ECON 312 Week 4 Midterm Exam SET 2

1. (TCO 1) As a student of economics, when you speak of scarcity, you are referring to the ability of society to

2. (TCO 1) The idea in economics that "there is no free lunch" means that

3. (TCO 1) The law of increasing opportunity costs indicates that

4. (TCO 1) A tradeoff exists between two economic goals, X and Y. This tradeoff means that

5. (TCO 1) The individual who brings together economic resources and assumes the risk of business ventures in a capitalist economy is called the

6. (TCO 1) The Soviet Union economy of the 1980s would best be classified as

7. (TCO 1) Markets in which firms sell their output of goods and services are called

8. (TCO 1) By free enterprise, we mean that

9. (TCO 1) Which is one of the five fundamental questions that need to be dealt with in any economic system?

10. (TCO 1) A major problem with state ownership of resources is that it does not

11. (TCO 2) The quantity demanded of a product increases as its price declines because the

12. (TCO 2) A surplus of a product will arise when price is

13. (TCO 2) Which of the following is a consequence of rent controls established to keep housing affordable for the poor?

14. (TCO 2) A headline reads "Lumber Prices Up Sharply." In a competitive market, this situation would lead to a(n)

15. (TCO 2) Two months ago, the Marbury Shirt company sold 200 shirts at $30 per shirt. Last month, the company raised its price to $35 per shirt and sold 300 shirts. Evidently the company experienced a(n)

16. (TCO 2) If the price-elasticity coefficient for a good is .75, the demand for that good is described as

17. (TCO 2) Total revenue falls as the price of a good is raised, if the demand for the good is

18. (TCO 2) The price elasticity of demand increases with the length of the period considered because

19. (TCO 2) To economists the main differences between "the short run" and "the long run" are that

20. (TCO 2) Airlines charge business travelers more than leisure travelers because there is a more

21. (TCO 3) Cash expenditures a firm makes to pay for resources are called

22. (TCO 3) If a firm's revenues just cover all its opportunity costs, then

23. (TCO 3) In the short run

24. (TCO 3) Fixed costs are those costs which are

25. (TCO 3) At an output of 20,000 units per year, a firm's variable costs are $80,000 and its average fixed costs are $3. The total costs per year for the firm are

26. (TCO 3) If the price of a fixed factor of production increases by 50 percent, what effect would this have on the marginal-cost schedule facing a firm?

1. (TCO 3) Which market model assumes the least number of firms in an industry?

2. (TCO 3) In which two market models would advertising be used most often?

3. (TCO 3) The steel and automobile industries would be examples of which market model?

4. (TCO 3) Sam owns a firm that produces tomatoes in a purely competitive market. The firm's demand curve is

5. (TCO 3) Let us suppose Harry's, a local supplier of chili and pizza, has the following revenue-and-cost structure

6. (TCO 3) A firm should increase the quantity of output as long as its

7. (TCO 3) In pure competition, each extra unit of output that a firm sells will yield a marginal revenue that is

8. (TCO 3) The classic example of a private, unregulated monopoly is

9. (TCO 3) Which of the following is a barrier to entry?

10. (TCO 3) One feature of pure monopoly is that the demand curve

11. (TCO 3) Which case below best represents a case of price discrimination?

12. (TCO 3) In which industry is monopolistic competition most likely to be found?

13. (TCO 3) If monopolistically competitive firms in an industry are making an economic profit, then new firms will enter the industry and the product demand facing existing firms will

14. (TCO 3) A unique feature of an oligopolistic industry is

15. (TCO 3) You are told that the four-firm concentration ratio in an industry is 20. Based on this information you can conclude that

16. (TCO 3) A major reason that firms form a cartel is to

17. (TCO 1) Which of the following is a land resource?

18. (TCO 1) Refer to the diagram which refers to the Circular Flow Model in Chapter 2. Arrows (1) and (3) are associated with

19. (TCO 2) Refer to the diagram. An increase in quantity demanded is depicted by a

20. (TCO 2) Refer to the information and assume the stadium capacity is 5,000. If the Mudhens' management charges $7 per ticket

Price per Ticket	Quantity Demanded
$13	1,000
11	2,000
9	3,000
7	4,000
5	5,000
3	6,000

21. (TCO 2) Which type of goods is most adversely affected by recessions?

22. (TCO 3) In the diagram Curves 1, 2, and 3 represent

23. (TCO 1) Refer to the diagram. The combination of computers and bicycles shown by Point G is

24. (TCO 3) Any activity designed to transfer income or wealth to a particular individual or firm at society's expense is called

25. (TCO 3) a.) A pure monopolist determines that at the current level of output the marginal cost of production is $2, average variable costs are $2.75, and average total costs are $2.95. The marginal revenue is $2.75. What would you recommend that the monopolist do to maximize profits? b.) Why might a business owner keep their business open but let it deteriorate, rather than shut it down? Will this profitability last?

26. (TCO 2) Evaluate how the following situations will affect the demand curve for iPod