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ECO 365 : ECO 365 Final Exam Questions & Answers by Studentwhiz

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Title: ECO 365 : ECO 365 Final Exam Questions & Answers by Studentwhiz


1
ECO 365 Final Exam
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2
  • 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 by
  • Economies of scope
  • Diseconomies of scale
  • Diminishing marginal productivity
  • Economies of scale
  • Complete Answers here- eco 365
    final exam answers
  • .

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3
  • 3) Suppose that college tuition is higher this
    year than last and that more students are
    enrolled in college this year than last year.
    Based on this information, we can best conclude
    that
  • despite the increase in price, quantity demanded
    rose due to some other factors changing.
  • the demand for a college education is positively
    sloped.
  • the law of demand is invalid.
  • this situation has nothing to do with the law of
    demand.
  • 4) A monopoly firm is different from a perfectly
    competitive firm in that
  • A monopolists demand curve is perfectly
    inelastic whereas a perfectly competitive firms
    demand curve is perfectly elastic.
  • A competitive firm has a u-shaped average cost
    curve whereas a monopolist does not.
  • A monopolist can influence market price whereas a
    perfectly competitive firm cannot.
  • There are many substitutes for a monopolists
    product whereas there are no substitutes for a
    competitive firms product.

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4
  • 5) The best example of positive externality is
  • Alcoholic beverages
  • Pollution
  • Education
  • Roller coaster rides
  • 6) 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
  • 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.

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5
  • 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.
  • 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
    doesnt care. Alexs music playing is an example
    of
  • Pareto externality
  • Positive externality
  • Negative externality
  • Normative externality
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    questions

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6
  • 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.
  • 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 firms goal is to maximize profit, it
    should
  • Produce more widgets
  • Produce fewer widgets
  • Continue producing 500 widgets
  • Shut down

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7
  • 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.
  • 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 less than
    infinity.
  • Demand elasticity for airline tickets is greater
    than zero in absolute value.
  • Demand for airline tickets is perfectly
    inelastic.
  • Quiz Answers just a click away- eco 365 final
    exam 2015

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8
  • 14).In 2011, the Department of Justice sued ATT
    to block its merger with the cell phone service
    provider T-Mobile. To defend itself against the
    charge, ATT argued that the
  • Combined company could raise prices, allowing it
    to survive in a rapidly changing market.
  • Government had no authority to block mergers in
    the telephone industry.
  • Government had guaranteed it exclusive control of
    cell phone service.
  • Merger would improve and expand cellular service
    to consumers.
  • 15) The law of diminishing marginal productivity
    implies that the marginal product of a variable
    input
  • Never declines
  • Always declines
  • Is constant
  • Eventually declines
  • 16) Suppose OPEC announces it will increase
    production. Using supply and demand analysis to
    predict the effect of increased production on
    equilibrium price and quantity, the first step is
    to show the
  • supply curve shifting to the right.
  • demand curve shifting to the left.
  • demand curve shifting to the right.
  • supply curve shifting to the left.

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9
  • 17) Many call centers that provide telephone
    customer services for U.S. companies have been
    established in India, but few or none have been
    established in China. Why?
  • China is at a more advanced stage of economic
    development than India.
  • China lacks the political infrastructure to
    support call centers.
  • Indian labor costs are equal to Chinese labor
    costs.
  • Chinese labor lacks the specific language skills
    needed to make call centers profitable in China.
  • 18) Suppose people freely choose to spend 40
    percent of their income on health care, but then
    the government decides to tax 40 percent of that
    persons income to provide the same level of
    coverage as before. What can be said about
    deadweight loss in each case?
  • There is no difference because the total spending
    remains the same and the health care purchased
    remains the same.
  • Taxing income results in less deadweight loss
    because government knows better what health care
    coverage is good for society.
  • Taxing income results in deadweight loss, and
    purchasing health care on ones own doesnt
    result in deadweight loss.
  • There is no difference between goods that are
    purchased in the market in either case.

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10
  • 19) At one time, sea lions were depleting the
    stock of steelhead trout. One idea to scare sea
    lions away from the Washington coast was to
    launch fake killer whales, which are predators of
    sea lions. The cost of making the first whale is
    16,000 (5,000 for materials and 11,000 for the
    mold). The mold can be reused to make additional
    whales, and so additional whales cost 5,000
    each. Based on these numbers, the production of
    fake killer whales exhibits
  • Diminishing marginal product
  • Decreasing returns to scale
  • Constant returns to scale
  • Increasing returns to scale
  • 20)There are many restaurants in the city of
    Raleigh, each one offering food and services that
    differ from those of its competitors. There is
    also free entry of sellers into the market, and
    each seller serves a very small fraction of the
    total number of meals served each day. The
    restaurant industry in Raleigh is best
    characterized as
  • Perfectly competitive.
  • Monopolistically competitive.
  • A pure monopoly.
  • An oligopoly.

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11
  • 21) Suppose foreign shrimp prices drop by 32
    percent and importers gain a 90 percent market
    share. From this information, what would
    economists strongly suspect about this industry?
  • Foreigners have a comparative advantage in
    shrimping.
  • The large sales of foreigners indicate they are
    better strategic business bargainers than
    Americans are.
  • Americans have a comparative advantage in
    shrimping.
  • Foreign sellers probably are colluding on price
    to maximize profits.
  • 22) For a monopolist, the price of a product
  • Is less than the marginal revenue.
  • Exceeds the marginal revenue.
  • Equals the marginal cost.
  • Equals the marginal revenue.
  • Want help? Click to download- eco 365 final exam
    octotutor

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12
  • 23) When Ross Perot ran for president as a third
    party candidate in 1992, he argued that free
    trade with Mexico would result in massive job
    losses in the United States because Mexican wages
    were so low. Which of the following is the best
    explanation of why few economists agreed with
    Perot?
  • Although economics predicted that unemployment
    would rise, the increased profits of corporations
    would raise stock prices enough to compensate for
    the lost jobs.
  • Economists did not believe any jobs would be lost
    in the United States.
  • Although economists believed that in some areas
    the United States would lose jobs, they expected
    the United States would gain jobs in other areas.
  • Economics believed that the U.S. unemployment
    would rise.
  • 24) Mr. Woodwards cabinet shop is experiencing
    rapid growth in sales. As sales have increased,
    Mr. Woodward has found it necessary to hire more
    workers. However, he has observed that doubling
    the number of workers has less than doubled his
    output. What is the likely explanation?
  • The law of demand
  • The law of diminishing marginal productivity
  • The law of supply
  • The law of diminishing marginal utility

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13
  • 25) Price elasticity of demand is the
  • Change in the quantity of a good demanded divided
    by the change in the price of that good.
  • Percentage change in price of that good divided
    by the percentage change in the quantity of that
    good demanded.
  • Percentage change in quantity of a good demanded
    divided by the percentage change in the price of
    that good.
  • Change in the price of a good divided by the
    change in the quantity of that good demanded.
  • 26) Which of the following statements is true
    about a downward-sloping demand curve that is a
    straight line?
  • The slope remains the same, but elasticity falls
    as you move down the demand curve.
  • The slope remains the same, but elasticity rises
    as you move down the demand curve.
  • The slope and the elasticity fall as you move
    down the demand curve.
  • The slope and elasticity are the same at all
    points.
  • Quiz Answers just a click away- eco 365 final
    exam answers 2016

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14
  • 27) Strategic decision making is most important
    in
  • Monopolistically competitive markets.
  • Monopolistic markets.
  • Oligopolistic markets.
  • Competitive markets.
  • 28) Cartels are organizations that
  • Encourage price wars.
  • Keep markets contestable.
  • Use predatory pricing to monopolize industries.
  • Coordinate the output and pricing decisions of a
    group of firms.

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15
  • 29) Microeconomics and macroeconomics are
  • Interrelated because what happens in the economy
    as a whole is based on individual decisions.
  • Interrelated because both are often taught by the
    same instructors.
  • Not related because they are taught separately.
  • Virtually identical, though one is much more
    difficult than the other.
  • 30) Microeconomics is the study of
  • a firm's pricing policies
  • inflation
  • unemployment
  • business cycle
  • Download Complete Answers -ECO 365 Final Exam

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