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Demand for labor will increase until the equilibrium wage rate is
$17.85.
9). Alex is playing his music at full volume in his dorm room. The other
people living on his floor found this to be a nuisance, but Alex doesnt care.
Alexs music playing is an example of:
Pareto externality
Positive externality
Negative externality
Normative externality
10). Oligopoly is probably the best market for technological change
because:
The typical oligopoly has the funds to carry out research and
development and believe that its competitors are innovating, which
motivates it to conduct research and development.
The typical oligopoly lacks the funds to carry out research and
development and therefore will use basic research from universities.
Research and development occurs only if government subsidizes such
activity, and government tends to subsidize oligopolies.
The typical oligopoly keeps price very close to average total cost
because it fears the entry of new rivals if its profits are excessively
high.
11). A perfectly competitive firm facing a price of $50 decides to produce
500 widgets. Its marginal cost of producing the last widget is $50. If the
firms goal is to maximize profit, it should:
Produce more widgets
Produce fewer widgets
Continue producing 500 widgets
Shut down
12). Graphically, a change in price causes:
the demand curve to shift.
both supply and demand to shift.
a movement along a given supply curve, not a shift.
the supply curve to shift.
Monopolistically competitive.
A pure monopoly.
An oligopoly.
21). Suppose foreign shrimp prices drop by 32 percent and importers gain a
90 percent market share. From this information, what would economists
strongly suspect about this industry?
Foreigners have a comparative advantage in shrimping.
The large sales of foreigners indicate they are better strategic business
bargainers than Americans are.
Americans have a comparative advantage in shrimping.
Foreign sellers probably are colluding on price to maximize profits.
22). For a monopolist, the price of a product:
Is less than the marginal revenue.
Exceeds the marginal revenue.
Equals the marginal cost.
Equals the marginal revenue.
23). 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 of why few economists agreed with Perot?
Although economics predicted that unemployment would rise, the
increased profits of corporations would raise stock prices enough to
compensate for the lost jobs.
Economists did not believe any jobs would be lost in the United States.
Although economists believed that in some areas the United States
would lose jobs, they expected the United States would gain jobs in
other areas.
Economics believed that the U.S. unemployment would rise.
24). Mr. Woodwards cabinet shop is experiencing rapid growth in sales. As
sales have increased, Mr. Woodward has found it necessary to hire more
workers. However, he has observed that doubling the number of workers has
less than doubled his output. What is the likely explanation?
The law of demand
The law of diminishing marginal productivity
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