Microeconomics – Final + Post Test w/o Graphs

The amount of money that a firm receives from the sale of it's output is called
a. total gross profit
b. total net profit
c. total revenue
d. net revenue

Profit is defines as
a. net revenue minus depreciation
b. total revenue minus total cost
c. average revenue minus average total cost
d. marginal revenue minus marginal cost

Explicit costs
a. require an outlay of money by the firm
b. include all of the firm's opportunity costs
c. include income that is forgone by the firm's owners
d. both b and c are correct

Accounting profit is equal to
a. marginal revenue minus marginal cost
b. total revenue minus the explicit cost of producing goods and services
c. total revenue minus the opportunity cost of producing goods and services
d. average revenue minus the average cost of producing the last unit of good or service

Average total cost is very high when a small amount of output is produced because
a. average variable cost is high
b. average fixed cost is high
c. marginal cost is high
d. marginal product is high

When doing research, Economists:
a. follow the scientific method: observation, theory and more observation
b. cannot use experiments, as they are often done in areas like Physics and Chemistry
c. have to use whatever data the world happens to give them
d. all of the above

In the long run,
a. inputs that were fixed in the short run remain fixed
b. inputs that were fixed in the short run become variable
c. inputs that were variable in the short run become fixed
d. variable inputs are rarely used

Which of the following statements is false?
a. In the long run, there are no fixed costs
b. Marginal cost is independent of fixed costs
c. Economies of scale is a short-run concept
d. Diminishing marginal product explains increasing marginal cost.

For a firm, the relationship between the quantity of inputs and quantity of output is call the
a. profit function
b. production function
c. total-cost function
d. quantity function

Refer to Figure 13-1. As the number of workers increases,
a. marginal product increases at an increase rate
b. marginal product increases, but at a decreasing rate
c. total output increases, but at a decreasing rate
d. total output decreases

Diminishing marginal product occurs when
a. the marginal product of an input decreases as the quantity of the input increases
b. total output decreases as the quantity of an input increases
c. total output increases as the quantity of an input increases
d. the marginal product of an input increases as the quantity of the input decreases

*Profit-maximizing firms produce extra units of output up to the point where
a. marginal revenue equals marginal cost
b. marginal revenue exceeds marginal cost
c. marginal revenue is less than marginal cost
d. any of the above

If marginal cost exceeds marginal revenue, the firm
a. is most likely to be at a profit-maximizing level of output
b. should increase the level of production to maximize its profit
c. must be experiencing losses
d. should reduce output to the point where MR=MC

When a perfectly competitive firm decides to shut down, it is most likely that
a. marginal cost is above average variable cost
b. marginal cost is above average total cost
c. price is below the firm's average variable cost
d. fixed costs exceed variable costs

Most products purchased in our daily lives are found in this market
a. monopoly
b. oligopoly
c. monopolistic competition
d. perfect competition

Which of the following statements is correct?
a. A competitive firm is a price maker and a monopoly is a price taker
b. A competitive firm is a price taker and a monopoly is a price maker
c. Both competitive firms and monopolies are price takers
d. Both competitive firms and monopolies are price makers

Which of the following statements is (are) true of a monopoly?
(i) A monopoly has the ability to set the price of its product at whatever level it desires.
(ii) A monopoly's total revenue will always increase when it increases the price of its product.
(iii) A monopoly can earn unlimited profits

a. (i) only
b. (ii) only
c. (i) and (ii)
d. (ii) and (iii)

*When the government is involved in regulating prices, this often leads to
a. unemployment, inflation and recession
b. deceptive advertising
c. price gouging
d. too many products in the market

Patent and copyright laws are major sources of
a. natural monopolies
b. government-created monopolies
c. resource monopolies
d. antitrust regulations

The fundamental cause of monopoly is
a. incompetent management in competitive firms
b. the zero-profit feature of long-run equilibrium in competitive markets
c. advertising
d. barriers to entry

A natural monopoly arises when
a. there are constant returns to scale over the relevant range of output
b. there are economies of scale over the relevant range of output
c. one firms owns a key natural resource
d. the government gives a single firm the exclusive right to produce a particular good or service

*Higher oil prices tend to
a. increase the prices of many different products
b. increase the prices of farm products only
c. increase prices in the airline industry only
d. increase the prices of public transport only

A firm that is the sole seller of a product without close substitutes is
a. perfectly competitive
b. monopolistically competitive
c. an oligopolist
d. a monopolist

In a market characterized by monopoly, the market demand curve is
a. upward sloping
b. horizontal
c. downward sloping
d. vertical

An oligopoly is a market in which
a. there are only a few sellers, each offering a product similar or identical to the products offered by other firms in the market.
b. firms are price takers.
c. the actions of one seller in the market have no impact on the other sellers' profits.
d. there are many price-taking firms, each offering a product similar or identical to the products offered by other firms in the market.

*Rival pricing strategies and collusion are typically found in a(n)
a. monopoly
b. oligopoly
c. monopolistic competition
d. perfect competition

In which of the following markets is economic profit driven to zero in the long run?
a. oligopoly
b. monopoly
c. perfect competition
d. cartels

The term "factor market" applies to the market for
a. labor
b. capital
c. land
d. all of the above are correct

*A price imposed by the government below an equilibrium price is called a
a. price ceiling
b. price floor
c. price carpet
d. price surplus

In which of the following market structures are there a large number of sellers?
(i) Monopolistic competition
(ii) Perfect competition
(iii)Oligopoly
a. (i) and (ii) only
b. (ii) and (iii) only
c. (ii) only
d. (i), (ii), and (iii)

Monopolistic competition differs from perfect competition because in monopolistically competitive markets
a. there are barriers to entry
b. all firms can eventually earn economic profits
c. each of the sellers offers a somewhat different product
d. strategic interactions between firms is vitally important

The Sherman Antitrust Act
a. was passed to encourage judicial leniency in the review of cooperative agreements
b. was concerned with self interest dominated Nash equilibrium in prisoners dilemma games
c. enhanced the ability to enforce cartel agreements
d. restricted the ability of competitors to engage in cooperative agreements

*Public goods are
a. excludable but not rival in consumption
b. rival in consumption but not excludable
c. excludable and rival in consumption
d. neither excludable nor rival in consumption

*In the United States, anti-trust laws might not allow:
a. black markets
b. underground economy
c. mergers of big and dominant companies like Coca-Cola and Pepsi-Co
d. too much competition in a specific market

*A few industry-dominating firms acting as a collective monopoly is known as
a. trading bloc
b. underground economy
c. a cartel
d. an industry

Fixed costs can be defined as costs that
a. vary inversely with production
b. vary in proportion with production
c. are incurred only when production is large enough
d. are incurred even if nothing is produced

From society's standpoint, cooperation among oligopolists is
a. desirable, because it leads to less conflict among firms and a wide variety of products for consumers
b. desirable, because it leads to an outcome closer to the competitive outcome than what would be observed in the absence of cooperation
c. undesirable, because it leads to output levels that are too low and prices that are too high
d. undesirable, because it leads to output levels that are too high and prices that are too high

Which government entity is charged with investigating and enforcing antitrust laws?
a. the U.S. Justice Department
b. the U.S. Commerce Department
c. the U.S. Treasury of Department
d. the Bureau of Alcohol, Tobacco, and Firearms

*Economic studies
a. how society manages its scarce resources
b. Social Welfare
c. ethical use of resources
d. protection of worker's rights

'Economic models
a. must completely describe every aspect of the economy in order to be useful
b. are simplified abstract representations of reality
c. avoid the use of assumptions wherever possible
d. are ideals that economics agents aspire to achieve

In hour one, a person can fix 4 flat tires or type 100 words. The opportunity cost of fixing ONE flat tire is
a. 25 words
b. 4 flat tires
c. 1 word
d. 50 words

*All other things being equal, a decrease in supply results in a(n)
a. increase in equilibrium price and a decrease in equilibrium quantity
b. increase in equilibrium quantity and a decrease in equilibrium price
c. decrease in equilibrium quantity and a decrease in equilibrium price
d. decrease in demand

In a free market, the market mechanism eliminates a shortage by
a. lowering prices which increases demand and decreases supply
b. increasing prices which decreases demand and increases supply
c. by increasing supply only
d. by increasing demand only