ECON 312 Midterm Exam, 04 Sets

ECON 312
Midterm Exam 1

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) (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) Which
would not be considered as a capital resource of a business by an
economist?
6. (TCO 1) The
economy of Germany would best be classified as:
7. (TCO 1) Markets
in which firms sell their output of goods and services are called
8. (TCO 1) Laissez-faire
capitalism is characterized by
9. (TCO 1) Which
is not one of the five
fundamental questions that an economy must deal with?
10. (TCO 1) The
major “success indicator” for business managers in command economies
like the Soviet Union and China in the past was
11. (TCO 2) An
increase in demand means that
12. (TCO 2) At the
point where the demand and supply curves intersect
13. (TCO 2) Black
markets are associated with
14. (TCO 2)A headline
reads “Lumber Prices Up Sharply.” In a competitive market, this
situation would lead to a(n)
15. (TCO 2) For
most products, purchases tend to fall with decreases in buyers’ incomes.
Such products are known as
16. (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
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
demand for Cheerios cereal is more price-elastic than the demand for cereals as
a whole. This is best explained by the fact that
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) 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
22. (TCO 3) Economic
profits are equal to
23. (TCO 3)The main
difference between the short run and the long run is that
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?

ECON 312
Midterm Exam 2

1. (TCO 3) Which
market model assumes the least number of firms in an industry?
2. (TCO 3) Local
electric or gas utility companies mostly operate in which market model?
3. (TCO 3) The
fast-food restaurants would be an example 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) 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
6. (TCO 3) A firm
should always continue to operate at a loss in the short run if
7. (TCO 3) The
short-run supply curve for a competitive firm is the
8. (TCO 3) One
feature of pure monopoly is that the monopolist is
9. (TCO 3) Barriers
to entry
10. (TCO 3) The
demand curve confronting a non discriminating, pure monopolist is
11. (TCO 3) Which
is the best example of price discrimination?
12. (TCO 3) Monopolistic
competition is characterized by firms
13. (TCO 3) Assume
that in a monopolistically competitive industry, firms are earning economic
profit. This situation 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) Money
is not an economic resource because
18. (TCO 1) Refer
to the diagram which is based on the Circular Flow Model in Chapter 2.
Arrows (3) and (4) represent
19. (TCO 2) Refer
to the diagram. A decrease in demand 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
21. (TCO 2) Which
type of goods is most adversely affected by recessions?
22. (TCO 3) The
following cost data are for a firm in the short run:…..What is the …..?
23. (TCO 1) Refer
to the diagram. Points A, B, C, D, and E show
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.) 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?
26. (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 demand determinant.

ECON 312 Midterm
Exam 3
1.(TCO 3) Mutual
interdependence would tend to limit control over price in which market model?
2. (TCO 3) Under which market model are the conditions of entry into the market
easiest?
3.(TCO 3) The
production of agricultural products such as wheat or corn would best be
described by which market model?
4.(TCO 3) The demand
curve faced by a purely competitive firm
5.(TCO 3) A
profit-maximizing firm in the short run will expand output
6.(TCO 3) A firm
should increase the quantity of output as long as its
7.(TCO 3) The
short-run supply curve for a competitive firm is the
8.(TCO 3) The classic
example of a private, unregulated monopoly is
9.(TCO 3) Barriers to
entry
10.(TCO 3) The demand
curve confronting a nondiscriminating, pure monopolist is
11.(TCO 3) Which is
the best example of price discrimination?
12.(TCO 3) In which
industry is monopolistic competition most likely to be found?
13.(TCO 3) Assume that
in a monopolistically competitive industry, firms are earning economic profit.
This situation will
14.(TCO 3) A unique
feature of an oligopolistic industry is
15.(TCO 3) A low
concentration ratio means that
16.(TCO 3) In which
set of market models are there the most significant barriers to entry?
17.(TCO 1) The four
factors of production are
18.(TCO 1) Refer to
the diagram below which is based on the Circular Flow Model in Chapter 2.
Arrows (1) and (2) represent
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. The supply of seats
for the game
21.(TCO 2) Which type
of goods is most adversely affected by recessions?
22.(TCO 3) The
following cost data are for a firm in the short run:
23.(TCO 1) Refer to
the diagram. Points A, B, C, D, and E show
24.(TCO 3) Assume that
the owners of the only gambling casino in Wisconsin spend large sums of money
lobbying state government officials to protect their gambling monopoly.
Economists refer to these expenditures as
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 iPods.