ECO/365 Final Examination Study Guide
This study guide prepares you for the Final Examination you complete in the last week of the course. It contains practice questions, which are related to each week’s objectives. Highlight the correct response, and then refer to the answer key at the end of this Study Guide to check your answers.
Use each week’s questions as a self-test at the start of a new week to reflect on the previous week’s concepts. When you come across concepts that you are unfamiliar with, refer to the Student Guide for that particular week.
Week One: Fundamentals of Microeconomics
Objective: Differentiate between macroeconomics and microeconomics.
a. the study of individual choice and how that choice is influenced by economic forces b. the study of the pricing policies of firms and the purchasing decisions of households c. the study of aggregate economic relationships
d. an analysis of economic reality that proceeds from the parts to the whole
The invisible hand theorem comes from
d. political science
Objective: Analyze the effect of changes in supply and demand on the equilibrium price and quantity.
The law of demand states that the quantity demanded of a good is inversely related to the price of that good. Therefore, as the price of a good goes a. up, the quantity demanded goes up
b. up, the quantity demanded goes down
c. down, the quantity demanded goes down
d. down, the quantity demanded stays the same
Which of the following situations best demonstrates the law of demand? a. Moviegoers react to an increase in the price of a ticket by seeing fewer movies per year. b. Moviegoers see fewer movies per year due to an overall decrease in the quality of newly released motion pictures. c. A drought causes a decrease in the availability of pumpkins, resulting in fewer jack-o-lanterns displayed on Halloween. d. An increase in the number of people writing economics textbooks results in a decrease in average textbook prices.
Objective: Determine how elasticities affect pricing and purchasing decisions.
If quantity demanded does not change when the price changes, the demand a. is elastic
b. is inelastic
c. has unit elasticity
d. is perfectly inelastic
High gasoline prices hit commuters who live far from their jobs in areas with little public transportation hard. With few alternatives, they have to bear the higher cost. Based on this information, how would you characterize demand for gasoline by these commuters? a. Gasoline is a luxury good.
b. Gasoline is an inferior good.
c. Demand for gasoline is elastic.
d. Demand for gasoline is inelastic.
Week Two: Production and Cost Analysis
Objective: Describe the relationship between the number of inputs and the law of diminishing marginal productivity.
Mr. Woodard 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? a. The law of diminishing marginal utility
b. The law of diminishing marginal productivity
c. The law of supply
d. The law of demand
Marginal product eventually
a. declines because some inputs are fixed
b. increases because some inputs are fixed
c. declines because some inputs are variable
d. increases because some inputs are variable
Objective: Analyze the relationship between productivity and the cost of production.
Suppose you operate a factory that produces gadgets. Your current output is 1,000 gadgets. If your fixed cost is $10,000 and your total cost is $50,000, then the a. average total cost of production is $500
b. average variable cost of production is $40
c. average variable cost of production is $50
d. marginal cost of production is $40,000
The average variable cost curve is a mirror image of the a. total product curve
b. marginal product curve...
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