ECO 561 Week 1 Quiz 1

ECO 561 Week 1 Quiz 1

1. Revenue increase when ?
2. An increase in the price of an inelastic good

3. Price elasticity of Demand increases when

4. The purpose of a market in a market system is to

5. By specializing in the production of one good, a company is able to benefit from economies of scale which increases its revenue. Which of the following is an attribute of specialization?

6. The market system promotes progress by

7. Productive efficiency is achieved when

8. The market is said to be in equilibrium when

9. The market will move to a higher equilibrium price if

10. The intersection of supply and demand will be at a lower equilibrium price but a higher equilibrium quantity if

11. When a price ceiling occurs

12. Because the goals of firms, entrepreneurs, and workers have different incentives, which of the following principles applies?

ECO561 Week 2 Quiz

1. Purely competitive firms increase total revenue by

2. What are two ways for a competitive firm to determine the optimal level of production, that is, the level of production that will maximize profit or minimize losses?

3. Suppose that a firm determines that its marginal revenue is greater than its marginal cost, it would be better to

4. It is profitable for a firm to continue employing additional resources as long as

5. As additional units are produced, the marginal revenue product falls for all firms because marginal product decreases. For firms operating in industries that are not perfectly competitive, marginal revenue product also falls because

6. All things being equal, an increase in demand for a product,

7. Marginal cost can be defined as the addition to _____ of one more unit of output.

8. If a firm starts small and, over time, builds successively larger plant sizes or adds additional work space in an office, average total costs are most likely to

9. Demand for resources, including labor, depend on it

10. The primary difference between increasing- and decreasing-cost industries lies in

11. When adding labor or other factors of production, businesses may see their total product rise, but see their per-unit increase in return for each additional unit diminish. This phenomenon

12. In the short run, firms should shut down if

13. When you are considering the value of a resource in its next best use, you are considering its

14. Of the four major market structures–perfectly competitive, monopolistic competition, oligopoly, monopoly–reducing variable costs of production

ECO561 Week 3

1. A purely- or perfectly-competitive firm would be characterized by which of the following?

2. For a purely-competitive firm, price must be

3. What will excessive or economic profits induce for a firm in any industry structure?

4. A pure-monopoly firm’s demand curve is also the market demand curve. This kind of firm may successfully engage in price discrimination to increase its total profit if it

5. Oligopolies are characterized by a small number of firms where the top three firms hold the majority of the market. If in an oligopoly market, firm A is almost twice as big as firm B and firm C then

6. In a monopolistic competition industry, if one firm appreciably increased its price from the existing equilibrium price, which of the following outcomes would most likely ensue?

7. Which factor characterizes the competitive relationship between firms in an oligopoly market structure?

8. Unregulated (natural) monopolies maintain their status through a variety of measures. Whether any particular measure can effectively constrain new firms from entering the market depends on

9. Regulated monopolies are empowered by public authority for which specific reason?

10. Using a significantly greater economy of scale—with attendant lower, long-run average total costs—to restrict the market entry of new competitors

11. In technology-intensive oligopolies—characterized by dynamically evolving product design—restricting the entry of additional firms is

12. Whether the market structure is monopolistic or oligopolistic, a firm may increase consumer demand for its product as an overall portion of market share if

13. One difference between firms already established in a monopolistic competition industry and those attempting to enter it is that

14. An average firm in an industry characterized by a homogeneous product, relatively low barriers to entry, and a low concentration ratio

15. A monopolistic firm may operate in a relatively mature market with little likelihood for significant change in technology or process efficiencies. To maximize its profits, such a firm might

16. Production differentiation can effectively be achieved by

17. While mass retail industries have one or several dominant producers, smaller firms have a limited set of nonpricing options. The most feasible of these include

18. In monopolistic competition industries, effective product differentiation is illustrated by

19. Differentiation strategies vary in degree of effectiveness from one type of market structure to another. For firms other than perfect competition

20. If a firm’s industry devolved from a monopolistic competition into an oligopolistic structure, the firm would discover that

21. A firm can increase both profit and per-unit profit margin by lowering production costs. To make this a long-term outcome, the firm should

22. A firm’s cost-reduction strategies may span multiple stages, from acquisition of production input factors to product service and maintenance. When seeking to lower cost in the short term, firms should

23. Firms can shift their marginal cost curves to the right, resulting in higher outputs at the same or lower maximum-profit prices. This can be done by

ECO 561 Week 4 Quiz

1. Business cycles occur when output

2. Which of these statements best describes a complete individual business cycle?

3. During the business cycle, the period between the point at which output reaches a high and the point at which it reaches a low is called

4. Which of the following equals the market value of all final goods and services produced in an economy, stated in the prices of a specific base year

5. Imagine a country has a population of 210 million. Within the country there are 95 million people who are employed workers, 50 million people incapable of working, and 60 million people capable of working, but not actively looking. Based on this information, what is the unemployment rate?

6. The unemployment produced by fluctuations in economic activity is called

7. New college graduates are most likely to experience

8. The natural rate of unemployment is defined as the

9. The Consumer Price Index (CPI) is based on

10. Unanticipated inflation is a problem for society because it

ECO 561 Week 5 Quiz

1. The Classical Theory of Asset Prices assumes which of the following ideas?

2. Economists use two principle interest rates: nominal and real. The purpose of this distinction is to

3. During periods of increasing inflationary pressure, the Federal Reserve should

4. What is the increased moral hazard associated with the too big to fail (TBTF) bailouts of the largest of financial institutions?

5. The Federal Reserve’s primary tool for managing the money flow is

6. Which of the following is a major drawback of a flexible exchange rate?

7. The major advantage to a flexible exchange-rate policy is

8. _____________suggests that a country will engage in trade and export products that it can produce at a lower-opportunity cost than a competing nation.

9. Absolute advantage encourages a country to

10. The _____________________ explains that long-run trends in exchange rates are based on a predictable relationship between product price levels and exchange rates.

11. A business traveler to Germany who, upon deplaning in Berlin, uses an airport ATM to withdraw 100 Euros from her U.S. bank would receive which kind of exchange rate?

12. Suppose Nation A can produce 2 million pounds of sugar per week OR 1 million pounds of rice in a week and Nation B can produce 10 million pounds of sugar per week OR 3 million pounds of rice in a week. If this is a two-good, two nation model, what would Nation B’s best choice in regards to trade and specialization?

ECO 561 Week 6 Quiz

1. If the demand curve is QD = 100 – 10P and there is a $1 price increase, then the elasticity of demand at P = 2 is

2. If the absolute value of a demand elasticity is less than 1, then

3. If the cross-price elasticity is negative, then the two goods are

4. Under perfect competition, a firm maximizes its profit by setting

5. In a large city, a good, real-world example for perfect competition would be

6. A firm under monopolistic competition will earn