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devry ECON312 mid term project




Question;(TCO 1) As a consequence of the condition of scarcity;there is never enough of;anything.;production has to be;centrally planned.;things which are plentiful;have relatively high prices.;individuals and communities;have to make choices from among alternatives.;Question 2. Question;(TCO 1) The opportunity cost;of constructing a new public highway is the;money cost of hiring;contractors and construction workers for the new highway.;value of other goods and;services that must be sacrificed to construct the new highway.;expected cost of constructing;the new highway in a future year.;value of shorter driving;times and distances when the new highway is completed.;Question 3. Question;(TCO 1) A nation can increase;its production possibilities by;shifting resources from;investment good production to consumer good production.;shifting resources from;private goods to public goods.;improving labor productivity.;eliminating discrimination.;Question 4. Question;(TCO 1) Which expression is;another way of saying "marginal benefit"?;Benefits given up;Unintended gain;Employment benefits;Extra benefit;Question 5. Question;(TCO 1) The individual who;brings together economic resources and assumes the risk of business ventures in;a capitalist economy is called the;manager.;entrepreneur.;stockbroker.;banker.;Question 6. Question;(TCO 1) The Soviet Union;economy of the 1980s would best be classified as;a market system.;pure capitalism.;laissez-faire capitalism.;a command system.;Question 7. Question: The;simple circular-flow model shows that workers, entrepreneurs, and the owners of;land and capital offer their services through;product markets.;resource markets.;employment agencies.;business firms.;Question 8. Question;(TCO 1) Consumers express;self-interest when they;seek the lowest price for a;product.;reduce business losses.;collect economic profits.;search for jobs with the;highest wages.;Question 9. Question;(TCO 1) Which is not one of;the five fundamental questions that an economy must deal with?;How will the goods and;services be produced?;Why should the goods and;services be produced?;Who is to receive the goods;and services produced in the economy?;In what ways will progress be;promoted?;Question 10. Question;(TCO 1) The major;success indicator" for business managers in command economies like;the Soviet Union and China in the past was;the quantity of output.;product quality.;the amount of profits.;worker morale.;Question 11. Question;(TCO 2) An increase in demand;means that;given supply, the price of;the product will decline.;the demand curve has shifted;to the right.;price has declined and;consumers therefore want to purchase more of the product.;the demand curve has shifted;to the left.;Question 12. Question;(TCO 2) At the point where;the demand and supply curves intersect;the buying and selling;decisions of consumers and producers are inconsistent with one another.;the market is in;disequilibrium.;there is neither a surplus;nor a shortage of the product.;quantity demanded exceeds;quantity supplied.;Question 13. Question;(TCO 2) Black markets are;associated with;price floors and the;resulting product surpluses.;price floors and the;resulting product shortages.;price ceilings and the;resulting product shortages.;price ceilings and the;resulting product surpluses.;Question 14. Question;(TCO 2) An increase in demand;for oil along with a simultaneous increase in supply of oil will;decrease price and increase;quantity.;increase price and decrease;quantity.;increase quantity, but;whether it increases price depends on how much each curve shifts.;increase price, but whether;it increases quantity depends on how much each curve shifts.;Question 15. Question;(TCO 2) If Product Y is an;inferior good, a decrease in consumer incomes will;make buyers want to buy less;of Product Y.;not affect the sales of;Product Y.;shift the demand curve for;Product Y to the left.;shift the demand curve for;Product Y to the right.;Question 16. Question;(TCO 2) If the price;elasticity of demand for a product is equal to 0.5, then a 10 percent decrease;in price will increase quantity demanded by;20 percent.;0.5 percent.;5 percent.;Question 17. Question;(TCO 2) Total revenue falls;as the price of a good is raised, if the demand for the good is;elastic.;inelastic.;unitary elastic.;perfectly elastic.;Question 18. Question;(TCO 2) You are the sales;manager for a software company and have been informed that the price elasticity;of demand for your most popular software is less than 1. To increase total;revenues, you should;increase the price of the software.;decrease the price of the;software.;hold the price of the;software constant.;increase the supply of the;software.;Question 19. Question;(TCO 2) A state government;wants to increase the taxes on cigarettes to increase tax revenue. This tax;would only be effective in raising new tax revenues if the price elasticity of;demand is;unity.;elastic.;inelastic.;perfectly elastic.;Question 20. Question;(TCO 2) When universities;announce a large tuition increase and follow it with an announcement that more financial;aid will be available, they are assuming that students who pay full tuition;have elastic demand and;students who use financial aid have inelastic demand.;have inelastic demand and;students who use financial aid have elastic demand.;view a college education as;an inferior good and students who use financial aid view it as a normal good.;view a college education as a;normal good and students who use financial aid view it as an inferior good.;Question 21. Question;(TCO 3) Suppose that you;could prepare your own tax return in 15 hours, or you could hire a tax;specialist to prepare it for you in two hours. You value your time at $11 an;hour. The tax specialist will charge you $55 an hour. The opportunity cost of;preparing your own tax return is;$40.;$55.;$110.;$165.;Question 22. Question;(TCO 3) Economic profits are;equal to;total revenues minus fixed;costs.;total revenues minus the;costs of raw materials.;total revenues minus the;opportunity costs of all inputs.;gross profit minus selling;and operating expenses.;Question 23. Question;(TCO 3) The main difference;between the short run and the long run is that;firms earn zero profits in;the long run.;the long run always refers to;a time period of one year or longer.;in the short run, some inputs;are fixed.;in the long run, all inputs;are fixed.;Question 24. Question;(TCO 3) The law of;diminishing returns only applies in cases where;there is increasing scarcity;of factors of production.;the price of extra units of a;factor is increasing.;there is at least one fixed;factor of production.;capital is a variable input.;Question 25. Question;(TCO 3) Marginal cost can be;defined as the;change in total fixed cost;resulting from one more unit of production.;change in total variable cost;resulting from one more unit of production.;change in average total cost;resulting from one more unit of production.;change in average variable;cost resulting from one more unit of production.;Question 26. Question;(TCO 3) If the price of a;fixed factor of production increases by 50 percent, what effect would this have;on the marginal-cost schedule facing a firm?;None, because fixed costs do;not affect marginal cost.;Marginal cost would increase;by 50 percent.;Marginal cost would increase;by less than 50 percent.;Marginal cost would increase;by more than 50 percent.;(TCO 3) Mutual interdependence would tend to limit control;over price in which market model?;Monopolistic competition;Pure competition;Pure monopoly;Oligopoly;Question 2. Question;(TCO 3) Under which market model are the conditions of entry;into the market easiest?;Pure competition;Pure monopoly;Monopolistic competition;Oligopoly;Question 3. Question;(TCO 3) The production of agricultural products such as;wheat or corn would best be described by which market model?;Monopolistic competition;Pure competition;Pure monopoly;Oligopoly;Question 4. Question;(TCO 3) The demand curve faced by a purely competitive firm;=;has unitary elasticity.;yields constant total revenues even when price;changes.;is identical to the market demand curve.;is the same as its marginal revenue curve.;Question 5. Question;(TCO 3) A profit-maximizing firm in the short run will;expand output;until marginal cost begins to rise.;until total revenue equals total cost.;until marginal cost equals average variable;cost.;as long as marginal revenue is greater than;marginal cost.;Question 6. Question;(TCO 3) A firm should increase the quantity of output as;long as its;marginal revenue is greater than its marginal;cost.;marginal cost is greater than its marginal;revenue.;average revenue is greater than its average total;cost.;average revenue is greater than its average;variable cost.;Question 7. Question;(TCO 3) The short-run supply curve for a competitive firm is;the;entire MC curve.;segment of the MC curve lying below the AVC;curve.;segment of the MC curve lying above the AVC;curve.;segment of the AVC curve lying to the right of;the MC curve.;Question 8. Question;(TCO 3) The classic example of a private, unregulated;monopoly is;Xerox.;De Beers.;General Motors.;General Electric.;Question 9. Question;(TCO 3) Barriers to entry;usually result in pure competition.;can result from government regulation.;exist in economic theory but not in the real;world.;are typically the result of wrongdoing on the;part of a firm.;Question 10. Question;(TCO 3) The demand curve confronting a nondiscriminating;pure monopolist is;horizontal.;the same as the industry's demand curve.;more elastic than the demand curve confronting;a competitive firm.;derived by vertically summing the individual;demand curves for the buyers.;Question 11. Question;(TCO 3) Which is the best example of price discrimination?;An airline company charging lower fares per;pound for air freight than for passengers.;A telephone company charging lower rates to;weekend users than weekday users.;A supermarket charging lower prices in its;inner city store than its out-of-town store.;A private doctor charging higher fees to;patients receiving special services than patients receiving regular services.;Question 12. Question;(TCO 3) In which industry is monopolistic competition most;likely to be found?;Utilities;Agriculture;Retail trade;Mining;Question 13. Question;(TCO 3) Assume that in a monopolistically competitive;industry, firms are earning economic profit.;This situation will;reduce the excess capacity in the industry as;firms expand production.;attract other firms to enter the industry;causing the firm's profits to shrink.;cause firms to standardize their product to;limit the degree of competition.;make the industry allocatively efficient as;each firm seeks to maintain its profits.;Question 14. Question;(TCO 3) A unique feature of an oligopolistic industry is;low barriers to entry.;standardized products.;diminishing marginal returns.;mutual interdependence.;Question 15. Question;(TCO 3) A low concentration ratio means that;there is a low probability of entering the;industry.;there is a low probability of success in the;industry.;each firm accounts for a small market share of;the industry.;each firm accounts for a large market share of;the industry.;Question 16. Question;(TCO 3) In which set of market models are there the most;significant barriers to entry?;/: Monopolistic competition and pure;competition;Monopolistic competition and pure monopoly;Oligopoly and monopolistic competition;Oligopoly and pure monopoly;Question 17. Question;(TCO 1) The four factors of production are;land, labor, capital, and money.;land, labor, capital, and entrepreneurial ability.;labor, capital, technology, and;entrepreneurial ability.;labor, capital, entrepreneurial ability, and;money.;Question 18. Question;(TCO 1) Refer to the diagram below which is based on the;Circular Flow Model in Chapter 2. Arrows;(1) and (2) represent;diagram1;Graph Description;goods and resources, respectively.;money incomes and output, respectively.;output and money incomes, respectively.;resources and goods, respectively.;Question 19. Question;(TCO 2) Refer to the diagram. An increase in quantity demanded is depicted;by a;diagram2;Graph Description;move from Point x to Point y.;shift from D1 to D2.;shift from D2 to D1.;move from Point y to Point x.;Question 20. Question;(TCO 2) Refer to the information and assume the stadium;capacity is 5,000. The supply of seats;for the game;Price per Ticket;Quantity Demanded;$13;1,000;11;2,000;9;3,000;7;4,000;5;5,000;3;6,000;varies inversely with ticket prices.;varies directly with ticket prices.;is perfectly inelastic.;is perfectly elastic.;Question 21. Question;(TCO 2) Which type of goods is most adversely affected by;recessions?;Goods for which the income-elasticity coefficient is relatively low or;negative.;Goods for which the income-elasticity;coefficient is relatively high and positive.;Goods for which the cross-elasticity;coefficient is positive.;Goods for which the cross-elasticity;coefficient is negative.;Question 22. Question;(TCO 3) The following cost data are for a firm in the short;run;Output Total Cost;0 $400;1 500;2 550;3 600;4 650;5 700;What is the firm's average variable cost at an output of 5;units?;Student Answer: $30;$60;$120;$140;Question 23. Question;(TCO 1) Refer to the diagram. Points A, B, C, D, and E show;points diagram1;Graph Description;that the opportunity cost of bicycles;increases, while that of computers is constant.;combinations of bicycles and computers that;society can produce by using its resources efficiently.;that the opportunity cost of computers;increases, while that of bicycles is constant.;that society's demand for computers is greater;than its demand for bicycles.;Question 24. Question;(TCO 3) Assume that the owners of the only gambling casino;in Wisconsin spend large sums of money lobbying state government officials to;protect their gambling monopoly.;Economists refer to these expenditures as;rent-seeking.;price discrimination.;X-efficiency.;network effects.;Question 25. Question;(TCO 3) a.) A pure monopolist determines that at the current;level of output the marginal cost of production is $2, average variable costs;are $2.75, and average total costs are $2.95.;The marginal revenue is $2.75.;What would you recommend that the monopolist do to maximize profits? b.) Why might a business owner keep their;business open but let it deteriorate, rather than shut it down? Will this profitability last?;Student Answer;Question 26. Question;(TCO 2) Evaluate how the following situations will affect;the demand curve for iPods.;(a) Income statistics show that income of 18?25-year-olds;have increased by 10 percent over the last year.;(b) Efforts of music artists wanting greater protection of;their music result in more stringent enforcement of copyrights and the shutdown;of numerous illegal downloading sites.;(c) Believing that it has significant control of the market;for portable digital music players, Apple decides to raise the price of iPods;with the goal of increasing profits.;(d) The price of milk decreases.;="background-position:>


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