ECO
561 Final Exam SET 2 -- Preview
1)
In a market economy the distribution of output will be determined primarily by:
A.
a social consensus as to what distribution of income is most equitable.
B.
consumer needs and preferences.
C.
the quantities and prices of the resources that households supply.
D.
government regulations that provide a minimum income for all.
2)
In a competitive market economy firms will select the least-cost production
technique because:
A.
"dollar voting" by consumers mandates such a choice.
B.
such choices will result in the full employment of available resources.
C.
to do so will maximize the firms' profits.
D. this will prevent new firms from entering
the industry.
3)
A leftward shift in the supply curve of product X will increase equilibrium
price to a greater extent the: A. more inelastic the demand for the product.
B.
more elastic the supply curve.
C.
larger the elasticity of demand coefficient.
D.
more elastic the demand for the product.
4)
Which of the following statements is true about productive and allocative
efficiency?
A.
Realizing allocative efficiency implies that productive efficiency has been
realized.
B.
Productive efficiency can only occur if there is also allocative efficiency.
C.
Productive efficiency and allocative efficiency can only occur together;
neither can occur without the other.
D.
Society can achieve either productive efficiency or allocative efficiency, but
not both simultaneously.
5)
Since their introduction, prices of DVD players have fallen and the quantity
purchased has increased. This statement:
A.
suggests that the supply of DVD players has increased.
B.
suggests that the demand for DVD players has increased.
C.
constitutes an exception to the law of supply in that they suggest a downward
sloping supply curve.
D.
constitutes an exception to the law of demand in that they suggest an upward
sloping demand curve.
6)
Camille's Creations and Julia's Jewels both sell beads in a competitive market.
If at the market price of $5, both are running out of beads to sell (they can't
keep up with the quantity demanded at that price), then we would expect both
Camille's and Julia's to:
A.
raise their price and reduce their quantity supplied.
B.
raise their price and increase their quantity supplied.
C.
lower their price and increase their quantity supplied.
D.
lower their price and reduce their quantity supplied.
7) If a firm in a purely competitive industry
is confronted with an equilibrium price of $5, its marginal revenue:
A.
may be either greater or less than $5.
B.
will also be $5.
C.
will be greater than $5.
D.
will be less than $5.
8)
If technology dictates that labor and capital must be used in fixed
proportions, an increase in the price of capital will cause a firm to use:
A.
more labor as a consequence of the substitution effect.
B.
more labor as a consequence of the output effect.
C.
less labor as a consequence of the output effect.
D.
less labor as a consequence of the substitution effect.
9)
If a firm is selling in an imperfectly competitive product market, then:
A.
average product will be less than marginal product for any number of workers
hired.
B.
the marginal products of successive workers must be sold at lower prices.
C.
the marginal products of successive workers can be sold at a constant price.
D.
the marginal products of successive workers can be sold at higher prices.
10)
In the short run the Sure-Screen T-Shirt Company is producing 500 units of
output. Its average variable costs are $2.00 and its average fixed costs are
$.50. The firm's total costs:
A.
are $2.50.
B.
are $1,250.
C.
are $1,100.
D.
are $750.
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