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ECO 365 Final exam (University of Phoenix) spring 2013




Question;ECO/365 Final Exam;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


Paper#58076 | Written in 18-Jul-2015

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