Final Exam Review
Supplemental Instruction
Iowa State University / Leader: / Sean C
Course: / ECON 101
Instructor: / Rudik
Date: / 4/28/16

1)The government puts in place a higher minimum wage, they are trying to promote

  1. Equality
  2. Trade
  3. Efficiency
  4. Lower opportunity costs

2. Trade moves the PPF

a. Inward

b. Outward

c. Doesn’t move it

d. Moves one country’s out and one country’s in.

  1. If a point on a PPF is inside the PPF and not on the line it is
  2. Inefficient and feasible
  3. Efficient and feasible
  4. Inefficient and infeasible
  5. Infeasible and efficient
  6. If demand for a good is perfectly inelastic the demand curve is
  1. Vertical
  2. Downward sloping
  3. Upward sloping
  4. Horizontal
  1. Firms in the circular flow model
  1. Own factors of production
  2. Buy goods
  3. Buy factors of production
  4. Only sell goods and not services
  1. If the US makes cars and shoes more efficiently than Japan, but Japan specializes in shoes and the US specializes in cars than
  1. The US has a comparative advantage in both
  2. Japan has a comparative advantage in shoes
  3. Japan has an absolute advantage in both
  4. The US has a comparative advantage in shoes
  1. A tornado is going to hit Iowa and destroy its corn, Iowa also produces computers, what effect does this have on Iowa’s PPF?
  1. Shrinks the whole PPF curve
  2. Shrinks the corn production and expands computer production
  3. Expands the whole PPF curve
  4. Just shrinks the corn production
  1. Demand for iPhones is perfectly elastic, if apple raises the prices of their iPhones revenue will
  1. Increase
  2. Decrease
  3. Can’t tell
  4. Remain the same
  1. Which is the best example of a competitive market?
  1. Market for selling cable
  2. Market for corn
  3. Market for beds
  4. Market for frozen yogurt
  1. If quantity demanded exceeds quantity supplied at the current price then the price must ______to return to equilibrium.
  2. Rise
  3. Fall
  4. Stay the same
  5. If the government implements a binding price floor, there is a
  6. Surplus
  7. Shortage
  8. Neither surplus nor shortage

Name / Cost
Dan / $12
Jenna / $22
Mike / $15
Emily / $30
Nate / $20
  1. Using the chart to the left find producer surplus if the market price of the good is $20
  2. $13
  3. $18
  4. $20
  5. $30
  6. Now if the market price of the good was $25, who would NOT enter the market
  7. Dan
  8. Jenna
  9. Mike
  10. Emily
  11. Nate
  12. If policy makers want to minimize deadweight loss, they should:
  1. Make a large tax
  2. Tax only the sellers
  3. Tax only the buyers
  4. Tax the good that’s the most inelastic
  1. Taxes
  2. Increase consumer surplus
  3. Decrease consumer and producer surplus
  4. Should only be on the seller
  5. Increase producer surplus
  6. If the world price of a good is $5 and the US price is $3, assuming there is free trade, the US will
  7. Import the good
  8. Export the good
  9. Tax the good
  10. Not enough information
  11. What’s the most efficient way for the government to reduce external costs?
  12. Tax the good
  13. Issue permits, like for polluting, and allow firms to trade them
  14. Tell each firm how much pollution to cut
  15. There is no way to reduce external costs
  16. Fishing is an example of a
  17. Common resource
  18. Public good
  19. Private good
  20. Club good
  21. If one person using the good doesn’t affect everyone else the good is
  22. Non-Rival
  23. Rival
  24. Excludable
  25. Non-excludable
  26. When a tax is increased it will always increase tax revenue
  27. True
  28. False

Quantity / FC / VC / TC
0 / $100 / $100
1 / $80
2 / $100 / $230
3 / $260
4 / $210
  1. Using the chart to the left to find the fixed cost at a quantity of 1.
  2. $100
  3. $0
  4. $80
  5. Can’t tell
  6. Using the same chart at a Quantity of 4 what is the total cost?
  7. $100
  8. $230
  9. $260
  10. $310
  11. What would the marginal cost be going from a quantity of 1 to 2 using the chart above.
  12. $180
  13. $50
  14. $80
  15. $30
  16. If P<AVC then the firm will decide to
  17. Exit the market
  18. Enter the market
  19. Shut down
  20. No way of knowing
  21. Price discrimination is done by monopolies to
  22. Maximize consumers happiness
  23. Maximize the firm’s profits
  24. Promote overall equality
  25. Maximize total surplus
  26. What’s the equilibrium of competitive markets?
  27. P=MC
  28. P=MR
  29. MR=ATC
  30. ATC=AVC Pizza Hut
  31. Using the chart to the left, what is the Nash Equilibrium?

60 Pizzas / 100 Pizzas
60 Pizzas / PH= $1000
D= $1000 / PH=$1300
D=$500
100 Pizzas / PH=$500
D=$1300 / PH= $600
D= $600
  1. 60 Pizzas each
  2. 100 Pizzas Each
  3. 60 for Dominos and 100 for Pizza Hut
  4. 100 for Dominos and 60 for Pizza Hut

Dominos

  1. According to the signaling theory of college
  2. College provides an important learning experience and gives us tools to use the workforce
  3. We’re just here to party
  4. College is useless
  5. College shows employers that we’re willing to work hard and proves productiveness
  6. Roger has a budget of $1000 dollars, if candy cost $2 and he bought 300 candies and soup cost $5, how much soup can he buy?
  7. 80 cans
  8. 100 cans
  9. 300 cans
  10. 180 cans