ECON 545 MIDTERM EXAM LATEST VERSION

1. (TCO 1) As a consequence of the condition of scarcity

2. (TCO 1) The opportunity cost of constructing a new public highway is the

3. (TCO 1) Which situation would most likely cause a nation's production possibilities curve to shift inward?

4. (TCO 1) Which expression is another way of saying "marginal cost"?

5. (TCO 1) The individual who brings together economic resources and assumes the risk of business ventures in a capitalist economy is called the

6. (TCO 1) The Soviet Union economy of the 1980s would best be classified as

7. (TCO 1) The simple circular-flow model shows that workers, entrepreneurs, and the owners of land and capital offer their services through

8. (TCO 1) Laissez-faire capitalism is characterized by

9. (TCO 1) Consumer sovereignty and "dollar votes" guide the market system in dealing with which fundamental question?

10. (TCO 1) A major problem with state ownership of resources is that it does not

11. (TCO 2) An increase in product price will cause

12. (TCO 2) At the point where the demand and supply curves intersect

13. (TCO 2) Black markets are associated with

14. (TCO 2) An increase in demand for oil along with a simultaneous increase in supply of oil will

15. (TCO 2) For most products, purchases tend to fall with decreases in buyers' incomes. Such products are known as

16. (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

17. (TCO 2) Demand is said to be inelastic when

18. (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

19. (TCO 2) To economists the main differences between "the short run" and "the long run" are that

20. (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

21. (TCO 3) Cash expenditures a firm makes to pay for resources are called

22. (TCO 3) Suppose that a firm produces 200,000 units a year and sells them all for $10 each. The explicit costs of production are $1,500,000 and the implicit costs of production are $300,000. The firm earns an accounting profit of

23. (TCO 3) The long run is a period of time, or a time frame, in which

24. (TCO 3) Fixed costs are those costs which are

25. (TCO 3) Marginal cost can be defined as the

26. (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

1. (TCO 3) Which market model assumes the least number of firms in an industry?

2. (TCO 3) Under which market model are the conditions of entry into the market easiest?

3. (TCO 3) The fast-food restaurants would be an example of which market model?

4. (TCO 3) In pure competition, the demand for the product of a single firm is perfectly

5. (TCO 3) T-Shirt Enterprises is selling in a purely competitive market. It is producing 3,000 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

6. (TCO 3) A firm should increase the quantity of output as long as its

7. (TCO 3) In pure competition, price is determined where the industry

8. (TCO 3) One feature of pure monopoly is that the monopolist is

9. (TCO 3) Barriers to entry

10. (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

11. (TCO 3) Which case below best represents a case of price discrimination?

12. (TCO 3) Monopolistic competition is characterized by firms

13. (TCO 3) Which set of characteristics below best describes the basic features of monopolistic competition?

14. (TCO 3) In an oligopolistic market there are

15. (TCO 3) You are told that the four-firm concentration ratio in an industry is 20. Based on this information you can conclude that

16. (TCO 3) A cartel is

17. (TCO 1) Money is not an economic resource because

18. (TCO 1) Refer to the diagram which refers to the Circular Flow Model in Chapter 2. Arrows (1) and (3) are associated with

19. (TCO 2) Refer to the diagram. A decrease in demand is depicted by a

20. (TCO 2) Refer to the information and assume the stadium capacity is 5,000. If the Mudhens' management wanted a full house for the game, it would

21. (TCO 2) Which type of goods is most adversely affected by recessions?

22. (TCO 3) In the diagram Curves 1, 2, and 3 represent

23. (TCO 1) Refer to the diagram. Points A, B, C, D, and E show

24. (TCO 3) Any activity designed to transfer income or wealth to a particular individual or firm at society's expense is called

25. (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?

26. (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.