ECON 312 Principles of Economics Week 4 Midterm Set 2 Devry

ECON 312 Principles of EconomicsMidterm Exam Set 2(TCO 1) As a student of economics, when you speak of scarcity, you are referring to the ability of society to(TCO 1) The idea in economics that “there is no free lunch” means that(TCO 1) (TCO 1) The law of increasing opportunity costs indicates that(TCO 1) A tradeoff exists between two economic goals, X and Y. This tradeoff means that(TCO 1) Which would not be considered as a capital resource of a business by an economist?(TCO 1) The economy of Germany would best be classified as:(TCO 1) Markets in which firms sell their output of goods and services are called(TCO 1) Laissez-faire capitalism is characterized by(TCO 1) Which is not one of the five fundamental questions that an economy must deal with?(TCO 1) The major “success indicator” for business managers in command economies like the Soviet Union and China in the past was(TCO 2) An increase in demand means that(TCO 2) At the point where the demand and supply curves intersect(TCO 2) Black markets are associated with(TCO 2) A headline reads “Lumber Prices Up Sharply.” In a competitive market, this situation would lead to a(n)(TCO 2) For most products, purchases tend to fall with decreases in buyers’ incomes. Such products are known as(TCO 2) When the price of a product is increased 10 percent, the quantity demanded decreases 15 percent. In this range of prices, demand for this product is(TCO 2) Total revenue falls as the price of a good is raised, if the demand for the good is(TCO 2) The demand for Cheerios cereal is more price-elastic than the demand for cereals as a whole. This is best explained by the fact that(TCO 2) To economists the main differences between “the short run” and “the long run” are that(TCO 2) Airlines charge business travelers more than leisure travelers because there is a more(TCO 3) Suppose that you could prepare your own tax return in 15 hours, or you could hire a tax specialist to prepare it for you in two hours. You value your time at $11 an hour. The tax specialist will charge you $55 an hour. The opportunity cost of preparing your own tax return is(TCO 3) Economic profits are equal to(TCO 3) The main difference between the short run and the long run is that(TCO 3) Fixed costs are those costs which are(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:(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?(TCO 3) Which market model assumes the least number of firms in an industry?(TCO 3) Local electric or gas utility companies mostly operate in which market model?(TCO 3) The fast-food restaurants would be an example of which market model?(TCO 3) Sam owns a firm that produces tomatoes in a purely competitive market. The firm’s demand curve is(TCO 3) T-Shirt Enterprises is selling in a purely competitive market. It is producing 3,000 units, selling them for $2 each. At this level of output, the average total cost is $2.50 and the average variable cost is $2.20. Based on these data, the firm should(TCO 3) A firm should always continue to operate at a loss in the short run if(TCO 3) The short-run supply curve for a competitive firm is the(TCO 3) One feature of pure monopoly is that the monopolist is(TCO 3) Barriers to entry(TCO 3) The demand curve confronting a nondiscriminating, pure monopolist is(TCO 3) Which is the best example of price discrimination?(TCO 3) Monopolistic competition is characterized by firms(TCO 3) Assume that in a monopolistically competitive industry, firms are earning economic profit. This situation will(TCO 3) A unique feature of an oligopolistic industry is(TCO 3) You are told that the four-firm concentration ratio in an industry is 20. Based on this information you can conclude that(TCO 3) A major reason that firms form a cartel is to(TCO 1) Money is not an economic resource because(TCO 1) Refer to the diagram which is based on the Circular Flow Model in Chapter 2. Arrows (3) and (4) represent(TCO 2) Refer to the diagram. A decrease in demand is depicted by a(TCO 2) Refer to the information and assume the stadium capacity is 5,000. If the Mudhens’ management charges $7 per ticket(TCO 2) Which type of goods is most adversely affected by recessions?(TCO 3) The following cost data are for a firm in the short run:…..What is the …..?(TCO 1) Refer to the diagram. Points A, B, C, D, and E show(TCO 3) Any activity designed to transfer income or wealth to a particular individual or firm at society’s expense is called(TCO 3) a.) Do you agree or disagree with the statement that: “A monopolist always charges the highest possible price.”? Explain. b.) Why can’t an individual firm raise its price by reducing output or lower its price to increase sales volume in a purely competitive market?(TCO 2) What effect should each of the following have on the demand for gasoline in a competitive market? State what happens to demand. Explain your reasoning in each case and relate it to a



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