Econ 1051 Exam Two Study Guide
Econ 1051 Exam Two Study Guide Econ 1051
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This 4 page Study Guide was uploaded by Abbey Notetaker on Saturday March 12, 2016. The Study Guide belongs to Econ 1051 at University of Missouri - Columbia taught by George Chikhladze,Martha Steffens in Summer 2015. Since its upload, it has received 59 views. For similar materials see General Economics in Economcs at University of Missouri - Columbia.
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Date Created: 03/12/16
Midterm 2Study Guide 1. The unemployment rate in an economy is 6 percent. The total population of the economy is 290 million and the size of the civilian labor force is 150 million. The number of unemployed workers in this economy is: Answer: 9 million. 2. Critics of economic growth: answer: argue that economic growth does not resolve socioeconomic problems such as an unequal distribution of income and wealth. 3. Monopolies are not violating antitrust laws as long as they don't: answer: put existing or potential rivals at unfair advantage. 4. One defining characteristic of pure monopoly is that: answer: the monopolist produces a product with no close substitutes. 5. The classic example of a private, unregulated monopoly is: Answer: De Beers. 6. A firm sells a product in a purely competitive market. The marginal cost of the product at the current output is $4.00 and the market price is $4.50. What should the firm do? Answer: Increase output if the minimum possible average variable cost is $3.75. 7. When firms in an industry reach an agreement to fix prices, divide up market share, or otherwise restrict competition, they are using the strategy of: . Answer: collusion. 8. The knowledge and skills that make workers productive are referred to by economists as: Answer: human capital.. 9. A major characteristic of monopolistic competition is: . Answer: a relatively large number of firms selling the product. 10. Answer the question based on the following price and output data over a fiveyear period for an economy that produces only one good. Assume that year 2 is the base year. The percentage increase in real GDP from year 2 to year 4 is: Answer: 80 percent. 11. To practice price discrimination, a monopolist must: Answer: be able to separate buyers into different markets with different willingness to pay. 12. The table below shows cost data for a firm that is selling in a purely competitive market. Refer to the above table. If the market price for the firm's product is $110, the competitive firm will produce: Answer: 5 units at an economic profit of $150. 13. When calculating GDP government purchases would include expenditures for payments of: Answer: salaries for current U.S. military officers. 14. Which industry would be the best example of an oligopoly? Answer: Steel 15. Candy Cane Corporation (CCC) produces 100,000 boxes of candy bars per year that sell for $1.8 a box. If variable costs are $2 per box and it has $125,000 in fixed operating costs, in the short run the CCC should: Answer: shut down as variable costs are not being covered. 16. Assume that there is a fixed rate of interest on contracts for borrowers and lenders. If unanticipated increase in inflation occurs in the economy, then: Answer: lenders are hurt, but borrowers benefit. 17. Which is not a supply factor in economic growth? Answer: An efficient allocation of resources. 18. One major barrier to entry under pure monopoly arises from: Answer: ownership of essential resources. 19. If the Consumer Price Index was 115 in one year and 120 in the next year, then the rate of inflation from one year to the next was: Answer: 4.3 percent. 20. Under which of the following circumstances would we observe the greatest increase in real income? Answer: Nominal income falls by 2 percent, and the price level falls by 10 percent. 21. A college graduate using the summer following graduation to search for a job would best be classified as: Answer: a part of frictional unemployment. 22. If firms are losing money in a purely competitive industry, then in the long run this situation will shift the industry: Answer: supply curve to the left, and the market price will increase. 23. Which would be most characteristic of oligopoly? Answer: Mutual interdependence. 24. One difference between monopolistic competition and pure competition is that: Answer: there is some control over price in monopolistic competition.
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