Grand ECN360/ECN 360 Midterm Exam (A+++++) 35 QUESTIONS

Grand ECN360/ECN 360 Midterm Exam (A+++++) 35 QUESTIONS

Question
1.  An inferior good has an income elasticity of demand that is
zero.
negative.
positive.
positive but less than 1.
2. In the above figure, when this monopolistically competitive firm produces its profit-maximizing output, it sets a per-unit price of
$10.
$13.
$8.
$11.
3. Refer to the above figure. The profit maximizing quantity for this firm is
Q2.
Q3.
Q1.
zero.
4. Refer to the above figure. Ajax and Greenco are oligopolists. Above you are given the payoff matrix for the two firms giving the payoff associated with different pricing strategies. What is the best strategy for Greenco if Ajax decides on charging a high price?
There is no best strategy.
High price
Low price
Not enough information is given to determine the best strategy.
5. In the above figure, the long-run cost curve between points A and B illustrates
diminishing marginal product.
diseconomies of scale.
economies of scale.
constant returns to scale.
6. The perfectly competitive firm cannot influence the market price because
its production is too small to affect the market.
it has market power.
its costs are too high.
it is a price maker.
7. In the above figure, what is the profit-maximizing output and price?
10, $8
12, $10
10, $10
8, $7
8. The demand curve faced by a monopolistically competitive firms is
horizontal.
vertical.
downward sloping.
unitary elastic.
9. In the above figure, the monopolistically competitive firm’s profit-maximizing output is
1,000 units.
300 units.
700 units.
900 units.
10. Which of the following will cause a shift in the demand curve of labor?
An increase or decrease in the productivity of labor.
An increase or decrease in the demand for the product labor produces.
A decline in the price of a complementary input .
all of the above
11. If the social costs of refining oil are greater than the private costs of oil refining, then
there is too much oil refining.
users of products that use refined oil are paying too much for the products.
the amount of oil refining needs to increase in order to bring social costs and private costs in line with each other.
the external costs of oil refining are greater than the social costs of oil refining.
12. Refer to the above figure. Which panel represents what happens in the U.S. job market in the short-run when U.S. firms substitute labor outside of the U.S. for labor inside the U.S.?
Panel A
Panel B
Panel C
Panel D
13. Refer to the above table. This firm operates in a perfectly competitive market in which the market price is $10 per unit. What is its profit-maximizing rate of production?
108 units
110 units
104 units
106 units
14. In the above table, the average physical product of the 3rd worker is
12.
3.
5.
4.
15. Industry X has four firms. The largest firm in Industry X has more than 90 percent of the market share. Industry Y also has four firms, but each of those four firms in Industry Y has 25 percent of the market share. The Herfindahl-Hirschman index will be
larger for Industry X than Industry Y, but the four-firm concentration will be the same.
larger for Industry Y than Industry X, but the four-firm concentration will be the same.
the same for both industries, but the four-firm concentration will be larger for Industry Y than Industry X.
the same for both industries, but the four-firm concentration will be larger for Industry X than Industry Y.
16. The perfectly competitive firm faces
a downward sloping demand curve.
constant marginal costs.
perfectly elastic demand.
a horizontal supply function.
17. If five firms of similar sizes join to form a cartel, then it is most likely that
all five firms will earn the same profits as before.
they will collectively produce less than before.
they will charge a common, lower market price.
all five firms as a group will have falling profits, but increased output.
18. If we add successive laborers to work a given amount of land on a wheat farm, eventually
the increases in wheat harvested will get larger and larger.
the increases in wheat harvested will get smaller and smaller.
the increases in wheat harvested will rise at a constant rate.
average total cost will fall to zero.
19. All of the following are characteristics of monopolistic competition EXCEPT
product differentiation.
many firms in the industry.
advertising.
a few firms dominate the industry.
20. For years, your neighbor insisted she had no desire to own a computer. Recently, however, she purchased one and says she did so because all her relatives have computers and she wants to exchange e-mail with them. Your neighbor’s behavior is an example of
a switching cost.
limited-pricing behavior.
the impact of negative market feedback.

a network effect.

Grand ECN360/ECN 360 Midterm Exam (A+++++) 35 QUESTIONS