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UOP ECO 365 Final Exam Guide 24 .pdf



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ECO 365 Final Exam Guide 24/30

Check this A+ tutorial guideline at
http://www.eco365entirecourse.com/EC
O-365/ECO-365-Final-Exam-Guide
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. citizens
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


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