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Final

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Department
Economics
Course
ECON 1000
Professor
Sam Lanfranco
Semester
Fall

Description
Sample Final Exam for Fall ECON1000 - Lanfranco These are the same INSTRUCTIONS as for the exam you will take on December 16 th If you do not follow these instructions your exam will not be graded until mid-January The purpose of this sample exam is to give you an idea of what the questions will look like. The content of Your Final might be different – See the chapter guides on the website I will not post the answers to these questions since there is always a chance that I will use one of them for your final exam INSTRUCTIONS: You have three hours for this exam. You may leave when you are finished. Put your preliminary answers on this sheet and then transfer all of your answers to the “bubble page ” Scantron sheet. Use the “white space” on front and back of these exam pages to draw diagrams and do calculations to assist in arriving at your answers. Do not leave answers blank. Your grade is based on the number of correct answers. It is smart to first record your answers on these exam pages, and then transfer them neatly to your answer sheet. Write your name and student number in all the appropriate spaces on the Answer Sheet. There are three places for your student number. Do not forget to enter it in “bubble” format in the upper left of the Scantron. Also, write your name and student number at the top of this exam page. Lastly, write the Version of this exam on the top center of your answer sheet. Turn in BOTH this EXAM and your ANSWER SHEET. Answer sheets will not be graded if not accompanied by a signed copy of the exam. ------------------------------------------------------------------------------------------------------------------------------------------------------------ MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question. 1) The redistribution of income creates the big tradeoff between ________. 1) _______ A) equity and efficiency B) qualifying to receive employment insurance and not qualifying to receive employment insurance C) earning an income and losing welfare benefits D) receiving workers' compensation and not receiving workers' compensation E) being rich and being poor 2) The law of diminishing marginal returns states: 2) _______ A) As a firm uses more of a variable factor of production, its average cost eventually decreases. B) As a firm uses more of a variable factor or production, total product eventually decreases. C) As the size of a firm's plant increases, average cost eventually decreases. D) As the size of a plant increases, marginal product eventually decreases. E) As a firm uses more of a variable factor of production, with a given quantity of the fixed factor of production, the marginal product of the variable factor eventually diminishes. 3) Which of the following are reasons economists consider valid for trade protection? 3) _______ I. Protection penalizes countries that have weak environmental standards. II. Protection limits dumping of low-wage jobs into the domestic economy. III. Protection prevents low-wage jobs in foreign countries from lowering wages in Canada. A) I, II, and III. B) I and II. C) II and III. D) I and III. E) None of the above. 4) An externality is a cost or benefit arising from an economic activity that falls on 4) _______ A) consumers but not producers. B) consumers or producers. C) producers but not consumers. D) someone other than consumers or producers. E) none of the above. 5) Assume that the leather market is a perfectly competitive market. The market demand curve for 5) _______ leather is ________ and each individual leather producer's demand curve is ________. A) horizontal; downward sloping B) downward sloping; horizontal C) downward sloping; vertical D) horizontal; horizontal E) vertical; downward sloping Use the figure below to answer the following question. Figure 14.2.2 6) Refer to Figure 14.2.2. To maximize economic profit, this firm in monopolistic competition will 6) _______ charge a price of A) $35 a unit. B) $25 a unit. C) $32 a unit. D) $20 a unit. E) $15 a unit. 7) The kinked demand curve model 7) _______ A) assumes marginal cost is constant. B) suggests that price will remain constant even with fluctuations in demand. C) assumes that marginal revenue equals marginal cost only at the quantity at the "kink." D) assumes that competitors will match price cuts and ignore price increases. E) none of the above. 8) The key feature of monopolistic competition that distinguishes it from perfect competition is 8) _______ A) barriers to entry. B) many sellers. C) perfectly elastic demand. D) product differentiation. E) none of the above. 9)Which one of the following statements is true? 9) _______ A) All technologically efficient methods are also economically efficient. B) All economically efficient methods are also technologically efficient. C) Technologically efficient firms will be more likely to survive than economically efficient firms. D) Technological efficiency changes with changes in relative input prices. E) none of the above 10) A common resource is 10) ______ A) rival and excludable. B) nonrival and excludable. C) regulated and excludable. D) rival and nonexcludable. E) nonrival and nonexcludable. Use the table below to answer the following question. Table 8.1.2 11) Refer to Table 8.1.2. Consider Sam's utility from sailing and skiing. If the price of sailing is $10 per11) ______ hour and the price of skiing is $20 per hour, Sam will choose to spend A) more time skiing than sailing. B) the same amount of time sailing and skiing, since they give the same amount of utility. C) all his time skiing. D) all his time sailing. E) more time sailing than skiing. 12) If firms in a perfectly competitive market are incurring an economic loss, some firms will exit. 12) ______ This exit shifts the industry A) demand curve rightward, and the market price rises. B) supply curve rightward, and the market price falls. C) demand curve leftward, and the market price falls. D) supply curve leftward, and the market price rises. E) none of the above. 13) To maximize profit, a firm hires labour until 13) ______ A) the wage rate paid to the labour equals the marginal cost of production. B) the additional benefit of hiring the labour is equal to the additional revenue the labour generates. C) the value of marginal product equals the wage rate. D) there is no more labour available at the market wage rate. E) they can sell that labour for no more than what they paid for it. Use the figure below to answer the following question. Figure 9.2.3 14) Refer to Figure 9.2.3. Rashid buys only books and albums. The figure shows his preferences. 14) ______ When Rashid chooses the consumption point of 3 books and 2 albums, his marginal rate of substitution is ________. A) 0.5 books per album B) zero C) 3/2 books per album D) 2/3 books per album E) 1 book per album 15) Which one of the following is not a reason why the wages of high-skilled workers exceed the 15) ______ wages of low-skilled workers? A) The value of marginal product of high-skilled workers is greater than that of low-skilled workers. B) The demand curve for high-skilled workers lies to the right of the demand curve for low-skilled workers. C) High-skilled workers have acquired more human capital than low-skilled workers. D) The cost of obtaining the human capital required for high-skilled workers is greater than the cost of obtaining the human capital required for low-skilled workers. E) The market for high-skilled workers is more competitive than the market for low-skilled labour. 16) Sara's income is $12 a week. The price of popcorn is $3 a bag, and the price of a smoothie is $3. 16) ______ The opportunity cost of a smoothie is ________. A) $3 B) 4 bags of popcorn C) 1.0 bag of popcorn D) $1 E) 1.00 smoothie 17) A monopoly can practice price discrimination when it 17) ______ A) is a price taker. B) produces a good with close substitutes. C) has decreasing average variables cost. D) has different marginal costs of production for different output levels. E) can segment the market according to the different prices the consumers are willing to pay. 18) The Gini coefficient for a perfectly equal distribution of income is 18) ______ A) equal to infinity. B) equal to 100. C) named after Gini Lollobrigida. D) equal to zero. E) equal to 1. 19) A union is formed to restrict labour supply in a previously perfectly competitive labour market. If 19) ______ the union succeeds in raising the wage, A) the total wage bill will rise. B) the total wage bill will fall. C) employment will rise. D) employment will not change. E) employment will fall. 20) Harold can consume either pens or milkshakes. The price of a pen is $1, and the price of a 20) ______ milkshake is $1. Harold figures that when his income is spent, his marginal utility from pens will be 10 and his marginal utility from milkshakes will be 8. Harold is better off A) only if he makes more income. B) by consuming more pens and fewer milkshakes. C) by consuming fewer pens and fewer milkshakes. D) by consuming more pens and more milkshakes. E) by consuming fewer pens and more milkshakes. Use the figure below to answer the following question. Figure 16.2.1 21) Refer to Figure 16.2.1. The figure shows the private marginal cost curve, the social marginal cost 21) ______ curve and the market demand curve. If the market is unregulated, then at the equilibrium output the marginal social cost of production is A) equal to the marginal benefit to consumers. B) less than the marginal benefit to consumers. C) equal to the marginal private cost of production. D) less than the marginal private cost of production. E) greater than the marginal benefit to consumers. Use the figure below to answer the following question. Figure 13.2.1 22) Refer to Figure 13.2.1. This single-price monopoly produces ________ units per day and charges a 22) ______ price of $________ per unit. A) 20; 75 B) 20; 50 C) 20; 20 D) 40; 50 E) zero; 0 23) Which one of the following statements is false? 23) ______ A) A high marginal rate of substitution implies a consumer must receive a large amount of good X to compensate for a small decrease in good Y. B) A flat indifference curve implies a consumer must receive a large amount of good X to compensate for a small decrease in good Y. C) A low marginal rate of substitution implies a flat indifference curve. D) A high marginal rate of substitution implies a consumer must receive a small amount of good X to compensate for a large decrease in good Y. E) If the indifference curve is steep, the marginal rate of substitution is high. Refer to the figure below to answer the following question. The figure shows the market for shirts in Canada, where D is the domestic demand curve and S is the domestic supply curve. The world price is $20 per shirt. Figure 7.2.1 24) In Figure 7.2.1, with international trade Canadians buy ________ million shirts per year. 24) ______ A) 16 B) 56 C) 48 D) 24 E) 32 25) If Canada imposes a tariff of $1 per imported shirt, the tariff 25) ______ A) decreases imports of shirts into Canada. B) creates a deadweight loss. C) benefits Canadian shirt producers. D) raises the price of a shirt paid by Canadian consumers. E) all of the above. 26) Choose the correct statement. 26) ______ A) When marginal product of labour is increasing, average product of labour is greater than marginal product of labour. B) When total product is increasing average product of labour and marginal product of labour are both increasing. C) When marginal product of labour is greater than or equal to average product of labour, average product of labour is increasing. D) When total product is increasing, average product of labour is decreasing and marginal product of labour is increasing. E) When marginal product of labour is greater than average product of labour and marginal product is either increasing or decreasing average product of labour is increasing. 27) Other than by adjusting price, the two main ways in which a firm in monopolistic competition 27) ______ competes with other firms are by ________ and ________. A) changing its method of production; relocating its factories to areas with lower wage rates B) taking surveys to discover the wants of its consumers; opening up new retail outlets C) advertising; producing the efficient quantity D) decreasing its workforce; using new technology E) innovation and product development; advertising Use the figure below to answer the following question. Figure 12.3.2 28) Refer to Figure 12.3.2 which shows the cost curves and marginal revenue curve of a firm in a 28) ______ perfectly competitive industry, The firm is A) breaking even. B) not maximizing economic profit. C) making an economic profit. D) going to close down temporarily. E) incurring an economic loss. 29) The idea that the demand for tire workers stems from the demand for automobiles is 29) ______ A) the value of the marginal product of auto workers. B) the value of the marginal product of tire workers. C) the value of the marginal product of labour. D) a derived demand. E) an output demand. Use the table below to answer the following question. Table 15.3.3 30) Refer to Table 15.3.3. Store X and Store Y must decide whether or not to lower their prices. The 30) ______ table gives the economic profit made by Store X and Store Y. Which one of the
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