05 Jun Econ 202 Name_________________________ Exam 3
Question
Econ 202 Name_________________________
Exam 3
Spring 2011
Due: No Later Than Midnight Friday May 13
(5 Point Deduction for each day it is late.)
Multiple Choice: Each of the following questions or incomplete statements is followed by a series of suggested answers or completions. Select the one best response for each question. (1 point each) [This exam has a maximum possible value of 75 points. 30 of these points come from the multiple choice questions – there are four extra multiple choice questions – and 45 of these points come from the essay questions.]
1. The “wastefulness” of excess capacity is not considered totally bad by economists because
A. advertisers make more income that is then circulated to the rest of the economy via the
multiplier.
B. the monopolistically competitive firm has a negatively sloped demand curve.
C. the monopolistically competitive firm allocates resources more efficiently than firms in other
market structures.
D. excess capacity may allow for a greater diversity of products than would otherwise be available.
2. Which of the following will create a demand for U.S. dollars in the foreign exchange market?
A. travel abroad by U.S. citizens
B. the desire of foreigners to buy U.S. stocks
C. the desire of U.S. citizens to purchase foreign stocks
D. U.S. imports
3. Consumers who clip and redeem discount coupons:
A. cause total revenue to decrease for firms that issue coupons for their products.
B. exhibit a unitary price elasticity of demand since all consumers have the ability to use
coupons.
C. exhibit the same price elasticity of demand for a given product as consumers who do not
clip and redeem coupons.
D. exhibit a more elastic demand for a given product than consumers who do not clip and
redeem coupons.
E. exhibit a more inelastic demand for a given product than consumers who do not clip and
redeem coupons.
4. Antitrust laws ________ whereas social regulations ________
A. are designed to promote competition; only improve competition in a market.
B. apply to specific firms and specific industries; apply to all firms and all industries.
C. lead to less competition in a market;. improve the quality of and the manner in which products
and services are produced.
D. Both B and C are correct.
E. All of the above are correct.
5. If the CEO of United Airlines plays golf with the CEO of American Airlines and then both
companies increase the prices of their airline tickets by 5% this is most likely a case of
A. a gentleman’s agreement.
B. multiproduct pricing.
C. cost-plus pricing.
D. price leadership.
6. Skilled workers generally earn more than unskilled workers do because
A. the productivity of skilled labor is higher than that of unskilled labor.
B. the supply of skilled labor is greater than the supply of unskilled labor.
C. the marginal cost of unskilled labor is higher than that of skilled labor.
D. the demand for unskilled labor is greater than the demand for skilled labor.
E. the demand for unskilled labor is more elastic than the demand for skilled labor.
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