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Eco 365 Final Exam Assignment Uop Complete Course

2039 words - 9 pages

ECO 365 Final Exam Assignment

1). The DeBeers company is a profit-maximizing monopolist that exercises monopoly power in the distribution of diamonds. If the company earns positive economic profits this year, the price of diamonds will:
• Exceed the marginal cost of diamonds but equal to the average total cost of diamonds.
• Exceed both the marginal cost and the average total cost of diamonds.
• Be equal to the marginal cost of diamonds.
• Be equal to the average total cost of diamonds.

2). Using 100 workers and 10 machines, a firm can produce 10,000 units of output; using 250 workers and 25 machines, the firm produces 21,000 units of output. These facts are best explained ...view middle of the document...

The theory that quantity supplied and price are positively related, other things constant, is referred to as the law of:
• supply
• profit maximization
• opportunity cost
• demand

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7). A reduction in the supply of labor will cause wages to:
• Decrease and employment to decrease.
• Increase and employment to increase.
• Decrease and employment to increase.
• Increase and employment to decrease.

8). Other things held constant in a competitive labor market, if workers negotiate a contract in which the employer agrees to pay an hourly of $17.85 while the market equilibrium hour rate is $16.50, the:
• Quantity of workers demanded will exceed the quantity of workers supplied.
• Quantity of workers supplied will exceed the quantity of workers demanded.
• Supply of labor will decrease until the equilibrium wage rate is $17.85.
• Demand for labor will increase until the equilibrium wage rate is $17.85.

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9). Alex is playing his music at full volume in his dorm room. The other people living on his floor found this to be a nuisance, but Alex doesn’t care. Alex’s music playing is an example of:
• Pareto externality
• Positive externality
• Negative externality
• Normative externality

10). Oligopoly is probably the best market for technological change because:
• The typical oligopoly has the funds to carry out research and development and believe that its competitors are innovating, which motivates it to conduct research and development.
• The typical oligopoly lacks the funds to carry out research and development and therefore will use basic research from universities.
• Research and development occurs only if government subsidizes such activity, and government tends to subsidize oligopolies.
• The typical oligopoly keeps price very close to average total cost because it fears the entry of new rivals if its profits are excessively high.

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11). A perfectly competitive firm facing a price of $50 decides to produce 500 widgets. Its marginal cost of producing the last widget is $50. If the firm’s goal is to maximize profit, it should:
• Produce more widgets
• Produce fewer widgets
• Continue producing 500 widgets
• Shut down

12). Graphically, a change in price causes:
• the demand curve to shift.
• both supply and demand to shift.
• a movement along a given supply curve, not a shift.
• the supply curve to shift.

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13). In 1997, the federal government reinstated a 10 percent excise tax on airline tickets. The industry tried to pass on the full 10 percent ticket tax to consumers but was able to boost fares by only 4 percent. From this you can conclude that the:
• Supply of airline tickets is perfectly inelastic.
• Supply elasticity of airline tickets is...

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