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Microeconomic Final exam Prep




Question;1.;Resources, as defined broadly by economists, are;A.;land and labor.;B.;land, labor, and;workers.;C.;land, workers, and;firms.;D.;capital, land, and;natural resources.;E.;land, labor, and capital.;2.;The transformation of resources into economic goods and services;is called;A.;technical;efficiency.;B.;resourcing.;C.;production.;D.;increasing returns.;E.;output.;3.;In economic theory, economists use the circular flow diagram to describe;A.;consumers who lack;any preference.;B.;an indifference;curve.;C.;the relationship between output and resources.;D.;the household;sector.;E.;the business sector.;4.;Marginal physical product is;A.;always increasing.;B.;the maximum output;that can be produced from different quantities of a variable resource.;C.;the maximum output;that can be produced from different quantities of a fixed resource.;D.;the additional output produced from one more unit of;a variable resource, holding other inputs constant.;E.;None of the above.;5.;Which of the following statements best represents the definition;of marginal physical product?;A.;The additional quantity that is produced when one;additional unit of a resource is used in combination with the same;quantities of all other resources;B.;The total quantity;that is produced when one additional unit of a resource is used in;combination with the same quantities of all other resources;C.;The total quantity;that is produced when all additional units of a resource are used in;combination with the same quantities of all other resources;D.;The total amount;produced in a specified time period;E.;The additional;quantity that is produced when all combinations of a resource are tried as;an experiment;6.;Every firm (and every individual and nation as well) is faced;with the law of diminishing marginal returns. The law is a physical property;rather than an economic one, but it is important to economics because;A.;it defines the;relationship between costs and output in the long run.;B.;it defines the relationship between costs and output;in the short run.;C.;it defines the;relationship between average costs and output in the long run.;D.;it defines the;relationship between marginal costs and output in the long run.;E.;it defines the;relationship between total revenue and output in the long run.;7.;For any firm, it is always true that;A.;as output rises, average fixed costs decline because;the total fixed cost is divided by a larger and larger number of units;produced.;B.;as output rises;average fixed costs rise equally because of more intense resource;utilization.;C.;as output rises;average fixed costs quickly drop to zero.;D.;as output rises;average fixed costs become a vertical line.;E.;as output rises;average fixed costs decline and ultimately become negative.;8.;Average fixed cost;A.;is constant as;output rises.;B.;decreases as output rises.;C.;increases with;rising output and then declines.;D.;intersects with;average variable cost at the lowest average variable cost.;E.;equals marginal cost;at the lowest point of marginal cost.;9.;Overhead costs are;A.;identical to fixed;costs.;B.;the costs of;variable inputs.;C.;those costs that are not directly attributable to the;production process.;D.;the costs of labor;inputs in the short run but not in the long run.;E.;the costs associated;with getting in over your head.;10.;The sum of the prices that firms must pay for resources used in;production times the quantity of resources used, for each quantity of output;produced, is known as the firm?s;A.;total resource schedule.;B.;total physical;product schedule.;C.;average physical;product schedule;D.;total cost schedule.;E.;average total cost;schedule.;Quiz Chapter 9;1.;A firm?s decision to supply a good or service;A.;depends on total;cost only.;B.;depends on total;revenue only.;C.;depends on past;profit of other firms in the industry.;D.;depends on expected profit.;E.;cannot be studied;with the tools of economics.;2.;The addition to a business firm?s total receipts (revenue) that;comes from selling one more unit of output is;A.;total costs.;B.;normal profit.;C.;marginal costs.;D.;marginal revenue.;E.;total revenue.;3.;To produce where marginal cost is equal to marginal revenue is;called;A.;the marginal-revenue;rule.;B.;the marginal-cost;rule.;C.;the profit-maximizing rule;D.;breaking the rules.;E.;being forced out of;business.;4.;The additional cost a firm acquires from selling an extra unit;of output is;A.;total cost.;B.;marginal cost.;C.;average cost.;D.;fixed cost.;E.;variable cost.;5.;In general, the two extreme cases of market structure models are;represented by;A.;monopolistic;competition and oligopoly.;B.;oligopoly and;monopoly.;C.;oligopoly and;perfect competition.;D.;perfect competition and monopoly.;E.;perfect monopoly and;oligopolistic competition.;6.;Firms operating in a perfectly competitive market are price;takers because;A.;they have a lot of;market power.;B.;they are unable to set a price that differs from the;market price without losing profit.;C.;they choose to set a;price that differs from the market price but do not lose profit.;D.;they choose to set a;price that differs from the market price in order to gain market share.;E.;in a perfectly;competitive market, price is dictated through various government agencies.;7.;If an industry has no barriers to entry, no product promotion;strategy, a standardized product type, and a very large number of firms;operating within it, the industry can be said to have;A.;a monopoly market;structure.;B.;perfect competition.;C.;differentiated;market.;D.;monopolistic;competition.;E.;an oligopoly market;structure.;8.;Monopoly is a market structure;A.;in which there is just one firm and entry by other;firms is not possible.;B.;in which consumers;have many places to buy the good.;C.;in which there are a;large number of close substitutes for the good.;D.;that is;characterized by ease of entry.;E.;that is;characterized by large expenditures on advertising.;9.;A(n) __________ may offer products that are either;differentiated or nondifferentiated.;A.;monopolistically;competitive firm;B.;price taker;C.;oligopolistic firm;D.;perfectly;competitive firm;E.;monopoly;10.;Regardless of market structure, firms maximize profits where;A.;P=MR;B.;P=MC;C.;MR=MC;D.;MC=AC;E.;TR=TC;Chapter 10 Quiz;1.;The model of perfect competition best applies to markets with;A.;a few firms selling;identical products.;B.;a few firms selling;differentiated products.;C.;many firms selling identical products.;D.;many firms selling;identical products.;E.;significant barriers;to entry and exit.;2.;Since computer chip manufacturers, agriculture, and scrap metal;processors are all industries that closely resemble perfect competition, the;producers within each of these industries are considered to be;A.;price takers.;B.;price makers.;C.;price searchers.;D.;price maximizers.;E.;price minimizers.;3.;If a perfectly competitive firm lowers its price;A.;it will be able to;gain more customers.;B.;its profit will;increase because demand is elastic.;C.;it will lose all of;its customers.;D.;its total revenue will decrease since it can already;sell as much as it produces at a higher price.;E.;All of the above.;4.;The demand curve of an individual firm in a perfectly;competitive market structure is always;A.;perfectly inelastic.;B.;elastic.;C.;unit elastic.;D.;perfectly elastic.;E.;inelastic.;5.;In the short run, a perfectly competitive firm maximizes profit;where;A.;marginal revenue;equals marginal cost.;B.;price equals;marginal cost.;C.;the short-run;average-total-cost curve reaches a minimum.;D.;price equals;marginal revenue;E.;Both a. and b.;6.;Economic profits are earned;A.;when price is less;than average fixed cost.;B.;when price exceeds average total cost.;C.;by perfectly;competitive firms in the long run.;D.;when marginal;revenue equals marginal cost.;E.;when price equals;average variable cost.;7.;In order to continue producing in the short run, a firm must;earn sufficient revenue to pay;A.;at least some of its;variable costs.;B.;all of its variable costs.;C.;all of its fixed;costs.;D.;its total costs.;E.;the owner a;reasonable profit.;8.;In the long run in a perfectly competitive market;A.;all firms can vary;all of their resources.;B.;firms will shut down;permanently if TR is less than TC.;C.;the number of firms;can vary.;D.;entry and exit of;firms can occur.;E.;All of the above.;9.;If economic profits exist in a perfectly competitive market;then;A.;firms will enter the;market in the short run.;B.;firms will enter the market in the long run.;C.;firms will exit the;market in the short run.;D.;firms will exit the;market in the long run.;E.;there will be no;change in the number of firms in the market.;10.;?Commoditization? occurs when;A.;firms spend too much;on advertising expenditures.;B.;firms devote more;resources to differentiating their products from rivals.;C.;the exit of firms;increases.;D.;as time goes on, a firm?s product begins to have more;and more substitutes and the product becomes increasingly standardized.;E.;the firm becomes a;commodity.;Chapter;11 Quiz;1.;Which of the following is an example of a;monopoly?;A.;Postal services in;most nations are run by the government.;B.;Cable television;service in most areas is provided by a single company.;C.;In most nations;money is printed by the central bank.;D.;Electricity is;delivered to your house by a single utility company.;E.;All of the above;2.;The reason that economies of scale can be a;barrier to entry is that;A.;the smaller the;production facility is, the lower the per-unit cost to produce is.;B.;the larger the;production facility is, the higher the per-unit cost to produce is.;C.;the larger the production facility is, the lower the;per-unit cost to produce is.;D.;small plants are;always more efficient than large plants.;E.;the lack of;exclusive ownership of essential resources.;3.;Marginal revenue is equal to;A.;average revenue;divided by quantity.;B.;total revenue;divided by quantity.;C.;the change in total revenue divided by the change in;quantity.;D.;the change in;average revenue divided by the change in quantity.;E.;the demand curve in;a monopolistic market.;4.;If a monopolist is producing at a level of;output at which marginal revenue equals marginal cost;A.;then the monopolist is maximizing profit.;B.;then the monopolist;is earning positive economic profit.;C.;then the monopolist;is charging a price equal to marginal cost.;D.;All of the above;E.;None of the above;5.;Suppose that a monopolist produces at a profit-maximizing;level of output at which the demand curve is just tangent to the;average-total-cost curve. In such a situation;A.;price is equal to;marginal cost.;B.;the firm is;producing at the minimum point of the average-total-cost curve.;C.;the firm is earning zero economic profits.;D.;the firm is earning;positive economic profits.;E.;the firm is earning;negative economic profits.;6.;The market supply in a monopoly is;A.;vertical.;B.;horizontal.;C.;downward sloping.;D.;the same as the monopoly firm?s supply.;E.;None of the above;7.;If a monopolist is producing at that output at;which price is less than average total cost, then the firm will;A.;have to shut down;permanently.;B.;incur an economic loss.;C.;earn both a positive;economic profit and a normal profit.;D.;earn only a normal;profit.;E.;earn a positive;economic profit.;8.;A price discriminating monopolist;A.;produces quality;products only.;B.;does not sell;products to minority groups.;C.;must have a very;large operation.;D.;sells the same product in different markets at;different prices.;E.;would not engage in;dumping.;9.;The monopoly market structure;A.;does not yield efficiency.;B.;is efficient in the;short run only.;C.;is efficient in the;long run only.;D.;is efficient in both;long and short runs.;E.;is inefficient;because price equals marginal cost in the long run.;10.;Which of the following is not characteristic;of a monopoly?;A.;It is a market;structure.;B.;A monopolist is the;sole supplier of a product.;C.;The monopolist?s;product has no close substitutes.;D.;To remain a;monopoly, there must be barriers to entry.;E.;Monopolists are price takers.


Paper#58020 | Written in 18-Jul-2015

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