Final Exam

A  Income Elasticity of Demand is -1/2 (or -.5), and it’s an Inferior good.

B  Income Elasticity of Demand is +2, and it’s a Superior-Normal good.

C  Income Elasticity of Demand is -2, and it’s an Inferior good.

D  None of these is correct.

E  Income Elasticity of Demand is +1/2 (or +.5), and it’s a Superior-Normal good.

A  TRUE

B  FALSE

A  FALSE

B  TRUE

A  FALSE

B  TRUE

A  4 donuts

B  7 donuts

C  24 donuts

D  28 donuts

E  1 donut

F  1/7 donut

A  a single firm operates in the market and a few large firms dominate the market

B  firms in the market sell identical products and a single firm operates in the market

C  firms in the market sell slightly differentiated products and a large number of firms are in the market

D  All of these can be features of “Monopolistic Competition”

A  TRUE

B  FALSE

A  a light house, a highway and a winter jacket

B  a cheeseburger, a hair cut and a winter jacket

C  a light house, a highway and a fire station

D  a light house, a highway and a hair cut

A  The buyer is more self-interested. That’s why we call some buyers “stingy” or “cheap.”

B  The seller is more self-interested. That’s why we call some companies “greedy.”

C  In economics, they are viewed as equally self-interested. The seller will try to sell to the highest bidder. The buyer will try to buy from the lowest offer.

A  $15

B  $25

C  $40

D  $5

E  None of these is correct.

F  $95

A  related as Substitutes, such as brownies and cookies.

B  related as Complements, such as milk and cereal.

A  TRUE

B  FALSE

A  FALSE

B  TRUE

A  No “Gains from trade” are possible in this situation.

B  There can be “Gains from trade,” and a mutually agreeable Price will be decided somewhere between $120 and $150.

A  FALSE

B  TRUE

A  FALSE

B  TRUE

A  1

B  8

C  20

D  9

E  18

A  neither answer is correct.

B  very elastic!

C  very inelastic!

A  monopolistic competition

B  oligopoly

C  monopoly

D  monarchy

E  duopoly

A  All of these are correct.

B  $60

C  $120

D  $20

A  TRUE

B  FALSE

A  The truck fuel and the workers’ & drivers’ hours worked.

B  The moving vans (trucks) used.

A  is always equal to the equilibrium price.

B  sets a legal minimum on the Price at which a good can be sold.

C  sets a legal maximum on the Price at which a good can be sold.

A  FALSE

B  TRUE

A  inequality of incomes
decentralized decisions
private property
unstable jobs (risk of unemployment)
rapid innovations & discovery of new technologies

B  inequality of incomes
decentralized decisions
private property
unstable jobs (risk of unemployment)
freedom to be an entrepreneur and make profits.

C  public (state owned) property
guaranteed employment
centralized decisions
stagnant (little or no) economic growth
equality of income

D  inequality of incomes
decentralized decisions
private property
unstable jobs (risk of unemployment)

A  TRUE

B  FALSE

A  ideal weather allows abundant food crops to be grown for 10 years straight, companies start to use 3-D printers to custom manufacture products, art work and repair parts for their customers, and a new cow disease wipes out beef cattle herds around the world

B  solar storms disrupt electrical grids and shut down power to cities for 20 months, hurricanes destroy U.S. farms and bridges and a new cow disease wipes out beef cattle herds around the world!

C  ideal weather allows abundant food crops to be grown for 10 years straight, companies start to use 3-D printers to custom manufacture products, art work and repair parts for their customers, and botantists discover that a common fast-growing plant found in South America can be used to cure headaches in humans

A  change in buyers’ incomes, change in price of ‘complements’ to a good and change in buyers’ incomes

B  finding more resources, change in the price of inputs used for production and improved manufacturing technologies

C  change in price of ‘complements’ to a good, change in tastes or preferences for a good and change in buyers’ incomes

A  decreases the quantity demanded for that good.”

B  decreases the demand for that good.”

A  monopoly

B  duopoly

C  perfect competition

D  oligopoly

A  the buyer’s minimum amount he is willing to pay for a good.

B  the buyer’s maximum amount he is willing to pay for a good.

C  the buyer’s net gain or “consumer surplus” measured in dollars.

A  the seller’s net gain or “profit” from selling his good.

B  the maximum amount the seller needs to receive to sell his good.

C  the minimum amount the seller needs to receive when supplying his good.

A  increases the supply of that good.”

B  increases the quantity supplied of that good.”