ECO/365– Principles of Microeconomics– Final Exam Study Guide 2013
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1) If average movie ticket prices rise by about 5 percent and attendance falls by about 2 percent, other things being equal, the elasticity of demand for movie tickets is about:
2) A basic difference between microeconomics and macroeconomics is that microeconomics
C. examines the choices made by individual participants in an economy, while macroeconomics considers the economy's overall performance
3) An economist who is studying the relationship between the money supply, interest rates, and the rate of inflation is engaged in B. macroeconomic research
4) After several years of slow economic growth, world demand for petroleum began to rise rapidly in the 1990s. Much of the increase in demand was met by additional supplies from sources outside the Organization of Petroleum Exporting Countries (OPEC). OPEC, during this time, was unable to restrain output among members in its effort to lift oil prices. What best describes these events?
C. The rise in demand shifted the demand for oil to the right. As price rose, the quantity of oil supplied rose.
5) Price elasticity of demand is the:
D. percentage change in quantity demanded of a good divided by the percentage change in the price of that good
6) The distinction between supply and the quantity supplied is best made by saying that
B. supply is represented graphically by a curve and the quantity supplied as a point on that curve associated with a particular price
7) When labor is the variable input, the average product equals the
D. quantity of output divided by the number of workers
8) The increase in output obtained by hiring an additional worker is known as
B. the marginal product
9) Which of the following is the best example of a long-run decision?
A. An automobile manufacturing company is considering whether or not to invest in robotic equipment to develop a more cost-effective production technique.
10) Other things being equal, when average productivity falls,
D. average variable cost must rise
11) According to economist Colin Camerer of the California Institute of Technology, many New York taxi drivers decide when to finish work by setting an income goal for themselves. If this is true, then on busy days when the effective hourly wage is higher, taxi drivers will
B. work fewer hours than they will on slower days
12) A firm's demand for labor is derived from the
D. demand for its output
13) Owen runs a delivery business and currently employs three drivers. He owns three vans that employees use to make deliveries, but he is considering hiring a fourth driver. If he hires a fourth driver, he can schedule breaks and lunch hours so all three vans are in constant use, allowing him to increase deliveries per day from 60 to 75. This will cost an additional $75 per day to hire the fourth driver. The marginal cost per delivery of increasing output beyond 60 deliveries per day
B. is $5
14) Expected economic profit per unit is equal to
C. the difference between expected average price and expected average total cost
15) If a firm in a perfectly competitive market experiences a technological breakthrough,
B. other firms would find out about it immediately
16) A significant difference between monopoly and perfect competition is that
C. the monopolist's demand curve is the industry demand curve, while the competitive firm's demand curve is perfectly elastic
17) A monopoly firm is different from a competitive firm in that
C. a monopolist can influence market price while a competitive firm cannot
18) The difference between a perfectly competitive firm and a monopolistically competitive firm is that a monopolistically competitive firm faces a
D. downward-sloping demand curve and price exceeds marginal cost in equilibrium
19) As long as marginal...
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