This pack of ECO 561 Final Exam consists of:

1) If a firm in a purely competitive industry is confronted with an equilibrium price of $5, its marginal revenue:

2) A firm that is motivated by self interest should

3) If price is above the equilibrium level, competition among sellers to reduce the resulting

4) Camille’s Creations and Julia’s Jewels both sell beads in a competitive market. If at the market price of $5, both are running out of beads to sell (they can’t keep up with the quantity demanded at that price), then we would expect both Camille’s and Julia’s to

5) Since their introduction, prices of DVD players have fallen and the quantity purchased has increased. This statement

6) In a market economy the distribution of output will be determined primarily by

7) In a competitive market economy firms will select the least-cost production technique because

8) Suppose that the price of peanuts falls from $3 to $2 per bushel and that, as a result, the total revenue received by peanut farmers changes from $16 to $14 billion.

9) If technology dictates that labor and capital must be used in fixed proportions, an increase in the price of capital will cause a firm to use

10) In which of the following industries are economies of scale exhausted at relatively low levels of output?

11) If a firm decides to produce no output in the short run, its costs will be

12) Which of the following represents a long-run adjustment?

13) Paying an above-equilibrium wage rate might reduce unit labor costs by

14) A firm can hire six workers at a wage rate of $8 per hour but must pay $9 per hour to all of its employees to attract a seventh worker. The marginal wage cost of the seventh worker is

15) Price exceeds marginal revenue for the pure monopolist because the

16) Oligopoly is difficult to analyze primarily because

17) A competitive firm will maximize profits at that output at which

18) Nonprice competition refers to

19) Advertising can impede economic efficiency when it

20) Which of the following is not a possible source of natural monopoly?

21) Suppose that an industry is characterized by a few firms and price leadership. We would expect that

22) When economists view technological change as internal to the economy, they mean that it

23) Firm X develops a new product and gets a head start in its production. Other firms try to produce a similar product but discover they have higher average total costs than the existing firm. This situation illustrates

24) In the long run a pure monopolist will maximize profits by producing that output at which marginal cost is equal to

25) If personal taxes were decreased and resource productivity increased simultaneously, the equilibrium

26) Suppose that nominal wages fall and productivity rises in a particular economy. Other things equal, the aggregate

27) Suppose the price level is fixed, the MPC is .5, and the GDP gap is a negative $100 billion. To achieve full-employment output (exactly), government should

28) Expansionary fiscal policy is so named because it

29) Stabilizing a nation’s price level and the purchasing power of its money can be achieved

30) Suppose that US prices rise 4 percent over the next year while prices in Mexico rise 6%. According to the purchasing power parity theory of exchange rates, what should happen to the exchange rate between the dollar and the peso?