Question Details

Week 3 - Individual Assignment - Due Day 7 (Monday)         Week 3 - Quiz
Student Name: ___
 Part A - True or False

1.	Scarcity exists because economies cannot produce enough to meet the perceived desires of all individuals. 


2. John is maximizing utility when consuming two goods, French fries and hot dogs. If the marginal utility from the last box of fries John consumed is 60 and the marginal utility of the last hot dog John consumed is 120, and hot dogs cost $1.00 apiece, a box of fries must cost 50 cents. 


2.	In the long run all inputs are variable; in the short run some inputs are fixed.


4.  When per-unit costs increase as output increases, there are economies of scale in production. 


5. A monopolist will always make a profit in the short run. 


6. The central element of the oligopoly model is that each firm produces a differentiated product. 


7. The more elastic the demand for the good labor produces, the less elastic the demand for labor. 


8. When a monopolistically competitive firm is in long-run equilibrium, average total cost is at its minimum. 

 

END OF TRUE/FALSE SECTION.

PLEASE CONTINUE TO THE MULTIPLE CHOICE SECTION.

REMEMBER TO RECORD ALL ANSWERS IN THE ANSWER SHEET ON THE LAST PAGE OF THIS EXAM.

Part B - Multiple Choice

1.  For a market to exist: 
a. private property rights must be allocated and defended by government.
b. government must guarantee equal treatment for all.
c. individuals must be concerned with the social good.
d. everyone must have identical wants and desires.

2.  Moore's Law states that the processing power of the latest computer chips doubles about every eighteen months. Assuming the graphs demonstrate the market for the latest computer chips, which of the following diagrams describe this situation? 

    
a. from D1 to D2.
b. from S1 to S2.
c. from S1 to S2.
d. from D1 to D2.

3.  An elasticity of supply of 2.7 means that: 
a. supply is inelastic.
b. quantity supplied changes 2.7 units for each 1% change in price.
c. quantity supplied changes 2.7% for each 1% change in price.
d. price changes by 2.7% for each 1% change in quantity supplied.



4. The foregone income that the owner of a business could have made by spending time working in another job is called: 
a. explicit cost.
b. marginal cost.
c. total cost.
d. opportunity cost.



5.  EBay.com is a vast auction site that has some similarities to a competitive market and some differences. Which of the following describes how eBay resembles a competitive market? 
a. It is easy to enter and easy to leave eBay.
b. Sellers sometimes do not describe the product accurately on eBay.
c. There is a great variety of different products sold on eBay.
d. On eBay the large sellers dominate the market.


6. The effect that explains why workers might supply fewer hours when their hourly wages increase is called the: 
a. income effect.
b. leisure effect.
c. substitution effect.
d. work effect.

7. A higher tax rate could result in lower tax revenues if: 
a. attempts to avoid or evade taxes increase.
b. individuals switch from leisure to labor.
c. fewer people qualify for government assistance.
d. the tax has no incentive effects.



 
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