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Douglas, Fall 2007 Version A Special Codes 00000
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Econ 201 Final Exam
1. For a profit-maximizing monopolist,

a. MR < MC < P.
b. P > MR > MC.
c. P = MR = MC.
d. P > MR = MC.
2. A market structure with only a few sellers, offering similar or identical products, is known as
a. monopoly.
b. oligopoly.
c. perfect competition.
d. monopolistic competition.
3. The main argument for splitting up monopolies through antitrust action is based on the notion that
a. small firms have lower costs.
b. competition is more efficient than monopoly.
c. greedy monopolies should be punished.
d. consumers prefer dealing with small firms.
Table 15-1
Total Average Marginal
Quantity Price Revenue Revenue Revenue
1 35 35
2 64 32 29
3 29
4 17
5 23 11
6 120
7 17 -1
4. Refer to Table 15-1. If the monopolist wants to maximize its revenue, how many units of its product should
it sell?
a. 4
b. 7
c. 6
d. 5
5. Refer to Table 15-1. What is the marginal revenue for the monopolist for the third unit sold?
a. 7.67
b. 87
c. 29
d. 23
6. If a competitive firm sees that its marginal cost exceeds its marginal revenue, then
a. the firm is definitely earning a positive profit.
b. it can increase its profit by increasing its output.
c. the firm is definitely losing money.
d. it can increase its profit by decreasing its output.
1
Econ201 Final Exam, Fall 2007, Version A Douglas
Table 13-8: Costs of Gigaplot Production

Quantity Average Average Average
of Fixed Variable Total Fixed Variable Total Marginal
gigaplots Cost Cost Cost Cost Cost Cost Cost
1 $13 $38
2 $28
3 $70
7. Refer to Table 13-8. What is the marginal cost of the 3rd gigaplot?
a. $70
b. $20
c. $17
d. $45
8. Refer to Table 13-8. What is the average variable cost of producing 3 gigaplots?
a. $15
b. $14
c. More information is needed.
d. $16
9. Refer to Table 13-8. What is the fixed cost of producing 3 gigaplots?
a. $25
b. $12
c. $20
d. More information is needed.
10. When a firm in a competitive market decides to triple the amount of output it sells, as a result
a. its profit must increase.
b. the price in the market falls.
c. its total revenue triples.
d. the price in the market rises.
11. Which of the following events will definitely cause equilibrium quantity to fall?
a. demand and supply both decrease
b. demand decreases and supply increases
c. demand and supply both increase
d. demand increases and supply decreases
12. During the last few decades, sunscreen sales have increased while the price of sunscreen has risen and the
variety of sunscreen products offered has increased. Whats the most likely explanation?
a. Sunscreen producers increased production out of concern for the publics health.
b. Health-conscious consumers heeded health warnings and decided to buy more sunscreen.
c. Cancer activists successfully lobbied to obtain government subsidies for sunscreen use.
d. Government officials ordered sunscreen producers to produce more sunscreen.
13. When a country allows trade and becomes an exporter of a good,
a. everyone in the country loses.
b. the losses of the losers exceed the gains of the winners.
c. the gains of the winners exceed the losses of the losers.
d. everyone in the country benefits.
2
14. What will happen to the equilibrium price and quantity of legal music downloads if iPods become cheaper, it
becomes more difficult to download or share music illegally, and payments to musicians by recording
companies fall?
a. Quantity will fall and the effect on price is ambiguous.
b. Price will fall and the effect on quantity is ambiguous.
c. Quantity will rise and the effect on price is ambiguous.
d. Price will rise and the effect on quantity is ambiguous.
15. The lowest points of the average variable cost and average total cost curves occur where
a. the average variable cost and average total cost curves intersect.
b. the marginal cost curve intersects those curves.
c. the marginal cost curve lies below both curves.
d. average total cost is below average variable cost.
16. The defining characteristic of a natural monopoly is
a. diseconomies of scale over the relevant range of output.
b. constant marginal cost over the relevant range of output.
c. constant returns to scale over the relevant range of output.
d. economies of scale over the relevant range of output.
Figure 15-6
17. Refer to Figure 15-6. To maximize its profit, a monopolist would choose
a. 200 units of output and a price of $20 per unit
b. 100 units of output and a price of $20 per unit
c. 150 units of output and a price of $15 per unit
d. 100 units of output and a price of $10 per unit
18. Refer to Figure 15-6. To maximize total surplus, a benevolent social planner would choose
19. A competitive firm's short-run supply curve is part of which of the following curves?
a. Average total cost
b. Average variable cost
c. Marginal revenue
d. Marginal cost
3
20. When an oligopoly market reaches a Nash equilibrium,

a. each firm will not have tried to maximize its profit.
b. firms will not be concerned about the strategies of competing firms.
c. each firm will have chosen its own best strategy, given what the other firms are doing.
d. the market price will be different for each firm.
21. The Social Security tax is a tax on
a. labor.
b. earnings during retirement.
c. capital.
d. consumption expenditures.
Figure 15-3
22. Refer to Figure 15-3. Profit will be maximized by charging a price equal to
a. P3.
b. P2.
c. P1.
d. P0.
23. Refer to Figure 15-3. The marginal revenue curve for a monopoly firm is depicted by curve
a. A.
b. B.
c. C.
d. D.
24. Refer to Figure 15-3. A profit-maximizing monopoly's profit is equal to
a. (P3 - P0) Q2.
b. P3 Q2.
c. (P1 - P0) Q2.
d. (P3 - P0) Q4.
4
25. Tommy's Tires operates in a perfectly competitive market. If tires sell for $50 each and average total cost per
tire is $40 at the profit-maximizing output level, then in the long run
a. some firms will exit from the market, and the price will rise.
b. more firms will enter the market, and the price will fall.
c. more firms will enter the market, and the price will rise.
d. more firms will exit from the market, and the price will fall.
26. The negative relationship between price and quantity demanded
a. is represented by a downward-sloping demand curve.
b. applies to most goods in the economy.
c. is referred to as the law of demand.
d. All of the above are correct.
27. In a competitive market the price is $7, and typical firms in the market has ATC = $7.50 and AVC = $7.15.
a. In the long run the market will cease to exist.
b. In the short run firms will shut down, and in the long run firms will leave the market.
c. New firms will likely enter this market to capture any remaining economic profits.
d. In the short run firms will produce, but in the long run firms will leave the market.
28. Because there is diminishing marginal product of labor, as the number of workers increases
a. the additional output added by one additional worker rises.
b. the additional cost of hiring an additional worker rises.
c. the additional output added by one additional worker declines.
d. the additional cost of an additional unit of output falls.
29. A monopolist can make large positive economic profits in the long run only if the monopolist
a. produces the amount of output where average variable cost is at a minimum.
b. is protected by barriers to entry.
c. produces the amount of output where average total cost is at a minimum.
d. operates as a price taker rather than a price maker.
Figure 13-8
30. Refer to Figure 13-8. At levels of output below M the firm experiences
a. economies of scale.
b. economic profit.
c. diseconomies of scale.
d. accounting profit.
5
31. Refer to Figure 13-8. In long run competitive market equilibrium, firms might operate on which of the
average total cost curves?
a. ATCC only.
b. ATCB only.
c. ATCA only.
d. ATCD between M and N.
32. Travis can mow a lawn in two hours or he can trim a tree in one hour. Ricardo can mow a lawn in three hours
or he can trim a tree in two hours.
a. Travis has a comparative advantage over Ricardo in mowing lawns.
b. Travis has an absolute advantage over Ricardo in mowing lawns.
c. Ricardo has a comparative advantage over Travis in trimming trees.
Figure 14-4: A typical firm in a COMPETITIVE market
33. Refer to Figure 14-4. When market price is P5, a profit-maximizing firm's profit is the area
a. P5 Q3.
b. (P5 - P3) Q2.
c. (P5 - P4) Q3.
d. When market price is P5 there are no profits.
34. Refer to Figure 14-4. Firms would want to enter this market anytime the price exceeds
a. P2.
b. P1.
c. P3.
d. None of the above is correct.
35. When firms have agreements among themselves on the quantity to produce and the price at which to sell
output, we refer to their form of organization as a
a. monopolistically competitive oligopoly.
b. cartel.
c. Nash arrangement.
d. perfectly competitive oligopoly.
36. The inner and outer loops in the circular-flow diagram represent
a. (i) the flows of inputs and outputs and (ii) the flow of dollars.
b. (i) the flow of dollars and (ii) other financial flows.
c. (i) the flow of goods and (ii) the flow of services.
d. (i) inputs into production processes and (ii) outputs from production processes.
6
37. As a group, oligopolists would always earn the highest profit if they would
a. produce the perfectly competitive quantity of output.
b. charge the same price that a monopolist would charge if the market were a monopoly.
c. produce more than the perfectly competitive quantity of output.
d. operate according to their own individual self-interests.
38. When determining whether to shutdown in the short run, a competitive firm should
a. ignore fixed costs.
b. ignore variable costs.
c. ignore sunk costs.
d. Both a and c are correct
39. When a country allows trade and becomes an importer of a good,
a. domestic producers become worse off, and domestic consumers become better off.
b. both domestic producers and domestic consumers become worse off.
c. both domestic producers and domestic consumers become better off.
d. domestic producers become better off, and domestic consumers become worse off.
40. The firm will make the most profits if it produces the quantity of output at which
a. marginal revenue equals total revenue.
b. profit per unit is greatest.
c. marginal cost equals average cost.
d. marginal revenue equals marginal cost.
41. Suppose a nation is currently producing at a point inside its production possibilities frontier. We know that
a. the nation is producing an efficient combination of goods.
b. there will be a large opportunity cost if the nation tries to increase production.
c. the nation is producing beyond its capacity, and inflation will occur.
d. the nation is not using all available resources or is using inferior technology or both.
Table 16-3
The information in the table below shows the total demand for cable TV subscriptions in Laramie, WY.
Assume that the variable cost of providing the service is zero, so the firm will maximize profits by
maximizing revenue.
Quantity Price (per month)
0 $120
3,000 $100
6,000 $ 80
9,000 $ 60
12,000 $ 40
15,000 $ 20
42. Refer to Table 16-3. Assume that there are two profit-maximizing digital cable TV companies operating in
Laramie, and they initially collude and agree to split the market equally. How many cable TV subscriptions
will be sold altogether when this market reaches a Nash equilibrium?
a. 9,000
b. 12,000
c. 3,000
d. 6,000
7
43. Refer to Table 16-3. If there is only one cable TV company in Laramie, what price would it charge if it
wants to maximize its profit?
a. $40
b. $60
c. $80
d. $100
44. If a surplus currently exists in a market we know that the current price is
a. above equilibrium price and quantity supplied is greater than quantity demanded.
b. below equilibrium price and quantity demanded is greater than quantity supplied.
c. below equilibrium price and quantity supplied is greater than quantity demanded.
d. above equilibrium price and quantity demanded is greater than quantity supplied.
45. Suppose a tax of $1 per unit is imposed on french fries. The more elastic the supply of french fries,
a. the larger is the deadweight loss of the tax.
b. the larger is the tax burden on french fry sellers relative to the tax burden on buyers.
c. the smaller is the response of the quantity supplied of french fries to the tax.
46. Which of the following events would cause both the equilibrium price and equilibrium quantity of Dodge
Neons (an inferior good) to increase?
a. a decrease in consumer income
b. an increase in consumer income
c. gas mileage of SUVs and mid-size sedans increases.
d. wages of auto workers fall.
Figure 13-6
47. Refer to Figure 13-6. Which of the curves is most likely to represent average total cost?
a. A
b. B
c. C
d. D
48. The U.S. market for locomotives is divided between two producers: General Electric has 70 percent of the
market and General Motors has 30 percent. This market is an example of
a. an oligopoly, or duopoly.
b. monopolistic competition.
c. a collusive monopoly.
d. a cartel.
8
49. If the price of oak lumber increases, what happens to consumer surplus in the market for oak cabinets?
a. It will not change consumer surplus; only producer surplus changes.
b. It may either increase or decrease.
c. It increases.
d. It decreases.
50. A good reason why the local gas distribution company is subject to price regulation rather than being broken
up through antitrust, is because the gas company is a
a. profit-maximizing monopoly.
b. producer of externalities.
c. revenue-maximizing monopoly.
d. natural monopoly.
Table 7-1
BUYER WILLINGNESS TO PAY
MIKE $50.00
SANDY $30.00
JONATHAN $20.00
HALEY $10.00
51. Refer to Table 7-1. If the table represents the willingness to pay of four buyers and the price of the product is
$28, then their total consumer surplus is
a. $24.
b. $46.
c. $26.
d. $56.
52. Which of the following changes would not shift the demand curve for Monty Python videos?
a. a change in consumer income
b. a change in the price of Monty Python videos
c. a change in expectations about the future price of Monty Python videos
d. a change in the price of Mr. Bean videos, a substitute good
53. Wal-Mart has low costs in part because it is very large. Local retailers often go out of business because their
prices are higher than Wal-Marts. This demonstrates that
a. the greed of large sellers like Wal-Mart hurts consumers, especially low-income
consumers.
b. consumers are angry at local retailers because of their high prices.
c. there are economies of scale in retail sales.
d. there are diseconomies of scale in retail sales.
54. Susan could work as a telemarketer, earning $25,000 per year. Instead, she has her own catering business. The
$25,000 possible telemarketing income is part of her catering businesss
a. total revenue.
b. explicit costs.
c. marginal costs.
d. implicit costs.
9
55. Kelly and David are both able to repair cars and cook meals. Which of the following is not possible?
a. Kelly has an absolute advantage in both repairing cars and in cooking meals.
b. Kelly has comparative advantage in car repair and David has comparative advantage in
cooking.
c. Kelly has absolute advantage in car repair and David has absolute advantage in cooking.
d. Kelly has a comparative advantage in both repairing cars and in cooking meals.
10
ID: A
Econ 201 Final Exam

Answer Section
MULTIPLE CHOICE
1. ANS: D MSC: Analytical

2. ANS: B MSC: Definitional
3. ANS: B MSC: Interpretive
4. ANS: C MSC: Applicative
5. ANS: D MSC: Applicative
8. ANS: A MSC: Applicative
10. ANS: C MSC: Analytical
12. ANS: B MSC: Applicative
13. ANS: C MSC: Interpretive
16. ANS: D MSC: Definitional
17. ANS: B MSC: Analytical
21. ANS: A MSC: Interpretive
22. ANS: A MSC: Analytical
26. ANS: D MSC: Interpretive
1
ID: A

2
Douglas, Fall 2007 Version B Special Codes 00000
Econ 201 Final Exam
Figure 15-3

a. P1.
b. P3.
c. P0.
d. P2.
a. (P1 - P0) Q2.
b. P3 Q2.
c. (P3 - P0) Q2.
d. (P3 - P0) Q4.
a. A.
b. B.
c. C.
d. D.
b. marginal cost equals average cost.
c. marginal revenue equals marginal cost.
d. profit per unit is greatest.
1
Econ201 Final Exam, Fall 2007, Version B Douglas
a. Average variable cost
b. Average total cost
c. Marginal revenue
d. Marginal cost
a. Government officials ordered sunscreen producers to produce more sunscreen.
b. Cancer activists successfully lobbied to obtain government subsidies for sunscreen use.
c. Health-conscious consumers heeded health warnings and decided to buy more sunscreen.
d. Sunscreen producers increased production out of concern for the publics health.
companies fall?
a. Quantity will rise and the effect on price is ambiguous.
b. Price will rise and the effect on quantity is ambiguous.
c. Quantity will fall and the effect on price is ambiguous.
d. Price will fall and the effect on quantity is ambiguous.
a. produce more than the perfectly competitive quantity of output.
b. operate according to their own individual self-interests.
c. charge the same price that a monopolist would charge if the market were a monopoly.
d. produce the perfectly competitive quantity of output.
a. applies to most goods in the economy.
b. is represented by a downward-sloping demand curve.
a. (i) the flow of dollars and (ii) other financial flows.
b. (i) inputs into production processes and (ii) outputs from production processes.
d. (i) the flows of inputs and outputs and (ii) the flow of dollars.
Table 7-1
MIKE $50.00
SANDY $30.00
JONATHAN $20.00
HALEY $10.00
a. $56.
b. $46.
c. $26.
d. $24.
2
Table 16-3
maximizing revenue.
0 $120
3,000 $100
6,000 $ 80
9,000 $ 60
12,000 $ 40
15,000 $ 20
a. 9,000
b. 6,000
c. 12,000
d. 3,000
a. $40
b. $100
c. $80
d. $60
a. the gains of the winners exceed the losses of the losers.
b. everyone in the country benefits.
c. the losses of the losers exceed the gains of the winners.
d. everyone in the country loses.

1 $13 $38
2 $28
3 $70
a. $70
b. $17
c. $20
d. $45
3
a. $15
b. More information is needed.
c. $14
d. $16
a. $12
b. $25
c. $20
a. the market price will be different for each firm.
b. firms will not be concerned about the strategies of competing firms.
c. each firm will not have tried to maximize its profit.
d. each firm will have chosen its own best strategy, given what the other firms are doing.
Figure 13-8
a. ATCA only.
b. ATCB only.
c. ATCC only.
a. diseconomies of scale.
b. economies of scale.
c. economic profit.
4
Table 15-1
1 35 35
2 64 32 29
3 29
4 17
5 23 11
6 120
7 17 -1
a. 7.67
b. 29
c. 23
d. 87
it sell?
a. 6
b. 5
c. 4
d. 7
a. monopolistically competitive oligopoly.
b. perfectly competitive oligopoly.
c. cartel.
d. Nash arrangement.
Figure 15-6
5
a. an oligopoly, or duopoly.
c. a cartel.
d. a collusive monopoly.
a. the larger is the tax burden on french fry sellers relative to the tax burden on buyers.
b. the larger is the deadweight loss of the tax.
a. more firms will exit from the market, and the price will fall.
b. more firms will enter the market, and the price will fall.
c. some firms will exit from the market, and the price will rise.
d. more firms will enter the market, and the price will rise.
a. a change in the price of Monty Python videos
b. a change in the price of Mr. Bean videos, a substitute good
d. a change in consumer income
a. producer of externalities.
b. natural monopoly.
c. profit-maximizing monopoly.
d. revenue-maximizing monopoly.
c. domestic producers become better off, and domestic consumers become worse off.
d. both domestic producers and domestic consumers become better off.
b. New firms will likely enter this market to capture any remaining economic profits.
c. In the short run firms will produce, but in the long run firms will leave the market.
d. In the short run firms will shut down, and in the long run firms will leave the market.
a. P > MR > MC.
b. P > MR = MC.
c. MR < MC < P.
d. P = MR = MC.
6
b. the price in the market falls.
a. monopolistic competition.
b. perfect competition.
c. oligopoly.
d. monopoly.
a. P3.
b. P2.
c. P1.
a. (P5 - P4) Q3.
b. When market price is P5 there are no profits.
c. (P5 - P3) Q2.
d. P5 Q3.
a. labor.
b. capital.
c. consumption expenditures.
d. earnings during retirement.
7
a. there are diseconomies of scale in retail sales.
d. the greed of large sellers like Wal-Mart hurts consumers, especially low-income
consumers.
a. below equilibrium price and quantity supplied is greater than quantity demanded.
b. above equilibrium price and quantity supplied is greater than quantity demanded.
c. below equilibrium price and quantity demanded is greater than quantity supplied.
b. the nation is not using all available resources or is using inferior technology or both.
d. there will be a large opportunity cost if the nation tries to increase production.
a. it can increase its profit by decreasing its output.
b. the firm is definitely earning a positive profit.
c. it can increase its profit by increasing its output.
d. the firm is definitely losing money.
a. marginal costs.
b. total revenue.
c. implicit costs.
d. explicit costs.
a. gas mileage of SUVs and mid-size sedans increases.
b. wages of auto workers fall.
c. a decrease in consumer income
d. an increase in consumer income
a. It increases.
c. It will not change consumer surplus; only producer surplus changes.
d. It decreases.
a. the additional cost of hiring an additional worker rises.
b. the additional cost of an additional unit of output falls.
c. the additional output added by one additional worker rises.
d. the additional output added by one additional worker declines.
a. average total cost is below average variable cost.
b. the average variable cost and average total cost curves intersect.
c. the marginal cost curve lies below both curves.
d. the marginal cost curve intersects those curves.
8

a. constant marginal cost over the relevant range of output.
b. diseconomies of scale over the relevant range of output.
c. economies of scale over the relevant range of output.
d. constant returns to scale over the relevant range of output.
a. greedy monopolies should be punished.
b. consumers prefer dealing with small firms.
c. small firms have lower costs.
d. competition is more efficient than monopoly.
Figure 13-6
a. A
b. B
c. C
d. D
a. Kelly has comparative advantage in car repair and David has comparative advantage in
cooking.
b. Kelly has a comparative advantage in both repairing cars and in cooking meals.
c. Kelly has an absolute advantage in both repairing cars and in cooking meals.
d. Kelly has absolute advantage in car repair and David has absolute advantage in cooking.
a. operates as a price taker rather than a price maker.
b. produces the amount of output where average variable cost is at a minimum.
c. is protected by barriers to entry.
d. produces the amount of output where average total cost is at a minimum.
9
a. demand increases and supply decreases
b. demand and supply both increase
c. demand and supply both decrease
d. demand decreases and supply increases
10
ID: B
Econ 201 Final Exam

Answer Section
MULTIPLE CHOICE

23. ANS: C MSC: Definitional
1
ID: B

2
Douglas, Fall 2007 Version C Special Codes 00000
Econ 201 Final Exam
c. In the short run firms will produce, but in the long run firms will leave the market.
d. New firms will likely enter this market to capture any remaining economic profits.
Figure 15-6
b. is represented by a downward-sloping demand curve.
1
Econ201 Final Exam, Fall 2007, Version C Douglas
a. (P5 - P4) Q3.
b. P5 Q3.
c. When market price is P5 there are no profits.
d. (P5 - P3) Q2.
a. P2.
b. P3.
c. P1.
b. Government officials ordered sunscreen producers to produce more sunscreen.
d. Health-conscious consumers heeded health warnings and decided to buy more sunscreen.
a. revenue-maximizing monopoly.
c. producer of externalities.
d. profit-maximizing monopoly.
2
Figure 13-6
a. A
b. B
c. C
d. D
Table 15-1
1 35 35
2 64 32 29
3 29
4 17
5 23 11
6 120
7 17 -1
a. 23
b. 87
c. 29
d. 7.67
it sell?
a. 6
b. 5
c. 7
d. 4
c. an increase in consumer income
d. a decrease in consumer income
3
Table 16-3
maximizing revenue.
0 $120
3,000 $100
6,000 $ 80
9,000 $ 60
12,000 $ 40
15,000 $ 20
a. $80
b. $60
c. $40
d. $100
a. 9,000
b. 12,000
c. 3,000
d. 6,000
a. labor.
b. earnings during retirement.
c. capital.
d. consumption expenditures.
a. the price in the market falls.
b. the price in the market rises.
d. its profit must increase.
a. perfectly competitive oligopoly.
b. cartel.
c. monopolistically competitive oligopoly.
a. above equilibrium price and quantity demanded is greater than quantity supplied.
b. above equilibrium price and quantity supplied is greater than quantity demanded.
d. below equilibrium price and quantity supplied is greater than quantity demanded.
4
c. produce the perfectly competitive quantity of output.
d. charge the same price that a monopolist would charge if the market were a monopoly.
a. Marginal cost
b. Marginal revenue
c. Average variable cost
d. Average total cost
Table 7-1
MIKE $50.00
SANDY $30.00
JONATHAN $20.00
HALEY $10.00
a. $46.
b. $24.
c. $26.
d. $56.
a. Travis has an absolute advantage over Ricardo in mowing lawns.
b. Ricardo has a comparative advantage over Travis in trimming trees.
c. Travis has a comparative advantage over Ricardo in mowing lawns.
a. the marginal cost curve intersects those curves.
b. the marginal cost curve lies below both curves.
c. the average variable cost and average total cost curves intersect.
a. everyone in the country benefits.
b. the gains of the winners exceed the losses of the losers.
c. everyone in the country loses.
d. the losses of the losers exceed the gains of the winners.
5

1 $13 $38
2 $28
3 $70
a. $20
b. $12
c. $25
a. More information is needed.
b. $16
c. $14
d. $15
a. $20
b. $70
c. $45
d. $17
Figure 15-3
a. P0.
b. P3.
c. P1.
d. P2.
6
a. A.
b. B.
c. C.
d. D.
a. (P3 - P0) Q4.
b. P3 Q2.
c. (P1 - P0) Q2.
d. (P3 - P0) Q2.
c. operates as a price taker rather than a price maker.
a. constant returns to scale over the relevant range of output.
c. diseconomies of scale over the relevant range of output.
a. P > MR = MC.
b. MR < MC < P.
c. P = MR = MC.
d. P > MR > MC.
a. demand decreases and supply increases
b. demand and supply both decrease
d. demand increases and supply decreases
a. domestic producers become better off, and domestic consumers become worse off.
b. both domestic producers and domestic consumers become better off.
c. both domestic producers and domestic consumers become worse off.
d. domestic producers become worse off, and domestic consumers become better off.
7
Figure 13-8
a. accounting profit.
b. diseconomies of scale.
c. economies of scale.
d. economic profit.
a. ATCC only.
b. ATCA only.
c. ATCB only.
a. some firms will exit from the market, and the price will rise.
b. more firms will exit from the market, and the price will fall.
c. more firms will enter the market, and the price will rise.
d. more firms will enter the market, and the price will fall.
a. It decreases.
b. It will not change consumer surplus; only producer surplus changes.
c. It may either increase or decrease.
d. It increases.
a. perfect competition.
b. monopoly.
c. oligopoly.
a. the firm is definitely losing money.
b. it can increase its profit by decreasing its output.
c. the firm is definitely earning a positive profit.
d. it can increase its profit by increasing its output.
8
a. a change in expectations about the future price of Monty Python videos
c. a change in the price of Monty Python videos
d. a change in consumer income
a. profit per unit is greatest.
d. marginal revenue equals total revenue.
a. each firm will not have tried to maximize its profit.
b. each firm will have chosen its own best strategy, given what the other firms are doing.
c. the market price will be different for each firm.
d. firms will not be concerned about the strategies of competing firms.
a. (i) the flow of goods and (ii) the flow of services.
c. (i) the flow of dollars and (ii) other financial flows.
a. a cartel.
b. an oligopoly, or duopoly.
c. monopolistic competition.
d. a collusive monopoly.
c. competition is more efficient than monopoly.
d. greedy monopolies should be punished.
b. the nation is producing beyond its capacity, and inflation will occur.
c. there will be a large opportunity cost if the nation tries to increase production.
d. the nation is not using all available resources or is using inferior technology or both.
a. the additional cost of an additional unit of output falls.
b. the additional cost of hiring an additional worker rises.
d. the additional output added by one additional worker rises.
b. Kelly has comparative advantage in car repair and David has comparative advantage in
cooking.
c. Kelly has absolute advantage in car repair and David has absolute advantage in cooking.
9
a. explicit costs.
b. total revenue.
c. implicit costs.
d. marginal costs.
companies fall?
a. Quantity will fall and the effect on price is ambiguous.
c. Price will rise and the effect on quantity is ambiguous.
d. Quantity will rise and the effect on price is ambiguous.
a. the smaller is the response of the quantity supplied of french fries to the tax.
c. the larger is the tax burden on french fry sellers relative to the tax burden on buyers.
a. there are economies of scale in retail sales.
c. the greed of large sellers like Wal-Mart hurts consumers, especially low-income
consumers.
d. there are diseconomies of scale in retail sales.
10
ID: C
Econ 201 Final Exam

Answer Section
MULTIPLE CHOICE

20. ANS: A MSC: Definitional
1
ID: C

2
Douglas, Fall 2007 Version D Special Codes 00000
Econ 201 Final Exam
a. the larger is the tax burden on french fry sellers relative to the tax burden on buyers.
b. its total revenue triples.
c. the price in the market rises.
d. its profit must increase.
a. profit per unit is greatest.
b. marginal revenue equals marginal cost.
d. marginal revenue equals total revenue.

1 $13 $38
2 $28
3 $70
a. $20
b. $17
c. $70
d. $45
a. $16
b. $14
c. $15
a. $12
b. $20
c. $25
1
Econ201 Final Exam, Fall 2007, Version D Douglas

a. domestic producers become better off, and domestic consumers become worse off.
c. domestic producers become worse off, and domestic consumers become better off.
a. It increases.
b. It decreases.
c. It will not change consumer surplus; only producer surplus changes.
d. It may either increase or decrease.
a. consumers are angry at local retailers because of their high prices.
b. there are diseconomies of scale in retail sales.
d. the greed of large sellers like Wal-Mart hurts consumers, especially low-income
consumers.
a. Average variable cost
b. Marginal cost
c. Marginal revenue
a. is referred to as the law of demand.
b. applies to most goods in the economy.
c. is represented by a downward-sloping demand curve.
d. demand decreases and supply increases
a. profit-maximizing monopoly.
c. producer of externalities.
d. revenue-maximizing monopoly.
2
Table 15-1
1 35 35
2 64 32 29
3 29
4 17
5 23 11
6 120
7 17 -1
it sell?
a. 7
b. 4
c. 6
d. 5
a. 87
b. 23
c. 29
d. 7.67
Table 16-3
maximizing revenue.
0 $120
3,000 $100
6,000 $ 80
9,000 $ 60
12,000 $ 40
15,000 $ 20
a. $80
b. $100
c. $40
d. $60
a. 6,000
b. 9,000
c. 12,000
d. 3,000
3
a. P5 Q3.
b. When market price is P5 there are no profits.
c. (P5 - P3) Q2.
d. (P5 - P4) Q3.
a. P1.
b. P3.
c. P2.
Figure 13-8
a. diseconomies of scale.
b. economic profit.
c. accounting profit.
d. economies of scale.
4
a. ATCB only.
b. ATCA only.
c. ATCC only.
a. it can increase its profit by increasing its output.
b. the firm is definitely losing money.
c. wages of auto workers fall.
d. a decrease in consumer income
a. labor.
b. consumption expenditures.
c. earnings during retirement.
d. capital.
a. Nash arrangement.
b. monopolistically competitive oligopoly.
c. perfectly competitive oligopoly.
d. cartel.
a. a cartel.
b. a collusive monopoly.
c. an oligopoly, or duopoly.
5
Figure 15-6
a. operate according to their own individual self-interests.
b. produce the perfectly competitive quantity of output.
c. charge the same price that a monopolist would charge if the market were a monopoly.
d. produce more than the perfectly competitive quantity of output.
a. Kelly has absolute advantage in car repair and David has absolute advantage in cooking.
b. Kelly has an absolute advantage in both repairing cars and in cooking meals.
c. Kelly has comparative advantage in car repair and David has comparative advantage in
cooking.
c. average total cost is below average variable cost.
d. the average variable cost and average total cost curves intersect.
a. Health-conscious consumers heeded health warnings and decided to buy more sunscreen.
b. Sunscreen producers increased production out of concern for the publics health.
6
a. more firms will enter the market, and the price will rise.
Figure 15-3
a. P3.
b. P2.
c. P0.
d. P1.
a. P3 Q2.
b. (P1 - P0) Q2.
c. (P3 - P0) Q2.
d. (P3 - P0) Q4.
a. A.
b. B.
c. C.
d. D.
7

a. each firm will have chosen its own best strategy, given what the other firms are doing.
b. the market price will be different for each firm.
c. firms will not be concerned about the strategies of competing firms.
d. each firm will not have tried to maximize its profit.
c. greedy monopolies should be punished.
d. competition is more efficient than monopoly.
a. oligopoly.
b. monopoly.
Table 7-1
MIKE $50.00
SANDY $30.00
JONATHAN $20.00
HALEY $10.00
a. $56.
b. $24.
c. $46.
d. $26.
b. below equilibrium price and quantity demanded is greater than quantity supplied.
c. above equilibrium price and quantity supplied is greater than quantity demanded.
a. (i) inputs into production processes and (ii) outputs from production processes.
b. (i) the flow of goods and (ii) the flow of services.
c. (i) the flows of inputs and outputs and (ii) the flow of dollars.
d. (i) the flow of dollars and (ii) other financial flows.
8
b. the additional output added by one additional worker rises.
d. diseconomies of scale over the relevant range of output.
a. New firms will likely enter this market to capture any remaining economic profits.
b. In the long run the market will cease to exist.
c. In the short run firms will shut down, and in the long run firms will leave the market.
a. MR < MC < P.
b. P > MR > MC.
c. P > MR = MC.
d. P = MR = MC.
a. the nation is producing beyond its capacity, and inflation will occur.
b. the nation is not using all available resources or is using inferior technology or both.
c. the nation is producing an efficient combination of goods.
companies fall?
a. Price will fall and the effect on quantity is ambiguous.
b. Quantity will fall and the effect on price is ambiguous.
d. Quantity will rise and the effect on price is ambiguous.
a. the losses of the losers exceed the gains of the winners.
c. the gains of the winners exceed the losses of the losers.
d. everyone in the country loses.
c. produces the amount of output where average total cost is at a minimum.
d. operates as a price taker rather than a price maker.
a. explicit costs.
b. implicit costs.
c. marginal costs.
d. total revenue.
9
b. a change in expectations about the future price of Monty Python videos
c. a change in the price of Monty Python videos
d. a change in the price of Mr. Bean videos, a substitute good
Figure 13-6
a. A
b. B
c. C
d. D
10
ID: D
Econ 201 Final Exam

Answer Section
MULTIPLE CHOICE

1
ID: D

2
Douglas, Fall 2007 Version E Special Codes 00000
Econ 201 Final Exam
Figure 13-6
a. A
b. B
c. C
d. D
c. firms will not be concerned about the strategies of competing firms.
d. each firm will not have tried to maximize its profit.
a. competition is more efficient than monopoly.
b. small firms have lower costs.
c. consumers prefer dealing with small firms.

1 $13 $38
2 $28
3 $70
a. $15
b. $16
c. $14
1
Econ201 Final Exam, Fall 2007, Version E Douglas

a. $12
b. $25
c. $20
a. $45
b. $20
c. $70
d. $17
a. natural monopoly.
b. producer of externalities.
c. revenue-maximizing monopoly.
d. profit-maximizing monopoly.
Table 15-1
1 35 35
2 64 32 29
3 29
4 17
5 23 11
6 120
7 17 -1
it sell?
a. 6
b. 7
c. 4
d. 5
a. 29
b. 7.67
c. 23
d. 87
2
a. P3.
b. P2.
c. P1.
a. (P5 - P4) Q3.
b. P5 Q3.
c. (P5 - P3) Q2.
b. the greed of large sellers like Wal-Mart hurts consumers, especially low-income
consumers.
d. consumers are angry at local retailers because of their high prices.
b. the larger is the tax burden on french fry sellers relative to the tax burden on buyers.
a. capital.
b. consumption expenditures.
c. labor.
d. earnings during retirement.
3
Figure 13-8
a. accounting profit.
b. economies of scale.
c. economic profit.
d. diseconomies of scale.
a. ATCA only.
b. ATCC only.
c. ATCB only.
b. its total revenue triples.
c. its profit must increase.
c. Government officials ordered sunscreen producers to produce more sunscreen.
d. Cancer activists successfully lobbied to obtain government subsidies for sunscreen use.
companies fall?
a. Price will fall and the effect on quantity is ambiguous.
b. Quantity will fall and the effect on price is ambiguous.
c. Quantity will rise and the effect on price is ambiguous.
d. Price will rise and the effect on quantity is ambiguous.
4
a. operates as a price taker rather than a price maker.
b. produces the amount of output where average total cost is at a minimum.
c. is protected by barriers to entry.
d. produces the amount of output where average variable cost is at a minimum.
b. is referred to as the law of demand.
a. Marginal revenue
b. Average variable cost
c. Marginal cost
a. above equilibrium price and quantity demanded is greater than quantity supplied.
b. below equilibrium price and quantity supplied is greater than quantity demanded.
d. above equilibrium price and quantity supplied is greater than quantity demanded.
a. monopoly.
b. oligopoly.
a. diseconomies of scale over the relevant range of output.
d. constant returns to scale over the relevant range of output.
d. profit per unit is greatest.
5
Figure 15-6
6
Figure 15-3
a. P3.
b. P1.
c. P2.
d. P0.
a. (P1 - P0) Q2.
b. (P3 - P0) Q2.
c. (P3 - P0) Q4.
d. P3 Q2.
a. A.
b. B.
c. C.
d. D.
a. it can increase its profit by decreasing its output.
d. the firm is definitely losing money.
b. Kelly has absolute advantage in car repair and David has absolute advantage in cooking.
c. Kelly has comparative advantage in car repair and David has comparative advantage in
cooking.
7
a. a decrease in consumer income
c. gas mileage of SUVs and mid-size sedans increases.
d. wages of auto workers fall.
a. the nation is not using all available resources or is using inferior technology or both.
b. the nation is producing an efficient combination of goods.
a. both domestic producers and domestic consumers become worse off.
b. domestic producers become worse off, and domestic consumers become better off.
a. perfectly competitive oligopoly.
b. Nash arrangement.
c. cartel.
d. monopolistically competitive oligopoly.
Table 7-1
MIKE $50.00
SANDY $30.00
JONATHAN $20.00
HALEY $10.00
a. $46.
b. $24.
c. $56.
d. $26.
8
Table 16-3
maximizing revenue.
0 $120
3,000 $100
6,000 $ 80
9,000 $ 60
12,000 $ 40
15,000 $ 20
a. 3,000
b. 6,000
c. 9,000
d. 12,000
a. $40
b. $100
c. $80
d. $60
b. the additional cost of an additional unit of output falls.
d. the additional output added by one additional worker rises.
a. Travis has an absolute advantage over Ricardo in mowing lawns.
b. Travis has a comparative advantage over Ricardo in mowing lawns.
a. charge the same price that a monopolist would charge if the market were a monopoly.
b. produce the perfectly competitive quantity of output.
c. produce more than the perfectly competitive quantity of output.
d. operate according to their own individual self-interests.
a. the marginal cost curve lies below both curves.
b. the marginal cost curve intersects those curves.
c. the average variable cost and average total cost curves intersect.
9
a. (i) the flow of goods and (ii) the flow of services.
b. (i) the flow of dollars and (ii) other financial flows.
c. (i) inputs into production processes and (ii) outputs from production processes.
a. more firms will enter the market, and the price will fall.
b. more firms will enter the market, and the price will rise.
c. more firms will exit from the market, and the price will fall.
d. some firms will exit from the market, and the price will rise.
d. a change in the price of Monty Python videos
a. MR < MC < P.
b. P = MR = MC.
c. P > MR = MC.
d. P > MR > MC.
a. everyone in the country loses.
b. the losses of the losers exceed the gains of the winners.
c. everyone in the country benefits.
d. the gains of the winners exceed the losses of the losers.
a. total revenue.
b. implicit costs.
c. marginal costs.
d. explicit costs.
a. It increases.
b. It will not change consumer surplus; only producer surplus changes.
c. It decreases.
d. It may either increase or decrease.
c. demand decreases and supply increases
d. demand and supply both increase
a. monopolistic competition.
b. an oligopoly, or duopoly.
d. a cartel.
10
a. In the short run firms will shut down, and in the long run firms will leave the market.
b. In the long run the market will cease to exist.
11
ID: E
Econ 201 Final Exam

Answer Section
MULTIPLE CHOICE

1
ID: E

2
Douglas, Fall 2007 Version F Special Codes 00000
Econ 201 Final Exam
a. P1.
b. P3.
c. P2.
a. P5 Q3.
b. (P5 - P4) Q3.
c. (P5 - P3) Q2.
a. the losses of the losers exceed the gains of the winners.
c. everyone in the country loses.
d. the gains of the winners exceed the losses of the losers.
a. implicit costs.
b. marginal costs.
c. explicit costs.
d. total revenue.
a. is protected by barriers to entry.
b. produces the amount of output where average variable cost is at a minimum.
c. operates as a price taker rather than a price maker.
1
Econ201 Final Exam, Fall 2007, Version F Douglas
a. a change in the price of Monty Python videos
b. a change in consumer income
c. a change in the price of Mr. Bean videos, a substitute good
d. a change in expectations about the future price of Monty Python videos
Figure 13-6
a. A
b. B
c. C
d. D
a. Kelly has a comparative advantage in both repairing cars and in cooking meals.
b. Kelly has absolute advantage in car repair and David has absolute advantage in cooking.
c. Kelly has an absolute advantage in both repairing cars and in cooking meals.
d. Kelly has comparative advantage in car repair and David has comparative advantage in
cooking.
Figure 15-6
2
a. It will not change consumer surplus; only producer surplus changes.
c. It decreases.
d. It increases.
a. natural monopoly.
b. revenue-maximizing monopoly.
c. profit-maximizing monopoly.
d. producer of externalities.
b. above equilibrium price and quantity demanded is greater than quantity supplied.
c. above equilibrium price and quantity supplied is greater than quantity demanded.
d. below equilibrium price and quantity demanded is greater than quantity supplied.
a. cartel.
b. perfectly competitive oligopoly.
c. monopolistically competitive oligopoly.
Figure 13-8
a. economies of scale.
b. diseconomies of scale.
c. economic profit.
3
a. ATCA only.
b. ATCC only.
c. ATCB only.
b. is referred to as the law of demand.
Table 16-3
maximizing revenue.
0 $120
3,000 $100
6,000 $ 80
9,000 $ 60
12,000 $ 40
15,000 $ 20
a. 12,000
b. 3,000
c. 9,000
d. 6,000
a. $60
b. $80
c. $100
d. $40
c. demand decreases and supply increases
d. demand and supply both increase
4
Table 15-1
1 35 35
2 64 32 29
3 29
4 17
5 23 11
6 120
7 17 -1
it sell?
a. 6
b. 4
c. 5
d. 7
a. 87
b. 23
c. 29
d. 7.67

1 $13 $38
2 $28
3 $70
a. $16
b. $14
c. More information is needed.
d. $15
a. $17
b. $70
c. $45
d. $20
a. $25
b. $20
c. $12
5
c. produce the perfectly competitive quantity of output.
d. charge the same price that a monopolist would charge if the market were a monopoly.
b. diseconomies of scale over the relevant range of output.
c. constant marginal cost over the relevant range of output.
companies fall?
a. Quantity will rise and the effect on price is ambiguous.
d. Quantity will fall and the effect on price is ambiguous.
Figure 15-3
a. A.
b. B.
c. C.
d. D.
a. (P3 - P0) Q2.
b. P3 Q2.
c. (P1 - P0) Q2.
d. (P3 - P0) Q4.
6
a. P1.
b. P0.
c. P3.
d. P2.
a. the firm is definitely earning a positive profit.
c. the firm is definitely losing money.
b. the greed of large sellers like Wal-Mart hurts consumers, especially low-income
consumers.
d. consumers are angry at local retailers because of their high prices.
a. the additional output added by one additional worker declines.
b. the additional output added by one additional worker rises.
c. the additional cost of hiring an additional worker rises.
c. a decrease in consumer income
d. an increase in consumer income
a. monopoly.
b. perfect competition.
c. oligopoly.
7
c. average total cost is below average variable cost.
d. the average variable cost and average total cost curves intersect.
a. more firms will enter the market, and the price will rise.
c. each firm will not have tried to maximize its profit.
d. firms will not be concerned about the strategies of competing firms.
b. the smaller is the response of the quantity supplied of french fries to the tax.
c. the larger is the tax burden on french fry sellers relative to the tax burden on buyers.
b. the price in the market rises.
c. the price in the market falls.
d. its total revenue triples.
a. (i) the flows of inputs and outputs and (ii) the flow of dollars.
d. (i) the flow of dollars and (ii) other financial flows.
a. MR < MC < P.
b. P > MR > MC.
c. P = MR = MC.
d. P > MR = MC.
b. profit per unit is greatest.
d. marginal revenue equals marginal cost.
8
b. competition is more efficient than monopoly.
c. consumers prefer dealing with small firms.
Table 7-1
MIKE $50.00
SANDY $30.00
JONATHAN $20.00
HALEY $10.00
a. $56.
b. $46.
c. $24.
d. $26.
a. Marginal revenue
b. Average total cost
c. Marginal cost
d. Average variable cost
a. the nation is not using all available resources or is using inferior technology or both.
b. there will be a large opportunity cost if the nation tries to increase production.
c. the nation is producing an efficient combination of goods.
d. the nation is producing beyond its capacity, and inflation will occur.
a. earnings during retirement.
b. labor.
c. consumption expenditures.
d. capital.
a. Cancer activists successfully lobbied to obtain government subsidies for sunscreen use.
c. Sunscreen producers increased production out of concern for the publics health.
9
a. a cartel.
d. an oligopoly, or duopoly.
10
ID: F
Econ 201 Final Exam

Answer Section
MULTIPLE CHOICE

1
ID: F


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Douglas, Fall 2007 Version A Special Codes 00000

SIGNED:__________________________ PRINT NAME: __________________________________

Econ 201 Final Exam

1. For a profit-maximizing monopolist,

Table 13-8: Costs of Gigaplot Production

20. When an oligopoly market reaches a Nash equilibrium,

Figure 14-4: A typical firm in a COMPETITIVE market

Econ 201 Final Exam

1. ANS: D MSC: Analytical

44. ANS: A MSC: Applicative

SIGNED:__________________________ PRINT NAME: __________________________________

Econ 201 Final Exam

1. Refer to Figure 15-3. Profit will be maximized by charging a price equal to

Table 13-8: Costs of Gigaplot Production

Figure 14-4: A typical firm in a COMPETITIVE market

49. The defining characteristic of a natural monopoly is

Econ 201 Final Exam

1. ANS: B MSC: Analytical

44. ANS: C MSC: Interpretive

SIGNED:__________________________ PRINT NAME: __________________________________

Econ 201 Final Exam

Figure 14-4: A typical firm in a COMPETITIVE market

Table 13-8: Costs of Gigaplot Production

Econ 201 Final Exam

1. ANS: B MSC: Applicative

44. ANS: C MSC: Interpretive

SIGNED:__________________________ PRINT NAME: __________________________________

Econ 201 Final Exam

Table 13-8: Costs of Gigaplot Production

7. When a country allows trade and becomes an importer of a good,

Figure 14-4: A typical firm in a COMPETITIVE market

38. When an oligopoly market reaches a Nash equilibrium,

Econ 201 Final Exam

1. ANS: B MSC: Applicative

44. ANS: B MSC: Applicative

SIGNED:__________________________ PRINT NAME: __________________________________

Econ 201 Final Exam

Table 13-8: Costs of Gigaplot Production

5. Refer to Table 13-8. What is the fixed cost of producing 3 gigaplots?

Figure 14-4: A typical firm in a COMPETITIVE market

Econ 201 Final Exam

1. ANS: B MSC: Analytical

44. ANS: A MSC: Interpretive

SIGNED:__________________________ PRINT NAME: __________________________________

Econ 201 Final Exam

Figure 14-4: A typical firm in a COMPETITIVE market

Table 13-8: Costs of Gigaplot Production

Econ 201 Final Exam

1. ANS: B MSC: Analytical

44. ANS: D MSC: Analytical

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