lire equals one U.S. dollar.;B. Because people have;essentially the same basic needs wherever they live, they tend to buy the same;bundle of goods.;C. Because wages are so much;lower in China, eventually all U.S. jobs will be outsourced to China, leaving;the US to import all goods at one price.;D. Because their countries;have similar institutions, the price paid for a computer in Germany and the;United States are about the same when converted into the same currency.;30) The fact that U.S. managers' salaries are;substantially greater than those of comparable managers in Japan may be related;to;A. an increase in the demand;for CEOs;B. an increase in the supply;of CEOs;C. the comparatively greater;competitive markets in Japan;D. the greater number of;public goods provided in the United States


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