Download Final Exam Sample Questions

Richards
Econ112: Principles of Microeconomics
Final Exam Sample Questions
1. To profit maximize, the firm will choose to produce __________ units and charge a
price of __________.
A) 400; $4
B) 400; $12
C) 500; $6
D) 500; $10
E) 800; $6
Page 1
2.
A)
B)
C)
D)
E)
At the point of profit maximization, the monopolist earns
a profit of $800
a loss of $800
a profit of $1600
a loss of $1600
a profit of $3000
3.
A)
B)
C)
D)
E)
When a monopolist sells additional units,
total revenues always rise.
marginal revenues are constant.
total revenues always fall.
marginal revenues rise.
total revenues may rise, fall, or remain unchanged.
The market for bagels in San Marcos, TX contains two firms: BagelWorld (BW) and
Bagels'R'Us (BRU). For simplicity, assume the cost of bagel production is zero so that total
revenues and profits are identical. The owners of the two firms decide to fix the price of bagels.
The table shows the total revenues the firms will collect if the abide by the price setting
agreement or if they cheat on the agreement.
Bagels'R'Us
Cheat
Abide
Bagel World
Cheat
Abide
$40 for BW
$0 for BW
$40 for BRU
$80 for BRU
$80 for BW
$45 for BW
$0 for BRU
$45 for BRU
4.
A)
B)
C)
D)
E)
Based on the payoff matrix, Bagels 'R' Us finds that __________ is its __________.
abiding by the agreement; dominated strategy
cheating on the agreement; dominated strategy
abiding by the agreement; dominant strategy
either cheating or abiding; dominant strategy
neither cheating or abiding; dominant strategy
5.
A)
B)
C)
D)
E)
Based on the payoff matrix, Bagel World finds that __________ is its __________.
abiding by the agreement; dominant strategy
cheating on the agreement; dominated strategy
either cheating or abiding; dominant strategy
cheating on the agreement; dominant strategy
either cheating or abiding; dominated strategy
Page 2
6.
A)
B)
C)
D)
E)
An oligopolist is a firm which finds it is
the only supplier
the only supplier of a good with no close substitutes.
one of many suppliers of a good with perfect substitutes.
one of a few firms.
one of a few firms that produces a good with close substitutes.
P
40
35
Price
30
25
20
15
10
5
1
2
3
5
4
6
Quantity
7
8
Q
7.
A)
B)
C)
D)
E)
If the monopolist decreases price from $30 to $25, its total revenue will ______
increase by $5
decrease by $5
increase by $15
decrease by $15
insufficient information
8.
A)
B)
C)
D)
E)
What is the marginal revenue of selling the 4th unit?
$0
$5
$10
$20
$25
Page 3
24000
22000
20000
Domestic
supply
Price of cars ($)
18000
16000
14000
12000
10000
8000
World
Price
6000
4000
2000
Domestic
demand
10 20 30 40 50 60 70 80 90 100
Quantity of cars (thousands)
9.
A)
B)
C)
D)
E)
If this is an open economy, quantity demanded of cars (in thousands) will be
20
40
60
80
100
10.
A)
B)
C)
D)
E)
How many cars (in thousands) will this country import in an open economy situation
20
40
60
80
100
Page 4
Answer Key
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
B
A
E
A
D
E
C
B
C
B
Page 5