Devry ECO 312 Midterm Latest
Question . Question : (TCO ) What is the economic meaning of the expression that “There is no such thing as a free lunch?”
It refers to “free-riders,” who do not pay for the cost of a product but who receive the benefit from it.
It means that economic freedom is limited by the amount of income available to the consumer.
It means that there is an opportunity cost when resources are used to provide “free” products.
It indicates that products only have value because people are willing to pay for them.
Question. Question : (TCO ) Henry wants to buy a book. The economic perspective suggests that Henry will buy the book if
the book will give him utility.
his income is high.
the marginal cost of the book is greater than its marginal benefit.
the marginal benefit of the book is greater than its marginal cost.
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Question 3. Question : (TCO ) Which situation would most likely cause a nation’s production possibilities curve to shift inward?
The construction of more capital goods
An increase in discrimination based on race
An increase in the number of skilled immigrant workers
The destruction from bombing and warfare in a losing military conflict
Question 4. Question : (TCO ) Which expression is another way of saying “marginal benefit”?
Benefits given up
Question 5. Question : (TCO ) Which would not be considered as a capital resource of a business by an economist?
A van used by a mother to transport the family around
An office computer used by an accountant
A crane used by a building contractor
A razor used by a barber
Question 6. Question : (TCO ) Another term for capitalism is
the command system.
the socialist economy.
the market system.
the system of inputs and outputs.
Question 7. Question : (TCO ) Markets in which firms sell their output of goods and services are called
Question 8. Question : (TCO ) By free enterprise, we mean that
products are provided free to those who can’t afford to buy them.
individuals may obtain resources, organize production, and sell the resulting output in any legal way they choose.
individual producers are free to produce whatever the government decides is needed by the society.
individuals are free to buy whatever products will satisfy their needs the most.
Question 8. Question : (TCO) You are the sales manager for a software company and have been informed that the price elasticity of demand for your most popular software is less than . To increase total revenues, you should:
increase the price of the software.
decrease the price of the software.
hold the price of the software constant.
increase the supply of the software.
Question 9. Question : (TCO) If the demand for a product is elastic, then
a higher tax on the product will generate more tax revenue.
a higher tax on the product will generate less tax revenue.
total revenue will decrease as price decreases.
total revenue will remain constant as price increases.
Question0. Question : (TCO) Airlines charge business travelers more than leisure travelers because there is a more
elastic supply of business travel.
inelastic supply of business travel.
elastic demand for business travel.
inelastic demand for business travel.
Question. Question : (TCO 3) Suppose that you could prepare your own tax return in 5 hours, or you could hire a tax specialist to prepare it for you in two hours. You value your time at $ an hour. The tax specialist will charge you $55 an hour. The opportunity cost of preparing your own tax return is
Question2. Question : (TCO 3) Economic profits are equal to
total revenues minus fixed costs.
total revenues minus the costs of raw materials.
total revenues minus the opportunity costs of all inputs.
gross profit minus selling and operating expenses.
Question3. Question : (TCO 3) In the short run
a firm cannot vary its output level.
all factors of production can be varied.
a firm can change its fixed inputs.
output is raised or reduced by changing the levels of variable inputs.
Question4. Question : (TCO 3) Variable costs are
costs that change every day.
costs that change with the level of production.
the change in total cost due to the production of an additional unit of output.
Question5. Question : (TCO 3) At an output of0,000 units per year, a firm’s variable costs are $80,000 and its average fixed costs are $3. The total costs per year for the firm are:
Question6. Question : (TCO 3) If you know that total fixed cost is $200, total variable cost is $600, and total product is four units, then average total cost must be:
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usually result in pure competition.
can result from government regulation.
exist in economic theory but not in the real world.
are typically the result of wrongdoing on the part of a firm.
Question 0. Question : (TCO 3) The demand curve confronting a nondiscriminating, pure monopolist is
the same as the industry’s demand curve.
more elastic than the demand curve confronting a competitive firm.
derived by vertically summing the individual demand curves for the buyers.
Question. Question : (TCO 3) Which is the best example of price discrimination?
An airline company charging lower fares per pound for air freight than for passengers.
A telephone company charging lower rates to weekend users than weekday users.
A supermarket charging lower prices in its inner city store than its out-of-town store.
A private doctor charging higher fees to patients receiving special services than patients receiving regular services.
Question 2. Question : (TCO 3) Monopolistic competition is characterized by firms
producing differentiated products.
making economic profits in the long run.
producing at optimal productive efficiency.
producing where price equals marginal cost.
Question 3. Question : (TCO 3) Assume that in a monopolistically competitive industry, firms are earning economic profit. This situation will
reduce the excess capacity in the industry as firms expand production.
attract other firms to enter the industry, causing the firm’s profits to shrink.
cause firms to standardize their product to limit the degree of competition.
make the industry allocatively efficient as each firm seeks to maintain its profits.
Question 4. Question : (TCO 3) A unique feature of an oligopolistic industry is
low barriers to entry.
diminishing marginal returns.
Question 5. Question : (TCO 3) A low concentration ratio means that
there is a low probability of entering the industry.
there is a low probability of success in the industry.
each firm accounts for a small market share of the industry.
each firm accounts for a large market share of the industry.
set ticket prices at $5.
set ticket prices at $9.
Question. Question : (TCO) Which type of goods is most adversely affected by recessions?
Goods for which the income-elasticity coefficient is relatively low or negative.
Goods for which the income-elasticity coefficient is relatively high and positive.
Goods for which the cross-elasticity coefficient is positive.
Goods for which the cross-elasticity coefficient is negative.
Question2. Question : (TCO 3) In the figure, Curves ,, 3, and 4 represent the
ATC, MC, AFC, and AVC curves, respectively.
MC, AFC, AVC, and ATC curves, respectively.
MC, ATC, AVC, and AFC curves, respectively.
ATC, AVC, AFC, and MC curves, respectively.
Question3. Question : (TCO ) Refer to the diagram. If society is producing nine units of bicycles and four units of computers and it now decides to increase computer output to six, the cost
will be four units of bicycles.
will be two units of bicycles.
will be zero because unemployed resources are available.
of doing so cannot be determined from the information given.
Question4. Question : (TCO 3) What type of barrier to entry was used by De Beers throughout much of its history to maintain its monopoly position?
Economies of scale
Ownership of an essential resource
Question5. Question : (TCO 3) a.) A pure monopolist determines that at the current level of output the marginal cost of production is $2, average variable costs are $2.75, and average total costs are $2.95. The marginal revenue is $2.75.What would you recommend that the monopolist do to maximize profits? b.) Why might a business owner keep their business open but let it deteriorate, rather than shut it down? Will this profitability last?
Question6. Question : (TCO) Evaluate how the following situations will affect the demand curve for iPods.
(a) Income statistics show that income of 8–25-year-olds have increased by 0 percent over the last year.
(b) Efforts of music artists wanting greater protection of their music result in more stringent enforcement of copyrights and the shutdown of numerous illegal downloading sites.
(c) Believing that it has significant control of the market for portable digital music players, Apple decides to raise the price of iPods with the goal of increasing profits.
(d) The price of milk decreases.
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