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ECON B-251 Final Exam Study Guide with Complete Solutions
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ECON B-251 Final Exam Study Guide with Complete Solutions
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ECON B-251 Final Exam Study Guidewith Complete Solutions
A firm will expand the amount of output it produces as long as its (average total
revenue, marginal cost, marginal revenue) exceeds its (marginal revenue, average total
cost, average variable cost, marginal cost). - ANSWER-marginal revenue; marginal cost
A game in which any gains within the group are exactly offset by equal losses by the
end of the game is called a ____________ game. - ANSWER-zero-sum
A moral hazard is a situation where a person or business _____
A) don't have the same aligned goals
B) might alter their behavior because they won't have to deal with the negative
consequence
C) All of the answers are correct.
D) has a tendency to take risks they wouldn't normally take - ANSWER-C) All of the
answers are correct.
A movie shown on a pay-per-view cable station is an example of __________ good.
A) a nonexcludable and nonrival
B) a nonexcludable and rival
C) an excludable and rival
D) an excludable and nonrival - ANSWER-D) an excludable and nonrival
A single-price monopolist will find when it produces its profit-maximizing amount of
output that
A) marginal revenue equals marginal cost.
B) All of other options occur at the profit-maximizing output level.
C) price exceeds marginal cost.
D) price exceeds marginal revenue. - ANSWER-
A single-price monopoly charges the same price
A) even if the demand curve shifts.
B) even if its cost curves shift.
C) to all customers.
D) at all times and that price equals the firm's marginal revenue. - ANSWER-C) to all
customers.
A subsidy can eliminate the deadweight loss and lead to an efficient outcome if the
value of the subsidy equals the ________ of the good.
,A) marginal social cost
B) marginal private benefit
C) marginal external benefit
D) marginal social benefit - ANSWER-C) marginal external benefit
Aisha had an exam score of 70%. There is an extra credit assignment Aisha can
complete that will raise her exam score by 18%. Aisha has determined the extra credit
will take 4 hours of her time. Aisha will complete the assignment if she values the
______ more than ________
A) 88%; the 4 hours of her time
B) 18%; the 4 hours of her time
C) higher score of 88%; the 760 percentage points
D) 4 hours of her time; the 18% - ANSWER-B) 18%; the 4 hours of her time
Allocative efficiency occurs when
A) we cannot produce more of any one good without giving up some other good
B) marginal benefit is less than marginal cost
C) we cannot produce more of any good without giving up some other good that we
value more highly
D) opportunity costs are decreasing - ANSWER-C) we cannot produce more of any
good without giving up some other good we value more highly
An example of a variable resource in the short run is
A) a building.
B) land.
C) capital equipment.
D) an employee. - ANSWER-D) an employee
An implicit cost is an opportunity cost that
A) is measured by the amount of cash the firm actually pays out.
B) requires no actual payment of cash.
C) is actually part of the firm's normal profit.
D) is adjusted for the rate of inflation. - ANSWER-B) requires no actual payment of
cash.
An increase in the nation's human capital (education) will
A) shift the PPC outward
B) cause a movement along the PPC upward and leftward
C) cause a movement along the PPC downward and rightward
, D) move the nation from producing within the PPC to producing at a point closer to the
PPC - ANSWER-A) shift the PPC outward
An unregulated monopoly will
A) flood the market with goods to deter entry.
B) produce in the inelastic range of its demand curve.
C) produce in the elastic range of its demand curve.
D) produce only where marginal revenue is zero. - ANSWER-C) produce in the elastic
range of its demand curve.
As a method of resource allocation, market price
A) means everyone who wants a good gets one
B) is determined by a central authority
C) means those who are willing and able to pay get a particular good or service
D) is efficient and equitable (fair) - ANSWER-C) means those who are willing and able
to pay get a particular good or service
As the quantity of a good consumed increases, its marginal utility is positive and
__________ and its total utility ________
A) decreases; increases
B) increases; increases
C) decreases; decreases
D) increases; decreases - ANSWER-A) decreases; increases
As time passes after a change in the price, the supply of a good or service
A) initially becomes more elastic and then becomes less elastic
B) initially becomes less elastic and then becomes more elastic
C) becomes more elastic
D) becomes less elastic - ANSWER-C) becomes more elastic
At the current level of output, the marginal social cost of iPhones is $1,300 and the
marginal social benefit of iPhones is $1,500. Then
A) firms producing iPhones must be earning positive profit
B) more than the efficient quantity of iPhones is being produced
C) too few iPhones are being produced
D) there is excess supply for iPhones - ANSWER-C) too few iPhones are being
produced
At the profit maximizing level of output, firms shutdown when
A) price < average variable cost
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