Final Exam Study Guide
Final Exam Study Guide ECON 221
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This 9 page Study Guide was uploaded by Katie Rosen on Sunday December 6, 2015. The Study Guide belongs to ECON 221 at University of South Carolina taught by Jones in Summer 2015. Since its upload, it has received 202 views. For similar materials see Principles of Economics: Microeconomics in Economcs at University of South Carolina.
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Date Created: 12/06/15
Microeconomics Final Exam Study Guide Our Microeconomics final exam covers the following information (all materials discussed since test 2. Including- setting up general model of production, defined perfect competition, modeled firm behavior in perfect competition, defined monopoly, modeled monopolist firm behavior. Good luck!) 1. Match the following markets types with the appropriate example: a. Monopoly 1. Verizon and AT&T b. Monopolistic Competition 2. SC E&G c. Oligopoly 3. Restaurants d. Perfectly Competitive 4. Grocery Stores 2. Sellers producing products that are all slightly different are in which of the following markets a. monopoly b. oligopoly c. monopolistic competition d. perfectly competitive 3. To calculate a firm’s profits: a. profit= total revenue - total costs b. profit= sales - taxes c. profit= assets - liabilities d. profit= total revenue - total assets 4. In the simple production function Q=F(K,L)= K^½ * L^½ K and L stand for: a. capital, land b. capital, labor c. labor, capital d. land, capital 5. The total product curve represents: a. relationship between goods sold and goods purchased b. relationship between expenses and assets c. relationship between total output and the quantity of one of the inputs d. relationship between total output and the quantity of input 6. Marginal product of labor is: a. how much more we can produce if we hire one more worker b. how many workers we need to hire to reach max profits c. revenue earned after hiring a certain number of employees d. the additional cost for every unit of product needed 7. The formula for marginal product of labor (MPL) is a. Change in revenue/ change in labor b. change in quantity/ change in labor c. change in labor/ change in quantity d. change in quantity x change in labor 8. Total revenue is a. price/quantity b. quantity/price c. price-quantity d. price*quantity 9. Total cost consists of ____ components a. 1 b. 2 c. 3 d. 4 10. Variable cost depends on quantity a. true b. false 11. Fixed cost depends on quantity a. true b. false 12. The total cost curve plots the: a. relationship between output and input b. relationship between benefit and cost c. relationship between output and total cost d. relationship between input and total cost 13. When the average total cost curve is decreasing, we know that the marginal cost curve is _______the ATC curve and when the ATC curve is increasing, we know that MC is ______ the ATC curve a. to the left of; to the right of b. below; above c. above; below d. to the right of; to the left of 14. fill in the missing values in the following table: quantity of total fixed total total cost widgets cost variable cost 0 $14 $ $ 1 2 2 5 19 3 9 23 4 14 5 34 6 14 27 15. The marginal cost of producing the sixth unit is a. 3 b. 4 c. 6 d. 7 16. The marginal cost of producing the third unit is ________ the average cost of the third unit. This means producing the third unit causes the average total cost to _________. a. less than; increase b. less than; decrease c. more than; increase d. more than; decrease 17. The characteristics that describe a perfectly competitive industry include a. one firm selling to many buyers b. a few firms selling to many buyers c. many firms selling an identical product d. many firms selling a slightly differentiated product 18. Sally, a college student, walks dogs for people in her neighborhood. The going rate is $10 for every walk but she wants to charge $20 because she feels like she does a better job than other dog-walkers. If the market for dog walking services is perfectly competitive, what would happen if Sally raised her price? a. She would lose some but not all her customers b. Initially, her customers might complain but over time they will come to accept the new rate c. If Sally, raises her price, then all others supplying the same service will also raise their prices d. If Sally raises her price she would lose all her customers 19. If the market price is $25 in a perfectly competitive market, the marginal revenue from selling the fifth unit is a. 10 b. 12 c. 5 d. 25 20. The below table shows the short run cost data of a perfectly competitive firm that produces phone cases.. Assume that output can only be increased in batches of 100 units. If the market price of each phone case is $8, what is the profit-maximizing quantity? a. 100 units b. 200 units c. 300 units d. 400 units 21. Refer to the table in question 20, what is the fixed cost of production? a. $1,000 b. $4,000 c. $0 d. It cannot be determined 22. Refer to the table in question 20, assume that the firm maximizes profit, what is the amount of the firms profit or loss? a. loss of $440 b. profit of $440 c. loss of $1,000 d. profit of $1,000 23. Refer to the table in question 20, suppose the fixed cost of production rises by $500 and if the price per unit is still $8. What happens to the firm’s profit maximizing output level? a. it will remain the same b. it must rise to offset the increased cost c. the firm will shut down d. it must fall 24. Refer to the diagram below, if the firm is producing 700 units, a. it is making a loss b. it should cut back its output to maximize profit c. it should increase its output to maximize profit d. it is making a profit 25. Refer to the diagram in question 24, if the firm is producing 700 units, what is the amount of its profit or loss? a. profit equivalent to the area A b. loss of $280 c. loss equivalent to the area A d. there is insufficient information to answer the question 26. A perfectly competitive firm produces 3,000 units of a good at a total cost of $36,000. The price of each good is $10. Calculate the firm’s short run profit or loss. a. loss of $6,000 b. profit of $6,000 c. profit of $30,000 d. there is insufficient information to answer the question 27. If, for the last unit of a good produced by a perfectly competitive firm, MR>MC, then in producing it, the firm a. added more to total costs than it added to total revenue b. added more to total revenue than it added to total costs c. is maximizing marginal profit d. has minimized its losses 28. Based off of the below graph, what price and quantity will maximize this firm’s profits? a. $2; 4 units b. $2; 1.5 units c. $5; 6 units d. $3; 3 units 29. The point in which a firm maximizes their profits is when a. MR=MC b. MR=ATC c. TC=MC d. TC=MR 30. Based on the below chart, assume the price of each unit is 14$, how many units should be sold to maximize profit? a. 2 b. 1 c. 3 d. 7 31. When a firm chooses the quantity that maximizes profit, they are always making a positive profit. a. true b. false 32. A firm will always be profitable when P> min ATC a. true b. false 33. The shutdown price is when P= min AVC a. true b. false 34. Which of the following graphs shows a profitable firm? a. P>min(ATC) on the left, P<min(ATC) on the right b. P<min(ATC) on the left, P>min(ATC) on the right 35. ATC is TC/Q a. true b. false 36. TR is MR*Q a. true b. false 37. The short-run is a time period when the firm can adjust it’s fixed inputs a. true b. false 38. De Beers Diamonds is an example of a. a perfectly competitive market b. a somewhat competitive market c. a monopoly 39. In a monopoly, a product generally has how many substitutes a. can not be determined b. 50 c. 100 d. 0 40. In a monopolistic market, marginal revenue ______ as output ______ a. decreases; decreases b. decreases; increases c. increases; increases d. increases; decreases ANSWERS 1.a-2 b-3 c-1 d-4 2. c 3. a 4.b 5.c 6.a 7.b 8.d 9.b 10.a 11.b 12.c 13.b 14. 0 1 0 14 4 1 1 2 16 4 2 1 5 19 4 3 1 9 23 4 4 1 14 28 4 5 1 20 34 4 6 1 27 41 4 15.d 16.b 17.c 18.d 19.d 20.d 21.a 22.b 23.a 24.b 25.d 26.a 27.b 28.a 29.a 30.c 31.b 32.a 33.a 34.a 35.a 36.a 37.b 38.c 39.d 40.b
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