ECON 208 Final Review || QUESTIONS AND ANSWERS
RATED 100% CORRECT!!
Perfect competition is characterized by all of the following except:
A) a horizontal demand curve for individual sellers
B) heavy advertising by individual sellers
C) sellers are price takers
D) homogeneous products correct answers B) heavy advertising by individual sellers
Identify the current Fed Funds rate.
A) .25 to .5 percent
B) .75 to 1.0 percent
C) 0 percent
D) 3.5 percent correct answers A) .25 to .5 percent
In response to the destructive bank panics of the Great Depression, future bank panics are
designed to be prevented by
A) increasing the required reserve ratio to 100%
B)the establishment of the Federal Deposit Insurance Corp.
C) establishing a fractional reserve system of banking
D) the Federal Reserve System acting as a lender of last resort
E) the Federal Reserve System conducting open market operations correct answers B) the
establishment of the Federal Deposit Insurance Corp
The main tool that the Federal Reserve uses to conduct monetary policy is
A) Open market operations
B) acting as the lender of last resort.
C) discount policy
D) check clearing
E) setting reserve requirements correct answers A) Open Market Operations
Identify the current vice-chair of the Board of Governors of the Federal Reserve.
A) Stanley Fischer
B) Janet Yellen
C) Ben Bernanke
D) Paul Volcker correct answers A) Stanley Fischer
Suppose the equilibrium price in a perfectly competitive industry is $15 and a firm in the
industry charges $21. Which of the following will happen?
A) The firm's profits will increase.
B) The firm will not sell any output
C) The firm's revenue will increase.
D) The firm will sell more output than its competitors. correct answers B) The firm will not
sell any output.
Both individual buyers and sellers in perfect competition
A) have the market price dictated to them by government.
B) can influence the market price by their own individual actions.
C) have to take the market price as given
, D) can influence the market price by joining with a few of their competitors correct answers
C) have to take the market price as given
If the market price is $25 in a perfectly competitive market, the marginal revenue from
selling the fifth unit is
A) $5.
B) 12.50
C)$25
D) $125. correct answers C) $25
If, for a given output level, a perfectly competitve firm's priceis less than its average variable
cost, the firm
A) should increase price
B) should increase output
C) is earning a profit
D) should shut down correct answers D) should shut down.
If a firm faces a downward-sloping demand curve,
A) the demand for its product must be inelastic
B) it will always make a profit.
C) it can control both price and quantity sold.
D) it must reduce its price to sell more units correct answers D) it must reduce its price to sell
more units
What is the profit-maximizing rule for a monopolistically competitive firm?
A) to produce a quanitity that maximies total revenue
B) to produce a quantity such that price equals marginal cost
C) to produce a quantity that mximized market share
D) to produce a quantity that marginal revenue equals marginal cost correct answers D) to
produce a quantity that marginal revenue equals marginal cost
A monopolistically competitive industry that earns economic profits in the short run will
A) continue to earn economic profits in the long run.
B) experience a rise in demand in the long run.
C) experience the entry of new rival firms into the industry in the long run
D) experience the exit of existing firms out of the industry in the long run. correct answers C)
experience the entry of new rival firms into the industry in the long run
An oligopoly firm is similar to a monopolically competitive firm in that
A) both firms have market power.
B) both firms are in industries characterized by an interdependent firm.
C) both operate in a market in which there are entry barriers.
D) both firms face the prisoner's dilemma. correct answers A) both firms have market power
The value of the four-firm concentration ratio that many economists consider indicative of
the existence of an oligopoly in a particular industry is
A) 20 percent or greater.
B) 50 percent or greater.
C) 30 percent or greater.
D) 10 percent or greater. correct answers B) 50 percent or greater.
RATED 100% CORRECT!!
Perfect competition is characterized by all of the following except:
A) a horizontal demand curve for individual sellers
B) heavy advertising by individual sellers
C) sellers are price takers
D) homogeneous products correct answers B) heavy advertising by individual sellers
Identify the current Fed Funds rate.
A) .25 to .5 percent
B) .75 to 1.0 percent
C) 0 percent
D) 3.5 percent correct answers A) .25 to .5 percent
In response to the destructive bank panics of the Great Depression, future bank panics are
designed to be prevented by
A) increasing the required reserve ratio to 100%
B)the establishment of the Federal Deposit Insurance Corp.
C) establishing a fractional reserve system of banking
D) the Federal Reserve System acting as a lender of last resort
E) the Federal Reserve System conducting open market operations correct answers B) the
establishment of the Federal Deposit Insurance Corp
The main tool that the Federal Reserve uses to conduct monetary policy is
A) Open market operations
B) acting as the lender of last resort.
C) discount policy
D) check clearing
E) setting reserve requirements correct answers A) Open Market Operations
Identify the current vice-chair of the Board of Governors of the Federal Reserve.
A) Stanley Fischer
B) Janet Yellen
C) Ben Bernanke
D) Paul Volcker correct answers A) Stanley Fischer
Suppose the equilibrium price in a perfectly competitive industry is $15 and a firm in the
industry charges $21. Which of the following will happen?
A) The firm's profits will increase.
B) The firm will not sell any output
C) The firm's revenue will increase.
D) The firm will sell more output than its competitors. correct answers B) The firm will not
sell any output.
Both individual buyers and sellers in perfect competition
A) have the market price dictated to them by government.
B) can influence the market price by their own individual actions.
C) have to take the market price as given
, D) can influence the market price by joining with a few of their competitors correct answers
C) have to take the market price as given
If the market price is $25 in a perfectly competitive market, the marginal revenue from
selling the fifth unit is
A) $5.
B) 12.50
C)$25
D) $125. correct answers C) $25
If, for a given output level, a perfectly competitve firm's priceis less than its average variable
cost, the firm
A) should increase price
B) should increase output
C) is earning a profit
D) should shut down correct answers D) should shut down.
If a firm faces a downward-sloping demand curve,
A) the demand for its product must be inelastic
B) it will always make a profit.
C) it can control both price and quantity sold.
D) it must reduce its price to sell more units correct answers D) it must reduce its price to sell
more units
What is the profit-maximizing rule for a monopolistically competitive firm?
A) to produce a quanitity that maximies total revenue
B) to produce a quantity such that price equals marginal cost
C) to produce a quantity that mximized market share
D) to produce a quantity that marginal revenue equals marginal cost correct answers D) to
produce a quantity that marginal revenue equals marginal cost
A monopolistically competitive industry that earns economic profits in the short run will
A) continue to earn economic profits in the long run.
B) experience a rise in demand in the long run.
C) experience the entry of new rival firms into the industry in the long run
D) experience the exit of existing firms out of the industry in the long run. correct answers C)
experience the entry of new rival firms into the industry in the long run
An oligopoly firm is similar to a monopolically competitive firm in that
A) both firms have market power.
B) both firms are in industries characterized by an interdependent firm.
C) both operate in a market in which there are entry barriers.
D) both firms face the prisoner's dilemma. correct answers A) both firms have market power
The value of the four-firm concentration ratio that many economists consider indicative of
the existence of an oligopoly in a particular industry is
A) 20 percent or greater.
B) 50 percent or greater.
C) 30 percent or greater.
D) 10 percent or greater. correct answers B) 50 percent or greater.
