Econ 201 Final Exam Answers

ECON 201 Final Exam Answers
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Question 1
One defining characteristic of pure monopoly is that:
A. The monopolist is a price taker
B. The monopolist uses advertising
C. . The monopolist produces a product with no close substitutes
D. There is relatively easy entry into the industry, but exit is difficult
Question 2
Which is a barrier to entry?
A. Close substitutes
B. Diseconomies of scale
C. Government licensing
D. Price-taking behavior
Question 3
Other things equal, which reduces competition in an industry?
A. Patent laws
B. Freedom of entry for new firms
C. An increase in the number of producers
D. An increase in the number of buyers
Question 4
The representative firm in a purely competitive industry:
A. Will always earn a profit in the short run
B. May earn either an economic profit or a loss in the long run
C. Will always earn an economic profit in the long run
D. Will earn an economic profit of zero in the long run
Question 5
An example of a monopolistically competitive industry would be:
A. Steel
B. Soybeans
C. Electricity
D. Retail clothing
Question 6
Firms in an industry will not earn long-run economic profits if:
A. Fixed costs are zero
B. The number of firms in the industry is fixed
C. There is free entry and exit of firms in the industry
D. Production costs for a given level of output are minimized
Question 7
Marginal product is:
A. the increase in total output attributable to the employment of one more worker.
B. the increase in total revenue attributable to the employment of one more worker.
C. the increase in total cost attributable to the employment of one more worker.
D. total product divided by the number of workers employed.
Question 8
The law of diminishing returns indicates that:
A. as extra units of a variable resource are added to a fixed resource, marginal product will decline beyond some point.
B. because of economies and...