ECONS 312 MIDTERM SUMMER 2015

Question Question 1. Question : (TCO 1) As a consequence of the condition of scarcity Question 2. Question : (TCO 1) The opportunity cost of constructing a new public highway is the Question 3. Question : (TCO 1) Which situation would most likely cause a nation’s production possibilities curve to shift inward? Question 4. Question : (TCO 1) Which expression is another way of saying “marginal cost”? Question 5. Question : (TCO 1) The individual who brings together economic resources and assumes the risk of business ventures in a capitalist economy is called the Question 6. Question : (TCO 1) The Soviet Union economy of the 1980s would best be classified as Question 7. Question : (TCO 1) The simple circular-flow model shows that workers entrepreneurs and the owners of land and capital offer their services through Question 8. Question : (TCO 1) Laissez-faire capitalism is characterized by Question 9. Question : (TCO 1) Consumer sovereignty and “dollar votes” guide the market system in dealing with which fundamental question? Question 10. Question : (TCO 1) A major problem with state ownership of resources is that it does not Question 11. Question : (TCO 2) An increase in product price will cause: Question 12. Question : (TCO 2) At the point where the demand and supply curves intersect Question 13. Question : (TCO 2) Black markets are associated with Question 14. Question : (TCO 2) An increase in demand for oil along with a simultaneous increase in supply of oil will Question 15. Question : (TCO 2) For most products purchases tend to fall with decreases in buyers’ incomes. Such products are known as Question 16. 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 is Question 17. Question : (TCO 2) Demand is said to be inelastic when Question 18. 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 that Question 19. Question : (TCO 2) To economists the main differences between “the short run” and “the long run” are that Question 20. Question : (TCO 2) When universities announce a large tuition increase and follow it with an announcement that more financial aid will be available they are assuming that students who pay full tuition Question 21. Question : (TCO 3) Cash expenditures a firm makes to pay for resources are called Question 22. Question : (TCO 3) Suppose that a firm produces 200000 units a year and sells them all for $10 each. The explicit costs of production are $1500000 and the implicit costs of production are $300000. The firm earns an accounting profit of Question 23. Question : (TCO 3) The long run is a period of time or a time frame in which Question 24. Question : (TCO 3) Fixed costs are those costs which are Question 25. Question : (TCO 3) Marginal cost can be defined as the Question 26. Question : (TCO 3) A fast-food company spends millions of dollars to develop and promote a new hamburger on its menu only to find that consumers won’t buy it because they don’t like the taste. From an economic perspective the company should Question 1. Question : (TCO 3) Which market model assumes the least number of firms in an industry? Question 2. Question : (TCO 3) Under which market model are the conditions of entry into the market easiest? Question 3. Question : (TCO 3) The fast-food restaurants would be an example of which market model? Question 4. Question : (TCO 3) In pure competition the demand for the product of a single firm is perfectly Question 5. Question : (TCO 3) T-Shirt Enterprises is selling in a purely competitive market. It is producing 3000 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 should Question 6. Question : (TCO 3) A firm should increase the quantity of output as long as its Question 7. Question : (TCO 3) In pure competition price is determined where the industry Question 8. Question : (TCO 3) One feature of pure monopoly is that the monopolist is Question 9. Question : (TCO 3) Barriers to entry Question 10. Question : (TCO 3) The nondiscriminating pure monopolist must decrease price on all units of a product sold in order to sell more units. This explains why Question 11. Question : (TCO 3) Which case below best represents a case of price discrimination? Question 12. Question : (TCO 3) Monopolistic competition is characterized by firms Question 13. Question : (TCO 3) Which set of characteristics below best describes the basic features of monopolistic competition? Question 14. Question : (TCO 3) In an oligopolistic market there are Question 15. Question : (TCO 3) You are told that the four-firm concentration ratio in an industry is 20. Based on this information you can conclude that Question 16. Question : (TCO 3) A cartel is Question 17. Question : (TCO 1) Money is not an economic resource because Question 18. Question : (TCO 1) Refer to the diagram which refers to the Circular Flow Model in Chapter 2. Arrows (1) and (3) are associated with Question 19. Question : (TCO 2) Refer to the diagram. A decrease in demand is depicted by a Question 20. Question : (TCO 2) Refer to the information and assume the stadium capacity is 5000. If the Mudhens’ management wanted a full house for the game it would Price per Ticket Quantity Demanded $13 1000 11 2000 9 3000 7 4000 5 5000 3 6000 Question 21. Question : (TCO 2) Which type of goods is most adversely affected by recessions? Question 22. Question : (TCO 3) In the diagram Curves 1 2 and 3 represent Question 23. Question : (TCO 1) Refer to the diagram. Points A B C D and E show Question 24. Question : (TCO 3) Any activity designed to transfer income or wealth to a particular individual or firm at society’s expense is called Question 25. 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? Question 26. Question : (TCO 2) What effect should each of the following have upon the demand for portable music players in a competitive market? Explain your reasoning in each case. (a) the development of improved low-priced devices that compete with music players (b) an increase in population and incomes (c) a substantial increase in the number and quality of music for players (d) consumer expectations of substantial price increases in music players

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