ECO561 ECO/561 Final Exam (39 out of 39) - 22354

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1) Suppose that the price of peanuts falls from $3 to $2 per bushel and that, as a result, the total revenue received by peanut farmers changes from $16 to $14 billion. Thus:

2) The advent of DVDs has virtually demolished the market for videocassettes. This is an example of:

 3) If the demand for farm products is price inelastic, a good harvest will cause farm revenues to

4) Suppose that in the clothing market, production costs have fallen, but the equilibrium price and quantity purchased have both increased. Based on this information we can conclude that:

5) Suppose that in 2007 Ford sold 500,000 Mustangs at an average price of $18,800 per car; in 2008, 600,000 Mustangs were sold at an average price of $19,500 per car. These statements:

 6) Which of the following statements is true about productive and allocative efficiency?

 7) If a firm in a purely competitive industry is confronted with an equilibrium price of $5, its marginal revenue:

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: 

 9) If a firm is selling in an imperfectly competitive product market, then:

 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:

 11) In which of the following industries are economies of scale exhausted at relatively low levels of output?

 12) If a firm decides to produce no output in the short run, its costs will be:

13) If the wage rate increases:

14) A firm can hire six workers at a wage rate of $8 per hour but must pay $9 per hour to all of its employees to attract a seventh worker. The marginal wage cost of the seventh worker is:

15) A profit-maximizing firm will:

16) Price exceeds marginal revenue for the pure monopolist because the:

 17) Oligopoly is difficult to analyze primarily because:

 18) A competitive firm will maximize profits at that output at which:

 19) Which of the following is not a possible source of natural monopoly?

 20) Advertising can impede economic efficiency when it:

21) One would expect that collusion among oligopolistic producers would be easiest to achieve in which of the following cases?

 22) Monopolistic competition means:

 23) In an oligopolistic market:

24) Suppose that an industry is characterized by a few firms and price leadership. We would expect that:

25) In the long run a pure monopolist will maximize profits by producing that output at which marginal cost is equal to:

26) Those who contend that oligopolists are less likely than more competitive firms to engage in R&D say that:

 27) Other things equal, a price discriminating monopolist will:

28) Suppose that nominal wages fall and productivity rises in a particular economy. Other things equal, the aggregate: 

 29) Inflation is undesirable because it:

30) The industries or sectors of the economy in which business cycle fluctuations tend to affect output the most are: 

31) Kara voluntarily quit her job as an insurance agent to return to school full-time to earn an MBA degree. With degree in hand she is now searching for a position in management. Kara presently is:

 32) Real GDP measures:

 33) Expansionary fiscal policy is so named because it:

34) In a fractional reserve banking system:

35) Assume the Standard Internet Company negotiates a loan for $5,000 from the Metro National Bank and receives a checkable deposit for that amount in exchange for its promissory note (IOU). As a result of this transaction:

 36) Stabilizing a nation's price level and the purchasing power of its money can be achieved:

 37) An unexpected increase in the money supply of 10% will cause the short-run exchange rate to:

38) ___________ purchasing power parity states that the difference between changes over time in product-price levels in two countries will be offset by the change in the exchange rate over this time.

 39) The quantity theory of the demand for money states that a country’s money supply is proportional to:

 

Solution Description

39) The quantity theory of the demand for money states that a country’s money supply is proportional to:

 

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