ECON 312 Week 4 Midterm – Version 3(ECON 312 Principles of Economics – DeVry)Page 11.Question:(TCO 1) As a student of economics, when you speak of scarcity, you are referring to the ability of society to2.Question: (TCO 1) The idea in economics that “there is no free lunch” means that3.Question: (TCO 1)(TCO 1) The law of increasing opportunity costs indicates that4.Question: (TCO 1) A tradeoff exists between two economic goals, X and Y. This tradeoff means that5.Question: (TCO 1) Which would not be considered as a capital resource of a business by an economist?6.Question: (TCO 1) The economy of Germany would best be classified as:7.Question: (TCO 1) Markets in which firms sell their output of goods and services are called8.Question: (TCO 1) Laissez-faire capitalism is characterized by9.Question: (TCO 1) Which isnot one of the five fundamental questions that an economy must deal with?10.Question: (TCO 1) The major “success indicator” for business managers in command economies like the Soviet Union and China in the past was11.Question: (TCO 2) An increase in demand means that12.Question: (TCO 2) At the point where the demand and supply curves intersect13.Question: (TCO 2) Black markets are associated with14.Question: (TCO 2)A headline reads “Lumber Prices Up Sharply.” In a competitive market, this situation would lead to a(n)15.Question: (TCO 2) For most products, purchases tend to fall with decreases in buyers’ incomes. Such products are known as16.Question: (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 is17.Question: (TCO 2) Total revenue falls as the price of a good is raised, if the demand for the good is18.Question: (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 that19.Question: (TCO 2) To economists the main differences between “the short run” and “the long run” are that20.Question: (TCO 2) Airlines charge business travelers more than leisure travelers because there is a more21.Question: (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 is22.Question: (TCO 3) Economic profits are equal to23.Question: (TCO 3)The main difference between the short run and the long run is that24.Question: (TCO 3) Fixed costs are those costs which are25.Question: (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.Question: (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?Page 21.Question: (TCO 3) Which market model assumes the least number of firms in an industry?2.Question: (TCO 3) Local electric or gas utility companies mostly operate in which market model?3.Question: (TCO 3) The fast-food restaurants would be an example of which market model?4.Question: (TCO 3) Sam owns a firm that produces tomatoes in a purely competitive market. The firm’s demand curve is5.Question: (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 should6.Question: (TCO 3) A firm should always continue to operate at a loss in the short run if7.Question: (TCO 3) The short-run supply curve for a competitive firm is the8.Question: (TCO 3) One feature of pure monopoly is that the monopolist is9.Question: (TCO 3) Barriers to entry10.Question: (TCO 3) The demand curve confronting a nondiscriminating, pure monopolist is11.Question: (TCO 3) Which is the best example of price discrimination?12.Question: (TCO 3) Monopolistic competition is characterized by firms13.Question: (TCO 3) Assume that in a monopolistically competitive industry, firms are earning economic profit. This situation will14.Question: (TCO 3) A unique feature of an oligopolistic industry is15.Question: (TCO 3) You are told that the four-firm concentration ratio in an industry is 20. Based on this information you can conclude that16.Question: (TCO 3) A major reason that firms form a cartel is to17.Question: (TCO 1) Money is not an economic resource because18.Question: (TCO 1) Refer to the diagram which is based on the Circular Flow Model in Chapter 2. Arrows (3) and (4) represent19.Question: (TCO 2) Refer to the diagram. A decrease in demand is depicted by a20.Question: (TCO 2) Refer to the information and assume the stadium capacity is 5,000. If the Mudhens’ management charges $7 per ticket21.Question: (TCO 2) Which type of goods is most adversely affected by recessions?22.Question: (TCO 3) The following cost data are for a firm in the short run:…..What is the …..?23.Question: (TCO 1) Refer to the diagram. Points A, B, C, D, and E show24.Question: (TCO 3) Any activity designed to transfer income or wealth to a particular individual or firm at society’s expense is called25.Question: (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.Question: (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.
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