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(ECON503)EC503FinalExamPractice2plus.pdf
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Name ________________________
Final Exam
Economics 503
Fundamentals of Economic Analysis
October 28, 2006
2:30-5:30PM
Write all of your answers on this white exam paper. Do not hand in the blue books.
Multiple Choice (2 points each)
1.
The demand and supply for a product both increase (i.e. both curves shift up and out. Which of the following statements is true:
a.
the equilibrium price of the product must increase; the equilibrium quantity of the product must increase.
b.
the equilibrium price of the product may or may not increase; the equilibrium quantity of the price must increase.
c.
the equilibrium price of the product must increase; the equilibrium quantity of the product may or may not increase.
d.
the equilibrium price of the product may or may not increase; the equilibrium quantity of the price may or may not increase.
_________________
2.
A countrys long-term development strategy focuses on accumulating more capital equipment without increasing the efficiency of production technology or the education level of workers. We would expect to see:
a.
Increasing returns to capital; Increasing ICOR levels
b.
Decreasing returns to capital; Increasing ICOR levels
c.
Increasing returns to capital; Decreasing ICOR levels
d.
Decreasing returns to capital; Decreasing ICOR levels
_________________
3.
Chinas GDP per capita is $2000 while in Japan it is $32,000. Chinas GDP per capita is growing at a rate of 7% per year, while in Japan it is growing at 1% per year. If this continues indefinitely, China will have caught up within
a.
10 years
b.
20 years
c.
40 years
d.
70 years
_________________
4.
A firm is termed a natural monopoly when its:
a.
average variable costs are initially falling.
b.
average fixed costs continue to decline at outputs beyond those sustainable in the market.
c.
average total costs of production continue to decline at outputs beyond those sustainable in the market.
d.
Marginal revenue is less than price.
_________________
5.
A monopoly faces a ________________; a perfectly competitive firm faces a _________________.
a.
perfectly elastic demand curve for which marginal revenue is less than price; perfectly elastic demand curve for which marginal revenue equals price.
b.
Perfectly elastic demand curve for which marginal revenue equals price; downward sloping demand curve for which marginal revenue is less than price.
c.
Downward sloping demand curve for which marginal revenue is less than price; perfectly elastic demand curve for which marginal revenue is less than price.
d.
Downward-sloping demand curve for which marginal revenue equals price; perfectly elastic demand curve for which marginal revenue is less than price.
e.
Downward-sloping deman