Final Exam Student Name: __________________________________
Microeconomics, several versions
Early May, 2011
Instructions:
I) On your Scantron card you must print three things:
1) Full name clearly;
2) Day and time of your section (for example MW 9:10);
3) Notice the number I have written in ink in the upper right corner of your test? Write that
number on the Scantron card. (This number tells me which version of the test you have.
Without it your test cannot be graded properly and you get no credit for your answers.)
II) Answer on your Scantron card, using a #2 pencil.
III) Warning: SOME QUESTIONS MUST BE ANSWERED SEVERAL
TIMES! Such questions will begin with a phrase such as this:
Repeat this answer on lines 37, 38 and 39.
Remember to do it!
IV) You must turn in this written exam along with your Scantron card to avoid zero credit.
=====================================================================
Questions:
1. Assume that the income elasticity of demand for a good is greater than one. Then evaluate
each of the following statements and choose the best answer from among the lettered choices
below.
1) The good is a luxury good.
2) The good is a necessity.
3) The good is a normal good.
4) The good is an inferior good.
A) Only Statements 1 and 3 are correct.
B) Only Statement 1 is correct.
C) Only Statement 3 is correct.
D) Only Statement 2 is correct.
E) Only Statement 4 is correct.
Ans: A
2. If when the incomes of potential customers rise the quantity demand for the good declines:
A) this is impossible.
B) economists would call the good a "normal good".
C) economists would call the good a "luxury good".
D) the good is of low quality.
E) economists would call the good an "inferior good".
Ans: E
,3. (Repeat your answer on Scantron line 32.) Evaluate the following statements and then
choose from A) through E)
1) The Wealth of Nations was written by Milton Freidman.
2) The Wealth of Nations was written by John Maynard Keynes.
3) The Wealth of Nations was published just after the Great Depression.
4) Adam Smith is a famous economist who wrote in the mid 1800's.
A) None of statements 1, 2, 3 or 4 are true.
B) Statements 2 and 3 are true.
C) Statement 4 is the only statement which is true.
D) Only statement 1 is true.
E) Only statement 3 is true.
Ans: A
4. (Repeat your answer on Scantron line 33.) A firm has average variable costs of $60 per
unit, average fixed costs of $40 per unit and can sell its output at $50 per unit.
A) the firm should keep operating in the short run.
B) the firm should shut down in the short run.
C) the firm needs to increase output in the short run.
D) the firm needs to keep operating in the long run, since average revenue is more than average
fixed costs.
E) no other answer is correct.
Ans: B
5. (Repeat your answer on Scantron line 34.) Consider the following statements and then
choose the best answer.
1) If the price elasticity of demand equals 2, a reduction in price will increase total revenue from
sales.
2) If the price elasticity of demand equals 1/2, a reduction in price will reduce total revenue
from sales.
3) If the price elasticity of demand equals 1, a reduction in price will leave total revenue from
sales unchanged.
4) Total revenue from sales depends on the elasticity of supply, not the elasticity of demand.
A) None of statements 1, 2 or 3 are correct.
B) Only statement 3 is correct.
C) Only statements 1 and 2 are correct.
D) Only statements 1, 2 and 3 are correct.
E) Only statement 4 is correct.
Ans: D
, Reference: Figure 12-2
20
18 MC
ATC
16
14
Price
12
10 D
8
6
4 MR
2
0
0 0 0 0 0 0 0 0 0 0
10 20 30 40 50 60 70 80 90 100
Output per day
6. (Repeat your answer on Scantron line 35.) Refer to the graph above. If this monopolist
seeks to maximize profit, its economic profit will be:
A) some other amount.
B) $4,200 per time period.
C) $2,400 per time period.
D) $600.
E) $850.
Ans: C
Refer To: Figure 12-2
Difficulty: Easy
LO: 12-3
Page: 265
Skill: Application
Source: Old
Type: Graph
Feedback: At this price, marginal revenue equals marginal cost so profits are maximized.
Reference: Figure 12-9
Microeconomics, several versions
Early May, 2011
Instructions:
I) On your Scantron card you must print three things:
1) Full name clearly;
2) Day and time of your section (for example MW 9:10);
3) Notice the number I have written in ink in the upper right corner of your test? Write that
number on the Scantron card. (This number tells me which version of the test you have.
Without it your test cannot be graded properly and you get no credit for your answers.)
II) Answer on your Scantron card, using a #2 pencil.
III) Warning: SOME QUESTIONS MUST BE ANSWERED SEVERAL
TIMES! Such questions will begin with a phrase such as this:
Repeat this answer on lines 37, 38 and 39.
Remember to do it!
IV) You must turn in this written exam along with your Scantron card to avoid zero credit.
=====================================================================
Questions:
1. Assume that the income elasticity of demand for a good is greater than one. Then evaluate
each of the following statements and choose the best answer from among the lettered choices
below.
1) The good is a luxury good.
2) The good is a necessity.
3) The good is a normal good.
4) The good is an inferior good.
A) Only Statements 1 and 3 are correct.
B) Only Statement 1 is correct.
C) Only Statement 3 is correct.
D) Only Statement 2 is correct.
E) Only Statement 4 is correct.
Ans: A
2. If when the incomes of potential customers rise the quantity demand for the good declines:
A) this is impossible.
B) economists would call the good a "normal good".
C) economists would call the good a "luxury good".
D) the good is of low quality.
E) economists would call the good an "inferior good".
Ans: E
,3. (Repeat your answer on Scantron line 32.) Evaluate the following statements and then
choose from A) through E)
1) The Wealth of Nations was written by Milton Freidman.
2) The Wealth of Nations was written by John Maynard Keynes.
3) The Wealth of Nations was published just after the Great Depression.
4) Adam Smith is a famous economist who wrote in the mid 1800's.
A) None of statements 1, 2, 3 or 4 are true.
B) Statements 2 and 3 are true.
C) Statement 4 is the only statement which is true.
D) Only statement 1 is true.
E) Only statement 3 is true.
Ans: A
4. (Repeat your answer on Scantron line 33.) A firm has average variable costs of $60 per
unit, average fixed costs of $40 per unit and can sell its output at $50 per unit.
A) the firm should keep operating in the short run.
B) the firm should shut down in the short run.
C) the firm needs to increase output in the short run.
D) the firm needs to keep operating in the long run, since average revenue is more than average
fixed costs.
E) no other answer is correct.
Ans: B
5. (Repeat your answer on Scantron line 34.) Consider the following statements and then
choose the best answer.
1) If the price elasticity of demand equals 2, a reduction in price will increase total revenue from
sales.
2) If the price elasticity of demand equals 1/2, a reduction in price will reduce total revenue
from sales.
3) If the price elasticity of demand equals 1, a reduction in price will leave total revenue from
sales unchanged.
4) Total revenue from sales depends on the elasticity of supply, not the elasticity of demand.
A) None of statements 1, 2 or 3 are correct.
B) Only statement 3 is correct.
C) Only statements 1 and 2 are correct.
D) Only statements 1, 2 and 3 are correct.
E) Only statement 4 is correct.
Ans: D
, Reference: Figure 12-2
20
18 MC
ATC
16
14
Price
12
10 D
8
6
4 MR
2
0
0 0 0 0 0 0 0 0 0 0
10 20 30 40 50 60 70 80 90 100
Output per day
6. (Repeat your answer on Scantron line 35.) Refer to the graph above. If this monopolist
seeks to maximize profit, its economic profit will be:
A) some other amount.
B) $4,200 per time period.
C) $2,400 per time period.
D) $600.
E) $850.
Ans: C
Refer To: Figure 12-2
Difficulty: Easy
LO: 12-3
Page: 265
Skill: Application
Source: Old
Type: Graph
Feedback: At this price, marginal revenue equals marginal cost so profits are maximized.
Reference: Figure 12-9
