C13 Midterm Exam SCORE 95 PERCENT

Question 1

5 / 5 points

As firms enter a perfectly competitive industry,

Question options:

	A)  the price falls and the existing firms' economic profits do not change.
	B)  the price falls and the existing firms' economic profits decrease.
	C)  the price falls and the existing firms' economic losses do not change.
	D)  the price rises and the existing firms' economic profits decrease.
Question 2		5 / 5 points

Although tickets to the Rams/Vikings NFC Championship game had a face value of roughly $50, numerous ticket holders willingly sold their tickets for $200 (and up). Consider $200 as the maximum price obtained for a ticket. Excluding other expenses, an economist would say the opportunity cost of attending the game was

Question options:

	A)  $50.
	B)  $150.
	C)  between $150 and $200.
	D)  $200.
	E)  more than $200.
Question 3		5 / 5 points

Suppose that you deciding between seeing a move and going to a concert on a particular Saturday evening. You are willing to pay $20 to see the movie and the movie ticket costs $5. You are willing to pay $80 for the concert and the concert ticket costs $50. The opportunity cost of going to the movie is:

Question options:

	A)  $5.
	B)  $30.
	C)  $35.
	D)  $65.
Question 4		5 / 5 points

Paul runs a shop that sells printers. Paul is a perfect competitor and can sell each printer for a price of $300. The marginal cost of selling one printer a day is $200; the marginal cost of selling a second printer is $250; and the marginal cost of selling a third printer is $350. To maximize his profit, Paul should sell

Question options:

	A)  two printers a day
	B)  more than three printers a day
	C)  three printers a day
	D)  one printer a day
Question 5		0 / 5 points

Suppose you play a round of golf costing $75. The golf takes four hours to play. If you were not playing golf you could be working and earning $40 per hour. The opportunity cost of your golf game is:

Question options:

	A)  $75.
	B)  $235.
	C)  $155.
	D)  $160.
Question 6		5 / 5 points

In the long run, a perfectly competitive firm can

Question options:

	A)  earn an economic profit, earn a normal profit, or incur an economic loss.
	B)  earn an economic profit.
	C)  incur an economic loss.
	D)  earn a normal profit.
Question 7		5 / 5 points

The term "opportunity cost" points out that:

Question options:

	A)  there may be such a thing as a free lunch.
	B)  executives do not always recognize opportunities for profit as quickly as they should.
	C)  any decision regarding the use of a resource involves a costly choice.
	D)  not all individuals will make the most of life's opportunities because some will fail to achieve their goals
Question 8		5 / 5 points

Which of the following is an implicit cost of going to college?

Question options:

	A)  Tuition
	B)  Cost of books and supplies
	C)  Room and board
	D)  Foregone wages
Question 9		5 / 5 points

Which of the following statements about opportunity costs is TRUE?
I. The opportunity cost of a given action is equal to the value foregone of all feasible alternative actions.
II. Opportunity costs only measure direct out of pocket expenditures.
III. To calculate accurately the opportunity cost of an action we need to first identify the next best alternative to that action.

Question options:

	A)  III only.
	B)  I and III only.
	C)  II only.
	D)  None of the statements is true.
Question 10		5 / 5 points

An example of a scarce good is

Question options:

	A)  free air.
	B)  free medical care in a crowded clinic.
	C)  free tumbleweeds.
	D)  empty seats at a free Chicago Bulls practice.
	E)  None of the above.
Question 11		5 / 5 points

A public good is:

Question options:

	A)  a good that the public must pay for.
	B)  nonrival in consumption.
	C)  more costly than a private good.
	D)  paid for by the government.
Question 12		5 / 5 points

Scarcity requires that people must:

Question options:

	A)  Trade
	B)  Cooperate
	C)  Make choices
	D)  Complete
Question 13		5 / 5 points

Macroeconomics is converging with microeconomics because

Question options:

	A)  macroeconomic relationships depend on microeconomic behavior.
	B)  macroeconomics studies total output.
	C)  government deficits and unemployment go together.
	D)  inflation means a general increase in prices.
	E)  microeconomic theories are easily testable whereas macroeconomic theories are difficult to test.
Question 14		5 / 5 points

Market failure can occur when

Question options:

	A)  monopoly power exists in the market.
	B)  markets are missing.
	C)  consumers can influence prices.
	D)  moral hazard and adverse selection exist
	E)  All of the above
Question 15		5 / 5 points

The most complete definition of an economic system includes

Question options:

	A)  incentives, opportunity costs and markets.
	B)  resource allocation arrangements, property rights and incentives.
	C)  property rights and scarcity.
	D)  the laws of supply and demand, the principle of substitution and self-interest.
	E)  choice and the law of diminishing returns.
Question 16		5 / 5 points

The demand for a product produced in a perfectly competitive market permanently increases.  In the short run the price

Question options:

	A)  rises and each firm produces less output.
	B)  does not change because each firm produces more output.
	C)  rises and each firm produces more output.
	D)  does not change as new firms enter the industry
Question 17		5 / 5 points

Microeconomics is the study of

Question options:

	A)  how households spend their limited income.
	B)  how business firms make choices.
	C)  how prices are determined in markets.
	D)  how people decide how many hours to work.
	E)  All of the above.
Question 18		5 / 5 points

Microeconomics is the study of 

Question options:

	A)  the economy as a whole.
	B)  the behavior of households as consumers and business as producers.
	C)  the behavior of variables such as GDP and the rate of inflation.
	D)  the behavior of inflation and unemployment.
	E)  the behavior of inflation and interest rates.
Question 19		5 / 5 points

Economic profits are:

Question options:

	A)  Total revenue minus total cost
	B)  Marginal revenue minus marginal cost
	C)  Total revenue minus total opportunity cost
	D)  Total profits of the economy as a whole
Question 20		5 / 5 points

According to the concept of scarcity in economics,

Question options:

	A)  wants will be fully satisfied sometime in the future
	B)  the wants of society cannot be satisfied by the goods and services that can be produced from given resources
	C)  there are no free goods
	D)  free goods and scarce goods are equally available.
	E)  all of the above.