Principles of Economics

rinciples of EconomicsUnit 1 ExaminationMultiple Choice Questions (Enter your answers on the enclosed answer sheet)1) The study of economics arises due toa. b. c. d. greed. scarcity. resources. money. 2) Economists assume that individualsa. b. c. d. are rational and respond to incentives. prefer to live in a society that values fairness above all else. will never take actions to help others. behave in unpredictable ways. 3) Your roommate, Serafina, a psychology major, said, “The problem with economics isthat it assumes that consumers and firms always make the correct decision. But weknow that everyone’s human, and we all make mistakes. ” Is Serafina’s criticism accurate?a. No. If we cannot assume that decisions are correct, then we will not be able to examine the moral implications of these decisions. b. Yes. One cannot make predictions about economic behavior because in reality peoplemake incorrect choices in many situations. c. No. Economics assumes that economic agents behave rationally, meaning they makethe best decisions given their knowledge of the costs and benefits of these decisions. d. Yes. Economic theory should allow for irrational behavior so that we can have morereliable predictions. 4) In Austria a woman can get up to 48 months of pension benefits and is guaranteeda maternity allowance two months before and after she gives birth. Further, the Austrian government gives monthly payouts ranging from $132 to $547, depending onthe age of offspring and offers generous tax benefits for families with children. Howwill these benefits affect a woman’s decision to have children?a. These incentives will encourage women to have children and increase the birth rate. b. These incentives will encourage only less educated women to have more children. c. These incentives will encourage only women with high opportunity costs to have morechildren. d. These incentives will have no effect on having children, the decision to have childrenis a social and psychological decision, not an economic decision. 5) Making “marginal” decisions involvesa. calculating the total benefits of an activity and determining if you are satisfied withthat amount. 53Principles of EconomicsUnit 1 Examinationb. calculating the total costs of an activity and determining if you can afford to incurthat expenditure. c. comparing the additional benefits and the additional costs of an activity. d. calculating the average benefit and the average cost of an activity to determine if it isworthwhile to undertake that activity. Scenario 1-1Suppose a cell-phone manufacturer currently sells 20,000 cell-phones per week andmakes a profit of $5,000 per week. A manager at the plant observes, “Although the last3,000 cell phones we produced and sold increased our revenue by $6,000 and our costsby $6,700, we are still making an overall profit of $5,000 per week so I think we’re onthe right track. We are producing the optimal number of cell phones. ”6) Refer to Scenario 1-1. Using marginal analysis terminology, what is another economicterm for the incremental revenue received from the sale of the last 3,000 cellphones?a. b. c. d. gross profitmarginal revenuegross earningssales revenue7) Automobile manufacturers produce a range of automobiles such as sports utilityvehicles, luxury sedans, pickup trucks and compact cars. What fundamental economic question are they addressing by making this range of products?a. b. c. d. How to produce goods that consumers want?What goods and services will be produced?Who to produce automobiles for?Why produce a variety of automobiles?8) Which of the following contributes to the efficiency of markets?a. b. c. d. 54Markets promote equal standards of living. Markets promote competition and voluntary exchange. Governments play an active role in the day-to-day operations of markets. Markets are able to bring about an equitable distribution of goods and services. Principles of EconomicsUnit 1 ExaminationFigure 1-49) Refer to Figure 1-4. Which of the following statements is true?a. b. c. d. The slope of the tangent at E is positive and the slope of the tangent at F is negative. The slope of the tangent at E and the slope of the tangent at F are negative. The slope of the tangent at E is negative and the slope of the tangent at F is positive. The slope of the tangent at E and the slope of the tangent at F are positive. 10) The production possibilities frontier model assumes all of the following excepta. b. c. d. the economy produces only two products. the level of technology is fixed and unchanging. labor, capital, land and natural resources are fixed in quantity. production of goods requires full employment of all resources. Figure 2-255Principles of EconomicsUnit 1 ExaminationFigure 2-2 above shows the production possibilities frontier for Mendonca, an agrarian nation that produces two goods, meat and vegetables. 11) Refer to Figure 2-2. The linear production possibilities frontier in the figure indicatesthata. b. c. d. the tradeoff between meat and vegetables is constant. Mendonca has a comparative advantage in the production of vegetables. it is progressively more expensive to produce meat. Mendonca has a comparative disadvantage in the production of meat. Table 2-3One Digital CameraWheat (per pound)China100 hours4 hoursSouth Korea60 hours3 hoursTable 2-3 shows the number of labor hours required to produce a digital camera and apound of wheat in China and South Korea. 12) Refer to Table 2-3. What is South Korea’s opportunity cost of producing one pound ofwheat?a. b. c. d. 20 digital cameras0. 05 units of a digital camera60 digital cameras5 digital cameras13) Which of the following are flows in the circular flow model?a. the flow of income earned by factors of production and the flow of expenditures ongoods and servicesb. the flow of goods and the flow of servicesc. the flow of costs and the flow of revenued. the flow of income received by households and the flow of tax revenues paid by households14. Which of the following statements about a simple circular flow model is true?a. b. c. d. 56Producers are neither buyers nor sellers in the product market. Households are sellers in the product market. Producers are buyers in the factor market. Households are neither buyers nor sellers in the factor market. Principles of EconomicsUnit 1 Examination15) The term “property rights” refers toa. the ability to exercise control over one’s own resources within the confines of the law. b. the government’s right to appropriate land from wealthy individuals to redistribute tolow income families. c. the physical possession of a house or any other property which the owner legally purchased. d. the right of a business not to have its assets confiscated by the government in theevent that the business is accused of committing fraud. Table 3-1Loose leaf TeaPrice per lb. (dollars)Sunil’sQuantity Demanded (lbs)Mia’sQuantity Demanded (lbs)Rest of MarketQuantityDemanded (lbs)$8403067240593514125643158MarketQuantity demanded (lbs)9016) Refer to Table 3-1. The table above shows the demand schedules for loose-leaf tee oftwo individuals (Sunil and Mia) and the rest of the market. If the price of loose-leaf tearises from $3 to $4 the market quantity demanded woulda. b. c. d. decrease by 32 pounds. decrease by 64 pounds. increase by 64 pounds. increase by 32 pounds. 17) If a firm expects that the price of its product to be higher in the future than it is todaya. the firm has an incentive to decrease supply now and increase supply in the future. b. the firm has an incentive to decrease quantity supplied now and increase quantitysupplied in the future. c. the firm will go out of business. d. the firm has an incentive to increase supply now and decrease supply in the future. 57Principles of EconomicsUnit 1 Examination18) Which of the following is the correct way to describe equilibrium in a market?a. b. c. d. At equilibrium, demand equals supply. At equilibrium, quantity demanded equals quantity supplied. At equilibrium, scarcity is eliminated. At equilibrium, market forces no longer apply. Figure 3-419) Refer to Figure 3-4. The figure represents the market for canvas tote bags. Assumethat the price of tote bags is $15. At this price: a. the quantity demanded exceeds the quantity supplied of tote bags by 75. The pricewill eventually rise to $25 where quantity demanded will equal quantity supplied. b. there is a shortage, equal to 55 tote bags, the price of tote bags will rise until demandis equal to supply. c. the demand exceeds the supply of tote bags by 55. Some consumers will have anincentive to offer to buy tote bags at a higher price. d. there is a shortage, equal to 55 tote bags, that will be eliminated when the price risesto $25. 20) Which of the following would cause the equilibrium price of white bread to decreaseand the equilibrium quantity of white bread to increase?a. b. c. d. 58a decrease in the price of flouran increase in the price of butter, a complement for white breadan increase in the price of rye bread, a substitute for white breadan increase in the price of flourPrinciples of EconomicsUnit 1 ExaminationFigure 4-6Figure 4-6 shows the market for apartments in Bay City. Recently, the government imposed a rent ceiling at R0. 21) Refer to Figure 4-6. What is the area that represents the producer surplus after theimposition of the ceiling?a. b. c. d. F+GFA+B+D+F+GD+F+G22) Which term refers to a legally determined minimum price that sellers may receive?a. b. c. d. A subsidy. A tariff. A price floor. A price ceiling. 23) A positive externality causesa. the marginal social benefit to be equal to the marginal private cost of the last unitproduced. b. the marginal social benefit to exceed the marginal private cost of the last unit produced. c. the marginal social benefit to be less than the marginal private cost of the last unitproduced. d. the marginal private benefit to exceed the marginal social cost of the last unit produced. 59Principles of EconomicsUnit 1 ExaminationFigure 4-15Companies producing toilet paper bleach the paper to make it white. The bleach is discharged into rivers and lakes and causes substantial environmental damage. Figure 4-15illustrates this situation in the toilet paper market. 24) Refer to Figure 4-15. An efficient way to get the firm to produce the socially optimaloutput level isa. to assign property rights to the firms in the industry. b. to impose a tax to make the industry bear the external costs it creates. c. to grant a subsidy to enable the industry to internalize the external costs of production. d. for government to set a quota on the quantity of toilet paper that the toilet paperindustry can produce. 25) What is the rationale behind a tradable emissions allowance scheme?a. to create a market for externalities: the scheme brings together buyers and sellers ofmarketable permitsb. to raise revenue for the government through the sale of emission permits and at thesame time set an emissions targetc. to provide firms with the incentive to consider less costly alternatives to pollutionreduction by making firms pay for the right to pollute beyond their specified allowanced. to discipline polluting firms by specifying the maximum amount of emissions allowedand giving them permits to pollute up to their allowance60

Principles Of Economics

Question: Antitrust Practices and Market PowerResearch authoritative articles using the news and the DeVry Online Library (http://library. devry. edu) for a recent case of antitrust investigation. You are free to choose a case from any industry and any part of the world. Based on the case you have selected, answer the following questions. Why was/were the firm(s) investigated for antitrust behavior?Identify some of the costs (pecuniary and nonpecuniary) associated with the antitrust behavior (firms having power in the market). Additionally, note the specific antitrust act (Sherman Act, Clayton Act, etc. ) under which the violation was investigated. Given your research and findings, are monopolies and oligopolies (firms demonstrating power) always bad for society? Be sure to provide real world examples of where this may be the case to strengthen your position. Provide at least one example of a case where having a monopoly or oligopoly may actually benefit the society. Based on your findings to the questions listed above, write a report with aminimumof 300 words in essay format in APA style , using correct economic terms. If you ONLY write 300 words, you probably won t be able to fully answer the questions. Key concepts to include in your paper include the following. Monopoly Market StructureOligopoly Market StructureBarriers to Entry Into the MarketNatural MonopolyGovernment MonopolyDownward Sloping Demand CurveEconomies of ScalePrice FixingCollusionMonopoly PricingPrice MakerMarket PowerEconomic ProfitsImperfect CompetitionRent-Seeking BehaviorX-InefficiencyDeadweight Loss to SocietyMarginal CostMarginal RevenueAntitrustYou must use at minimum at least one article from the DeVry Online Library. Cite all your references in APA format.

principles of economics

Question

Question: Antitrust Practices and Market Power

Research authoritative articles using the news and the DeVry Online Library (http://library.devry.edu) for a recent case of antitrust investigation. You are free to choose a case from any industry and any part of the world. Based on the case you have selected, answer the following questions.

Why was/were the firm(s) investigated for antitrust behavior?
Identify some of the costs (pecuniary and nonpecuniary) associated with the antitrust behavior (firms having power in the market). Additionally, note the specific antitrust act (Sherman Act, Clayton Act, etc.) under which the violation was investigated.
Given your research and findings, are monopolies and oligopolies (firms demonstrating power) always bad for society? Be sure to provide real world examples of where this may be the case to strengthen your position.
Provide at least one example of a case where having a monopoly or oligopoly may actually benefit the society.

Based on your findings to the questions listed above, write a report with aminimumof 300 words in essay format in APA style , using correct economic terms. If you ONLY write 300 words, you probably won’t be able to fully answer the questions.

Key concepts to include in your paper include the following.

Monopoly Market Structure
Oligopoly Market Structure
Barriers to Entry Into the Market
Natural Monopoly
Government Monopoly
Downward Sloping Demand Curve
Economies of Scale
Price Fixing
Collusion
Monopoly Pricing
Price Maker
Market Power
Economic Profits
Imperfect Competition
Rent-Seeking Behavior
X-Inefficiency
Deadweight Loss to Society
Marginal Cost
Marginal Revenue
Antitrust

You must use at minimum at least one article from the DeVry Online Library. Cite all your references in APA format.

Originally posted 2016-09-30 08:44:21. Republished by Blog Post Promoter

principles of economics

Question: Antitrust Practices and Market Power

Research authoritative articles using the news and the DeVry Online Library (http://library.devry.edu) for a recent case of antitrust investigation. You are free to choose a case from any industry and any part of the world. Based on the case you have selected, answer the following questions.

Why was/were the firm(s) investigated for antitrust behavior?
Identify some of the costs (pecuniary and nonpecuniary) associated with the antitrust behavior (firms having power in the market). Additionally, note the specific antitrust act (Sherman Act, Clayton Act, etc.) under which the violation was investigated.
Given your research and findings, are monopolies and oligopolies (firms demonstrating power) always bad for society? Be sure to provide real world examples of where this may be the case to strengthen your position.
Provide at least one example of a case where having a monopoly or oligopoly may actually benefit the society.

Based on your findings to the questions listed above, write a report with aminimumof 300 words in essay format in APA style , using correct economic terms. If you ONLY write 300 words, you probably won’t be able to fully answer the questions.

Key concepts to include in your paper include the following.

Monopoly Market Structure
Oligopoly Market Structure
Barriers to Entry Into the Market
Natural Monopoly
Government Monopoly
Downward Sloping Demand Curve
Economies of Scale
Price Fixing
Collusion
Monopoly Pricing
Price Maker
Market Power
Economic Profits
Imperfect Competition
Rent-Seeking Behavior
X-Inefficiency
Deadweight Loss to Society
Marginal Cost
Marginal Revenue
Antitrust

You must use at minimum at least one article from the DeVry Online Library. Cite all your references in APA format.