Eastern Mediterranean University
Faculty of Business and Economics
Department of Economics
2015‐16 Spring Semester
ECON101 ‐ Introduction to Economics I
Final Exam
Answer Key
2June2016
Duration: 100 minutes
Name:_________________________ StudentID:_____________________
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Part A: Multiple Choice Questions (2 points each, total 60 points)
Please mark your answers on both the exam paper and the optic sheet.
1.WhichofthefollowingisNOTacharacteristicofaperfectlycompetitivemarket?
a.Firmsarepricetakers.b.Firmshavedifficultyenteringthemarket.
c.Therearemanysellersinthemarket.d.Goodsofferedforsalearelargelythesame.
2.Whichofthefollowingstatementsbestreflectsapricetakingfirm?
a.Ifthefirmweretochargemorethanthegoingprice,itwouldsellnoneofitsgoods.
b.Thefirmhasanincentivetochargelessthanthemarketpricetoearnhigherrevenue.
c.Thefirmcansellonlyalimitedamountofoutputatthemarketpricebeforethemarketpricewillfall.
d.Pricetakingfirmsmaximizeprofitsbychargingapriceabovemarginalcost.
3.Supposeafirminacompetitivemarketreducesitsoutputby20percent.Asaresult,thepriceofitsoutputislikelyto
a.Increase.b.remainunchanged.
c.decreasebylessthan20percent.d.decreasebymorethan20percent.
Table142
Thetablerepresentsademandcurvefacedbyafirminacompetitivemarket.
4.RefertoTable142.Forthisfirm,theaveragerevenuefromselling3unitsis
a.$12.b.$4.c.$3.d.$1.
5.RefertoTable142.Forthisfirm,themarginalrevenuefromsellingthe3rdunitis
a.$12.b.$4.c.$3.d.$1.
6.Attheprofitmaximizinglevelofoutput,
a.marginalrevenueequalsaveragetotalcost. b.marginalrevenueequalsaveragevariablecost.
c.marginalrevenueequalsmarginalcost.d.averagerevenueequalsaveragetotalcost.
1469.Refer to Figure 14-5. When market price is P5, a profit-maximizing firm's profits can be represented by the area:...
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70.Refer to Figure 14-5. Firms would be encouraged to enter this market for all prices that exceed:...
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71.Suppose that a perfectly competitive firm is selling its output for $10 per unit and it is maximizing its profit. Now theprice rises to $14, and the firm makes whatever adjustments are necessary to maximize its profit at the now-higherprice. Once the firm has adjusted, which of the following statements is correct?
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72.In a market with 1,000 identical firms, the short-run marketsupply is the:a.marginal cost curve (above average variable cost) for a typical firm in the market.b.quantity supplied by the typical firm at a given price in the market.c.sum of the prices charged by each of the 1,000 individual firms.d.sum of the quantities supplied at a given price by each of the 1,000 individual firms.D
73When new firms have an incentive to enter a competitive market, their entry will:
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74.Assuming an equilibrium situation, a monopoly's marginal cost will:
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75.A fundamental source of monopoly market power arises from:
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Introduction to microeconomics (eco1104)Final exam/ Fall 2006
Which segment represents the short run supply curve?
What line segment best reflects the long run supply curve for this firm?
Term 1. Refer to Table 14-1. The price and quantity relationship in the table is most likely that faced by a firm in a | Definition competitive market |
Term 22. Refer to Figure 14-3. Which line segment best reflects the long-run supply curve for this firm? | Definition a. ABCD |