ECON 101 Final Exam Review: Questions

ECON 101 Final Exam Review: Questions

ECON 101 Final Exam Review: Questions

  1. David and Gary are working together to collect food. It takes David 1 hour to collect berries and 2 hours to catch fish. It takes Gary 2 hours to collect berries and 6 hours to catch fish. Who has the absolute advantage in each good?
  2. Gary fish and David berries
  3. Gary berries and David fish
  4. Gary in both
  5. David in both
  1. Who has the comparative advantage in each good?
  2. Gary fish and David Berries
  3. Gary berries and David Fish
  4. Gary in both
  5. David in both
  1. The United States had a set PPF for oil and corn. The government decides to allow more offshore drilling than before, how does this affect the PPF?
  2. Both axis of the PPF decrease
  3. Both axis of the PPF increase
  4. Only the corn axis increases
  5. Only the Oil axis increases
  1. There is a shortage of potato chips in the U.S. What will happen to the demand and the price of corn chips in the market?
  2. Demand for corn chips decreases and price decreases
  3. Demand for corn chips increases and price decreases
  4. Demand for corn chip decreases and price increases
  5. Demand for corn chips increases and price increases
  1. A firm wants to know what will happen if their competitor, who offers a substitute good, decreases the price of their good. To do this, what should the firm calculate?
  2. Price elasticity
  3. Income elasticity
  4. Cross-price elasticity
  5. Law of demand
  1. The government decides to put a price floor on fatty fast food. What will this price floor create?
  2. Increase price and a surplus
  3. Increased price and a shortage
  4. Decreased price and a surplus
  5. Decreased price and a shortage
  1. Suppose the economy in Iowa improves and everyone in the state becomes a millionaire. What will happen to the demand for diamond rings
  2. It will increase because it is a normal good
  3. It will decrease because it is a normal good
  4. It will increase because it is an inferior good
  5. It will decrease because it is an inferior good
  6. UtilityQuantity

00

501

1102

1603

2004

What is the marginal utility from adding the third unit?

  1. 160
  2. 540
  3. 50
  4. 40
  1. A company wants to start a pizza place. To begin they buy a plot of land, build a store, and buy ovens and furniture to put in the store. These are all examples of what?
  2. Total cost
  3. Average cost
  4. Variable cost
  5. Fixed Cost
  1. A firm is trying to decide how much output they should produce. After looking at the following equations, which one should they use to determine where to produce at?
  2. TR=P*Q
  3. MR=MC
  4. MUa/Pa=MUb/Pb
  5. MC=ATC
  1. Why is the Demand Curve in a perfectly competitive market horizontal?
  2. Any increase in the quantity will lead to a price change to price 0
  3. Any increase in the price will lead to a quantity change to quantity 0
  4. Any increase in Marginal Cost will lead to a price of 0
  5. Any increase in ATC will lead to a price change of 0
  1. As quantity increases, the demand curve for a monopoly is:
  2. Always horizontal
  3. Always increasing
  4. Always decreasing
  5. Monopolies don’t have demand curves
  1. Which of the following IS NOT a valid argument against monopolies?
  2. They make too much money
  3. They have less incentive to innovate
  4. They have less incentive to cut cost
  5. Monopolies fail to produce output that society values more than the cost to produce it
  1. Which of the following are not required for a monopolist competition?
  2. Many buyers and sellers
  3. No significant barriers to entry
  4. Nobody is allowed to have market power
  5. A differentiated product
  1. Which of the following does not produce where MR=MC
  2. Monopolistic competition
  3. Oligopoly
  4. Monopoly
  5. Perfectly Competitive Market
  1. How do cartels make above normal profits?
  2. They behave like a monopoly
  3. They shift their marginal cost curve
  4. They ignore MR=MC
  5. They use violence and force to change their prices
  1. Which of the follow is not a reason why every competitive market isn’t a cartel?
  2. Cartels are illegal in some nations
  3. Cartels are unstable because of cheaters and free riders
  4. It makes more since for an individual to make the decision that is better for him in the cartel
  5. Cartels have to hide away making them difficult to manage
  1. In a Brazilian TV show, two contestants compete against each other. They have two options to submit to the judges, Win and Share. If one person chooses win and the other chooses share, the winner collects $30,000, if they both choose share, they each collect $20,000, and if they both choose win they each collect $10,000.

Which of the following is the dominant strategy of this game?

  1. One Win, One Share
  2. Both Win
  3. Both Share
  1. What is the socially preferred outcome in this game?
  2. One Win, One Share
  3. Both Win
  4. Both Share
  1. If any number of people can consume a good simultaneously, it is considered what?
  2. Non excludability
  3. Non rival
  4. Non functional
  5. Non frequent
  1. Which of the following would not be a public good?
  2. The view of a mountain
  3. The water in the ocean
  4. Public roads
  5. A new pair of shoes
  1. What was the present value last year of an amount that is now worth 1,110 at a 11% interest rate?
  2. 1,100
  3. 1,200
  4. 11,000
  5. 1000
  1. What is the Nash equilibrium?
  2. A situation where everyone is happy with their choice
  3. A situation where the society highest outcome is always reached
  4. A situation where nobody regrets their decision
  5. A situation where everyone knows the outcome before their decision is made
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