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ECO 365 Final Exam Solution

1.George Davis and Michael Wohlgenant estimate that for every 1 percent increase in the price of Christmas trees, quantity demanded falls by 0.6 percent. The demand for Christmas trees is __________________.

2.A Wall Street Journal headline reads: "Cigar Shortage Draws New Brands into Market." The shortage resulted from a renewed interest in smoking cigars. What best describes the facts behind the headline?

3.State what type of business combination is occurring in the following scenario: Samsung and Sony become partners in a flat screen manufacturing company.

4.The price of a ticket to a rock concert is set at $35. All the tickets for the concert sell out 1 hour after they go on sale and there are still 1,000 fans who want to buy tickets. It follows that:

5.According to the text, Microeconomics, Colander (2013), economics is the study of how:

6.Suppose a firm finds that an additional dollar spent on labor increases output more than does an additional dollar spent on machines. Under these conditions, the firm:

7.Which of the following is the best example of a macroeconomic externality?

8.Refer to the graph shown. The figure shows the demand and supply curves for eggs and shows two equilibrium points, E1 and E2. An increase in demand from D1 to D2 would cause:

9.State what type of business combination is occurring in the following scenario: A tobacco producer buys a carbonated beverage plant.

10.A resource is said to have a comparative advantage if:

11.Refer to the graph shown. If hamburger dinners are produced by a perfectly competitive industry with a market demand D:

12.Oligopoly is characterized by:

13.Refer to the table shown. Diminishing marginal productivity begins when the:

14.When Ross Perot ran for president as a third party candidate in 1992, he argued that free trade with Mexico would result in massive job losses in the United States because Mexican wages were so low. Which of the following is the best explanation for why few economists agreed with Perot?

15.If MR < MC, a monopolist should:

16.Refer to the graph shown. At which point is elasticity zero?

17.Refer to the table shown. The average product when eight workers are employed is:

18.Germany restricts the use of nonrefillable bottles and cans. The European Union argues that the rules aren't just protecting the environment; they also are protecting German beverage makers from competition. The EU sees Germany's environmentalism as _____________________.

19.Refer to the table shown. At what level of employment is the marginal product of labor seven?

20.The morel is a prized mushroom that is often abundant in the Western United States in years after forest fires. Suppose two companies are buying morels from workers willing to find them. One company offers to pay workers $5.00 per pound, and the other company will pay workers only $4.00 per pound. Economists would say that

21.Economists and laypeople see the pros and cons of international trade in different ways. Which of the following is one of those ways?

22.Which of the following statements is true?

23.Because you can only obtain more of one good by giving up some of another good, the shape of a production possibility curve is _______________.

24.Refer to the graph shown. Initially, the market is in equilibrium with price equal to $3 and quantity equal to 100. Government imposes a tax on suppliers of $1 per unit. The effect of the tax is to

25.Refer to the graph shown. If this monopolistically competitive firm maximizes profit, it will

26.Suppose the minimum possible price of constructing homes is $50 per square foot. As a result of a sharp drop in the demand for home construction, the equilibrium price of home construction falls to $40 per square foot. Assuming the home construction industry is perfectly competitive and there are no specialized inputs, firms will

27.Opponents of government intervention in the economy argue that externalities

28.State what type of business combination is occurring in the following scenario: IBP meat processing firm buys American Cattle, a very large cattle ranch.

29.State what type of business combination is occurring in the following scenario: Golf Smith, a golf supply retailer buys its competitor, Vango golf.

30.Oligopoly is probably the best market for technological change because