econ 115 final fall 2011 - compiler press 115...11) for the single-price monopoly shown in figure...

Econ 115 Final Fall 2011MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question.

1) Statements about ʺwhat ought to beʺ are calledA) hypotheses.B) positive statements.C) normative statements.D) scientific statements.E) economic statements.

1)

2) Which one of the following does not occur in perfect competition?A) There are significant restrictions on entry into the market.B) There are many buyers.C) Sellers and buyers are well informed about prices.D) Established firms have no advantage over new ones.E) No single firm can exert a significant influence on the market price of the good.

2)

3) In a perfect competitive market, the market demand curve is illustrated byA) a downward-sloping curve.B) a curve that is bowed towards the origin.C) a line that is vertical at the market output.D) an upward-sloping curve.E) a line that is horizontal at the market price.

3)

Use the figure below to answer the following questions.

Figure 12.1.1

4) Refer to Figure 12.1.1. Curve A represents the firmʹsA) total revenue curve.B) average fixed cost curve.C) marginal revenue curve.D) total fixed cost curve.E) average variable cost curve.

4)

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5) Refer to Figure 12.1.1. A is a straight line because the firmA) has constant marginal cost.B) is a price taker.C) has perfect information.D) wants to maximize profits.E) faces constant returns to scale.

5)

6) If a firm faces a perfectly elastic demand for its product, thenA) it will want to raise its price to increase total revenue.B) it will always make zero economic profit.C) it is not a price taker.D) it will want to lower its price to increase sales.E) its marginal revenue curve is horizontal at the market price.

6)

7) The slope of a perfectly competitive firmʹs demand curve isA) 1.B) zero.C) negative.D) greater than 1.E) infinity.

7)

8) Complete the following sentence. Marginal revenue isA) economic profit divided by the quantity sold.B) the change in total revenue that results from a one-unit increase in the quantity sold.C) the change in economic profit that results from a one-unit increase in the quantity sold.D) total revenue minus total cost.E) the change in total quantity that results from a one-unit increase in the price of the good.

8)

9) The maximum loss a firm will experience in the short run equalsA) its total variable cost.B) its marginal cost.C) zero.D) its total fixed cost.E) its total cost.

9)

10) If a profit-maximizing monopoly is producing an output at which marginal cost exceedsmarginal revenue, itA) should raise price and decrease output.B) is incurring an economic loss.C) is maximizing profit.D) should lower price and decrease output.E) should lower price and increase output.

10)

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Figure 13.2.2

11) For the single-price monopoly shown in Figure 13.2.2, when profit is maximized, quantity isA) 5 and price is $4.B) 4 and price is $4.C) 3 and price is $6.D) 3 and price is $3.E) 4 and price is $5.

11)

Use the figure below to answer the following question.

Figure 13.2.1

12) Refer to Figure 13.2.1. This single-price monopoly produces ________ units per day andcharges a price of $________ per unit.A) 40; 50 B) 20; 20 C) 20; 75 D) zero; 0 E) 20; 50

12)

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Figure 12.2.1

13) Refer to Figure 12.2.1, which shows a perfectly competitive firmʹs total revenue and total costcurves. Which one of the following statements is false?A) At an output less than Q1 units a day, the firm incurs an economic loss.B) At an output greater than Q3 units a day, the firm incurs an economic loss.C) At an output of Q1 units a day, the firm makes zero economic profit.D) At an output of Q2 units a day, the firm incurs an economic loss.E) Economic profit is the vertical distance between the total revenue curve and the total cost

curve.

13)

14) A cartel isA) an arrangement among firms to capture the regulator.B) usually a stable organization, with no threat from cheaters on the cartel arrangements.C) an arrangement to flood the market and eliminate competition.D) an arrangement to steal secret industrial processes from rival firms.E) an arrangement among firms to reduce output and raise prices.

14)

15) A monopolist under rate of return regulation has an incentive toA) maximize consumer surplus.B) produce more than the efficient quantity of output.C) maximize shareholder profitsD) pad costs.E) charge a price equal to marginal cost.

15)

16) A monopolistically competitive firm is able to influence the price of what it sells because ofA) product differentiation.B) the fact there are many buyers.C) economies of scale.D) inelastic demand.E) barriers to entry.

16)

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17) In monopolistic competition, firms compete on the basis ofA) price only.B) price, quality, and marketing.C) quality only.D) quality and marketing, but not price.E) marketing only.

17)

18) In monopolistic competitionA) the goods produced by each firm are identical.B) firms practice product differentiation.C) there are barriers to entry.D) firms do not have any control over the price of their products.E) a small number of firms compete.

18)

19) Which of the following goods is best described as being sold in a monopolistically competitivemarket?A) the local newspaperB) postage stampsC) wheatD) automobilesE) fast food

19)

20) One factor that distinguishes a monopoly from monopolistic competition is thatA) firms in monopolistic competition practice collusion.B) no barriers to entry exist in a monopoly.C) barriers to exit exist in monopolistic competition.D) close substitutes are available in monopolistic competition.E) firms are price-takers in monopolistic competition.

20)

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Figure 13.2.3

21) Refer to Figure 13.2.3. Assume this firm is a single-price monopoly. How many tickets doesthis monopolist sell to maximize economic profit?A) 30 tickets B) 100 tickets C) 60 tickets D) 20 tickets E) 50 tickets

21)

22) Why might only a few firms dominate an oligopolistic industry?A) Perfectly elastic demand makes small-scale operation economically inefficient.B) A natural or legal barrier to entry exists.C) It is due to the outcome of the prisonersʹ dilemma.D) Inelastic market demand leads to the domination of the industry by a few firms.E) Decreasing returns to scale may make small-scale firms more advantageous.

22)

23) The market structure in which natural or legal barriers prevent the entry of new firms and asmall number of firms compete isA) monopolistic competition.B) monopoly.C) duopoly.D) perfect competition.E) oligopoly.

23)

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Figure 15.2.1

24) Which one of the following statements about the sections of the kinked demand curve inFigure 15.2.1 is correct?A) The kink between sections reflects market imperfections.B) AB assumes other firms will not match a price increase, while BC assumes other firms

will match a price decrease.C) AB assumes other firms will match a price increase, while BC assumes other firms will

not match a price decrease.D) AB assumes no new firms will enter the industry, while BC assumes new firms will enter.E) AB assumes new firms will enter the industry, while BC assumes no new firms will enter.

24)

25) Which one the following industries is the best example of an oligopoly?A) the fast-food industryB) the clothing industryC) the restaurant industryD) the market for wheatE) the automobile industry

25)

26) According to the kinked demand curve theory of oligopoly, each firm believes that if it raisesits price,A) its profit will rise by the same percentage.B) the government will impose price controls.C) other firms will lower theirs.D) other firms will raise their prices by an identical amount.E) other firms will not raise theirs.

26)

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27) Monopolistic competition differs from monopoly because in monopolistic competitionA) firms are free to enter and exit.B) firms maximize profits.C) firms set marginal revenue equal to marginal cost to maximize profit.D) All of the above are differences between monopoly and monopolistically competitive

firms.E) None of the above are differences between monopoly and monopolistically competitive

firms.

27)

28) Which one of the following quotations best describes the kinked demand curve model ofoliogopoly?A) ʺConstruction prices in this town seem to be always set by Big Jimʹs Dandy Construction

Company.ʺB) ʺEvery time Sparrowʹs Donuts has a donut sale, so does Tim Hortonʹs.ʺC) ʺGas prices in this town always go up and down together.ʺD) All of the above.E) None of the above.

28)

29) Toronto has a large number of retail stores that sell clothes. Each store has its owncharacteristics which differ from the other stores. The clothing business in Toronto is anexample ofA) a duopoly.B) a monopoly.C) a monopolistically competitive market.D) an oligopoly.E) a perfectly competitive market.

29)

30) If a perfectly competitive firm in the short run is able to pay its variable costs and part, but notall, of its fixed costs, then it is operating in the range on its marginal cost curve that isanywhereA) below the shutdown point.B) between the shutdown and break-even points.C) above the break-even point.D) above the shutdown point.E) below the break-even point.

30)

31) If a perfectly competitive firm is producing in the short run at an output where price is lessthan average total cost, the firmA) will shut down.B) is still making a positive economic profit.C) is incurring an economic loss but will continue to operate as long as price is above

minimum average variable cost.D) is breaking even.E) is incurring an economic loss but will continue to operate as long as price is above

minimum average fixed cost.

31)

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32) Complete the following sentence. Economic modelsA) answer questions that arise from normative statements.B) describe some aspect of the economic world, but include only those features needed for

the purpose at hand.C) do not answer questions about the economic world.D) include most of the details of the economic world.E) were first developed in the 1970s.

32)

33) Which one of the following events shifts the demand curve for grape jelly to the right?A) an increase in the price of peanut butter, a complement of grape jellyB) a decrease in the price of grape jellyC) a decrease in the populationD) an increase in income if grape jelly is a normal goodE) a decrease in the price of strawberry preserves, a substitute for grape jelly

33)

34) An increase in the price of ground beefA) increases the demand for chicken, a substitute for ground beef.B) increases the quantity demanded of ground beef.C) increases the demand for hamburger buns, a complement of ground beef.D) decreases the quantity demanded of ground beef.E) both A and D.

34)

35) An increase in incomeA) decreases the supply of turnips.B) decreases the demand for turnips if turnips have a very low price.C) increases the demand for turnips if a turnip is an inferior good.D) increases the demand for turnips if a turnip is a normal good.E) increases the supply of turnips.

35)

36) A turnip is an inferior good ifA) turnips violate the law of demand.B) an increase in income increases the demand for turnips.C) an increase in income decreases the demand for turnips.D) turnips are a low quality good.E) an increase in the price of a turnip decreases the quantity of turnips that consumers want

to buy.

36)

37) Which one of the following illustrates an inelastic demand?A) A price elasticity of demand equal to infinity.B) A price elasticity of demand equal to 2.0.C) A price elasticity of demand equal to 1.0.D) A 10 percent rise in price leads to a 5 percent decrease in quantity demanded.E) A 10 percent rise in price leads to a 20 percent decrease in quantity demanded.

37)

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Figure 3.2.1

38) Which one of the following statements best characterizes point B in Figure 3.2.1?A) At a price of $0.50, consumers will be unwilling to buy any apples.B) At a price of $0.50, there will be an apple shortage.C) The most that consumers would be willing to pay for the 9,000th apple is $0.50.D) Producers would be unwilling to sell the 9,000th apple for less than $0.50.E) At point B, the market is in equilibrium.

38)

39) An indifference curve isA) the boundary between what a consumer can afford and what he cannot afford.B) the boundary between what can be produced and what cannot be produced.C) a line that shows combinations of goods among which a consumer is indifferent.D) a line with a positive slope.E) the boundary between normal goods and inferior goods.

39)

40) If we produce one more bottle of waterA) we incur a marginal cost.B) we cannot be acting efficiently.C) we must move away from market equilibrium.D) the marginal social benefit from bottled water increases.E) the price of a bottle of water must rise.

40)

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Figure 9.2.4

41) Refer to Figure 9.2.4. Rashid buys only books and albums. The figure shows his preferences.Rashidʹs indifference curves ________ display diminishing marginal rate of substitutionbecause ________.A) do; the magnitude of the slope of both indifference curves decreases as Rashid consumes

more albums and fewer booksB) do; Rashid is indifferent between consuming 6 albums and 2 books and consuming 2

albums and 3 booksC) do not; the magnitude of the slope of both indifference curves decreases as Rashid

consumes more albums and fewer booksD) do not; Rashid is indifferent between consuming 6 albums and 2 books and consuming 2

albums and 3 booksE) do; the price of an album decreases as Rashid increases the quantity he buys

41)

42) Marginal costA) is the minimum price a producer must receive to induce him to offer one more unit of a

good or service for sale.B) decreases as more of a good or service is produced.C) can be negative.D) is greater than price.E) is always less than price.

42)

43) The magnitude of the slope of an indifference curve isA) the marginal rate of substitution.B) the marginal propensity to consume.C) the marginal rate of transformation.D) the relative price of good Y.E) the marginal propensity to substitute.

43)

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44) Producer surplus isA) equal to the opportunity cost of production.B) the difference between the maximum price consumers are willing to pay and the

minimum price producers are willing to accept.C) the price received for a good minus its marginal cost, summed over the quantity sold.D) equal to the area under the supply curve.E) the total amount paid for the good.

44)

45) A price elasticity of demand of 2 means that a 10 percent increase in price will result in aA) 2 percent increase in quantity demanded.B) 20 percent decrease in quantity demanded.C) 2 percent decrease in quantity demanded.D) 5 percent decrease in quantity demanded.E) 20 percent increase in quantity demanded.

45)

46) Marginal cost is equal toA) total cost divided by output.B) the increase in total cost divided by the increase in output.C) the increase in total cost divided by the increase in labour input, given the amount of

capital.D) total variable cost minus total fixed cost.E) the increase in total cost divided by the increase in variable cost.

46)

47) If ATC is falling, then MC must beA) above ATC.B) rising.C) falling.D) below ATC.E) equal to ATC.

47)

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Figure 9.2.2

48) Figure 9.2.2 shows three indifference curves for Brenda. Which one of the following is not true?A) Brenda prefers consuming at point D to consuming at either point B or point C.B) Brenda prefers consuming at point D to consuming at point A.C) Brenda would be equally happy consuming at either point B or point C.D) Brenda prefers consuming at point B to consuming at point A.E) The marginal rate of substitution is higher at point C than at point B.

48)

49) Which of the following are correct? According to the law of diminishing returns,(1) marginal product eventually rises.(2) marginal product eventually falls.(3) marginal cost eventually rises.(4) marginal cost eventually falls.A) (1) and (3) B) (1) and (4) C) (2) and (3) D) (2) and (4) E) (4)

49)

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Figure 11.3.2

50) Refer to Figure 11.3.2, which illustrates the short-run average and marginal cost curves. Themarginal cost curve is curveA) A.B) B.C) C.D) D.E) none of the above.

50)

51) The average variable cost curve will shift upward ifA) the price of the variable input increases.B) the price of output increases.C) the price of the variable input decreases.D) there is a technological advance.E) there is an increase in fixed cost.

51)

52) At the best affordable point, what is the relationship between the indifference curve and thebudget line?A) The slope of the indifference curve exceeds the slope of the budget line.B) The budget line and the indifference curve are identical.C) The slope of the budget line exceeds the slope of the indifference curve.D) The slope of the indifference curve equals the slope of the budget line.E) None of the above.

52)

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Figure 11.2.1

53) Refer to Figure 11.2.1 which illustrates Taniaʹs total product curve. Which one of the followingstatements is false?A) All the points below the curve are attainable.B) All the points above the curve are unattainable.C) All the points on the curve are attainable.D) The cost of producing at point B equals the cost of producing at point C.E) All the points below the curve are inefficient.

53)

54) The law of diminishing marginal returns states:A) As the size of a firmʹs plant increases, average cost eventually decreases.B) As a firm uses more of a variable factor of production, its average cost eventually

decreases.C) As a firm uses more of a variable factor or production, total product eventually decreases.D) As the size of a plant increases, marginal product eventually decreases.E) As a firm uses more of a variable factor of production, with a given quantity of the fixed

factor of production, the marginal product of the variable factor eventually diminishes.

54)

55) A price ceiling set below the equilibrium price will result inA) excess demand.B) excess supply.C) an increase in supply.D) a decrease in demand.E) the equilibrium price.

55)

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56) Economies of scale are present whenA) the LRAC curve is horizontal.B) average total cost rises as input increases.C) the LRAC curve slopes downward.D) average total cost remains constant as input increases.E) total fixed cost increases.

56)

57) Suppose Honda can triple its production of Civics by tripling its production facility for thosecars. This indicates the presence ofA) the law of diminishing returns.B) constant returns to scale.C) minimum efficient scale.D) economies of scale.E) diseconomies of scale.

57)

58) If the price of a good is not affected by a tax, thenA) supply is perfectly elastic.B) the elasticity of supply is greater than elasticity of demand.C) demand is unit elastic.D) demand is perfectly elastic.E) supply is unit elastic.

58)

59) If the government imposes a maximum rent for housing that is above the equilibrium price,then you predict thatA) the demand curve for housing shifts rightward.B) the law will generate a shortage of housing.C) the law will create a surplus of housing.D) the law will have no effect in the market for housing.E) the supply curve for housing shifts leftward.

59)

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Figure 6.3.1

60) Refer to Figure 6.3.1 showing the market for frisbees before and after a tax is imposed. The taxon each frisbee isA) $0.40. B) $0.60. C) $5.60. D) $6.60. E) $1.00.

60)

61) A public good isA) nonrival and nonexcludable.B) produced by monopolies.C) rival and excludable.D) nonrival and excludable.E) rival and nonexcludable.

61)

62) An economyʹs marginal social benefit curve for a private good is obtained by summing theindividual marginalA) benefit curves horizontally.B) benefit curves vertically.C) cost curves horizontally.D) cost curves vertically.E) benefit curves diagonally.

62)

63) Governments provide public goods such as national defence becauseA) governments are more efficient than private firms at producing public goods.B) of external costs.C) people do not value national defence very highly.D) of the free-rider problem which results in underproduction by private firms.E) of the potential that private firms will make excess profit.

63)

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64) When a good is rival and excludable, it is aA) common resource.B) regulated good.C) public good.D) natural monopoly.E) private good.

64)

65) For a private good, the economyʹs marginal social benefit curve is the ________ sum of theindividual marginal benefit curves and for a public good, the economyʹs marginal socialbenefit curve is the ________ sum of the individual marginal benefit curves.A) horizontal and vertical; vertical and horizontalB) horizontal; verticalC) vertical; horizontalD) horizontal; horizontalE) vertical; vertical

65)

66) An example of common resource isA) the Ambassador Bridge which goes between Windsor Ontario and Detroit.B) air-traffic control.C) the Internet.D) fish in the ocean.E) national defence.

66)

67) Which one of the following goods is nonexcludable?A) a taxiB) the atmosphereC) an art museumD) a toll bridgeE) all of the above

67)

68) Suppose Brian Adams wants to perform a concert in the City Park in Corner BrookNewfoundland. The city officials argue that the only way the concert can be given permissionto be performed in the City Park is if it is free of charge. If Brian Adams agrees to performingfree of charge, then the concert isA) excludable.B) rival.C) a private good.D) rival and nonexcludable.E) nonexcludable.

68)

69) Public choice theory predicts thatA) governments make choices that achieve an efficient provision of public goods.B) votes are based on lobbyistsʹ viewpoints.C) votes are based on reality, not perceptions.D) voters are fully informed about the effects of policies.E) voters are rationally ignorant.

69)

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70) All of the following statements regarding rational ignorance are true exceptA) it allows special interest groups to exert political influence.B) it results when the cost of information exceeds the expected benefit of acquiring the

information.C) it leads to an efficient outcome.D) combined with special interest groups, it yields inefficiency in the provision of public

goods.E) none of the above.

70)

71) Minimum differentiation among the political parties suggests thatA) the parties will have few ideas in common on their platforms.B) the platforms of the parties will tend to have few, if any, new ideas.C) the platforms of the parties will tend to become similar as they try to appeal to a majority

of voters.D) the platforms of the parties will tend to become dissimilar as they try to appeal to a loyal

majority of voters.E) the parties will offer few ideas on minimizing the size and scope of government.

71)

72) One way to alleviate the tragedy of the commons is toA) allow all individuals to use the common resource free of charge.B) set a price of $1 per unit of the common resource because it is an affordable price.C) distribute common resources among those individuals who really need the resource free

of charge.D) make the resource private property.E) eliminate quotas for using the common resource.

72)

73) According to public choice theory, a voter will favour a candidate whose political program isA) favoured by the median voter.B) closest to efficiency.C) perceived by the voter to be in his self-interest.D) best for the majority of the people.E) all of the above.

73)

74) Rational ignorance suggests thatA) all voters will be ignorant on issues that are not of special interest to them.B) it is easier to aim at the median voter because it is a less costly strategy for the politicians.C) all voters are ignorant.D) low voter turnout is due to a lack of understanding of the importance of the political

platforms.E) all voters will pursue information about each issue before voting.

74)

75) The ʺtragedy of the commonsʺ refers toA) the absence of incentives to prevent the overuse and depletion of a commonly used

resource.B) the acceptance of deplorable working conditions by those who lack the human capital to

obtain a better job.C) the inability of lower income groups to achieve a higher level of education.D) the tendency for bureaucrats to maximize their budget.E) farmers who allow their livestock to overgraze their fields.

75)

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76) An externality is defined asA) an additional gain received by consumers from decisions made by the government.B) an additional cost imposed by the government on producers.C) the additional amount consumers have to pay to consume an additional amount of a

good or service.D) a cost or benefit that arises from production and falls on someone other than the

producer, or a cost or benefit that arises from consumption and falls on someone otherthan the consumer.

E) a marginal social cost.

76)

77) Which of the following achieves the efficient use of a common resource?A) property rights, quotas, and subsidiesB) quotas, individual transferable quotas, and copyrightsC) property rights, quotas, and individual transferable quotasD) property rights, individual transferable quotas, and subsidiesE) individual transferable quotas and copyrights

77)

78) A well-maintained water-front property that is enjoyed by other property owners is anexample ofA) a negative consumption externality.B) an inefficient allocation of resources.C) a negative production externality.D) a positive production externality.E) a positive consumption externality.

78)


Figure 16.2.1

79) Refer to Figure 16.2.1. The figure shows the private marginal cost curve, the social marginalcost curve and the market demand curve. If the market is unregulated, then the quantityproduced isA) Q2. B) too low. C) zero. D) Q1. E) Q3.

79)

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80) Common resources are overused becauseA) the social costs outweigh the private costs.B) the marginal private benefit will always exceed the marginal social cost.C) the marginal social benefit is not taken into consideration by producers.D) social costs are controlled by quotas.E) the marginal private benefit of operating a boat is the quantity of fish a boat can catch.

80)

81) Private goods areA) nonrival and excludable.B) nonrival and nonexcludable.C) rival and nonexcludable.D) rival and excludable.E) always produced in a non-regulated market.

81)


Figure 16.2.1

82) Refer to Figure 16.2.1. The figure shows the private marginal cost curve, the social marginalcost curve and the market demand curve. If the market is unregulated, then at the equilibriumoutput the marginal social cost of production isA) less than the marginal private cost of production.B) equal to the marginal benefit to consumers.C) equal to the marginal private cost of production.D) greater than the marginal benefit to consumers.E) less than the marginal benefit to consumers.

82)

83) In the equilibrium for a common resource with no government regulation,A) marginal social benefit equals marginal cost.B) marginal social benefit is greater than marginal private benefit.C) marginal social benefit is greater than marginal cost.D) marginal social benefit equals marginal private benefit.E) marginal private benefit equals marginal cost.

83)

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84) An example of an activity that creates a positive consumption externality isA) logging, which pollutes rivers.B) a noisy party.C) a flu vaccination.D) smoking, which harms the health of a bystander.E) locating beehives next to an orange orchard.

84)

85) Effective strategies for addressing the problem of negative externalities includeA) closing down a polluting industry.B) imposing recycling laws.C) taxing the profit of polluting companies at twice the rate of non-polluting companies.D) stressing the use of renewable resources.E) imposing taxes on the activity that generates the pollution.

85)


Figure 16.2.3

86) Refer to Figure 16.2.3. The unregulated outcome in the paper market isA) a quantity of 50 tonnes and a price of $12 a tonneB) a quantity of 50 tonnes and a price of $14 a tonneC) a quantity of 40 tonnes and a price of $13 a tonneD) a quantity of 40 tonnes and a price of $11 a tonneE) a quantity of 60 tonnes and a price of $13 a tonne

86)

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Figure 16.2.2

87) Refer to Figure 16.2.2. This figure shows the demand curve, the marginal private cost curveand the marginal social cost curve of good A. Production of the 6th unit of output generates amarginal externalA) benefit of $6.B) benefit of $3.C) cost of $6.D) cost of $1.50.E) cost of $3.

87)

88) When the production of a good has an external cost, theA) marginal social benefit curve lies above the marginal private benefit curve.B) equilibrium quantity in an unregulated, competitive market has a marginal social cost

less than the marginal social benefit.C) marginal social cost curve lies below the marginal private cost curve.D) equilibrium quantity in an unregulated, competitive market has a marginal social cost

greater than the marginal social benefit.E) none of the above.

88)

89) The time spent looking for someone with whom to do business is calledA) development time.B) market time.C) elasticity of time.D) search activity.E) opportunity time.

89)

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90) When the marginal social cost of the production of Good A is greater than the marginalprivate cost of the production of Good A, thenA) the government should levy a tax on the production of Good A that is equal to the

horizontal distance between the two marginal cost curves.B) a competitive, unregulated market produces the efficient quantity of Good A.C) a competitive, unregulated market produces more than the efficient quantity of Good A.D) a competitive, unregulated market does not create a deadweight loss.E) a competitive, unregulated market produces less than the efficient quantity of Good A.

90)


Figure 6.1.1

91) Consider the market for housing illustrated in Figure 6.1.1 when the demand curve is D0 . Theequilibrium in an unregulated market isA) 1,750 rooms rented at $200 a month.B) 1,500 rooms rented at $200 a month.C) 1,500 rooms rented at $150 a month.D) 1,750 rooms rented at $175 a month.E) 2,000 rooms rented at $150 a month.

91)

92) One way to solve negative externality problems isA) establish and enforce patents and copyrights.B) issue marketable permits to polluting firms.C) subsidize the externalities.D) to organize a limited boycott of the products.E) eliminate transactions costs when property rights are not legally established.

92)

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Figure 6.2.1

93) Refer to Figure 6.2.1. What is the equilibrium wage rate per hour in an unregulated market?A) $2 B) $3 C) $5 D) $4 E) $30

93)

94) All of the following statements about legalizing and taxing drugs are true exceptA) an extremely high tax rate would be needed to cut the quantity of drugs bought to the

level prevailing with a prohibition.B) the quantity of a drug bought could be decreased if the drug was legalized and taxed.C) legalizing and taxing drugs would eliminate the black market in drugs.D) a sufficiently high tax could be imposed to decrease supply, raise the price, and achieve

the same decrease in the quantity bought as with a prohibition of drugs.E) tax revenue can be used to make law enforcement more effective.

94)

95) In an unregulated housing market with no rent ceiling, the rent is determined by theA) market.B) tenants only.C) landlords only.D) landlords, tenants, and the government.E) government only.

95)

96) Marginal cost equalsA) ΔTFC/ΔTC.B) Q/TVC.C) ΔTC/ΔQ.D) (TC-TVC)/Q.E) Q/TVC.

96)

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97) Which one of the following statements is false?A) An effective rent ceiling leads to a housing shortage.B) A minimum wage is a price ceiling in the labour market.C) An effective minimum wage sets the wage rate above the equilibrium wage rate.D) An effective rent ceiling sets the rent below the equilibrium rent.E) An effective minimum wage is inefficient.

97)


Figure 11.3.2

98) Refer to Figure 11.3.2, which illustrates the short-run average and marginal cost curves. Theaverage variable cost curve is curveA) A.B) B.C) C.D) D.E) none of the above.

98)

99) Perfect competition occurs in a market where there are many firms, each sellingA) a unique product.B) a similar product.C) a competitive product.D) an identical product.E) a capital-intensive product.

99)

100) Economic profit equalsA) total revenue minus total cost.B) total fixed cost plus total variable cost.C) marginal revenue minus marginal cost.D) total revenue minus total variable cost.E) total revenue minus marginal cost.

100)

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Answer KeyTestname: ECON 115 FINAL FALL 2011

1) C2) A3) A4) A5) B6) E7) B8) B9) D10) A11) C12) C13) D14) E15) D16) A17) B18) B19) E20) D21) A22) B23) E24) B25) E26) E27) A28) B29) C30) B31) C32) B33) D34) E35) D36) C37) D38) C39) C40) A41) A42) A43) A44) C45) B46) B47) D48) E

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49) C50) D51) A52) D53) D54) E55) A56) C57) B58) D59) D60) E61) A62) A63) D64) E65) B66) D67) B68) E69) E70) C71) C72) D73) C74) A75) A76) D77) C78) E79) E80) C81) D82) D83) E84) C85) E86) A87) E88) D89) D90) C91) C92) B93) D94) C95) A96) C

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97) B98) B99) D100) A

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econ 115 final fall 2011 - compiler press 115...11) for the single-price monopoly shown in figure...

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