ECO 152 Practice Final Exam

Countries should trade for goods in which they have a comparative advantage. A. True B. False Practice Final Exam ECO: 152 Micro If a country has a comparative advantage in the production of one good it doesn't have ...

Countries should trade for goods in which they have a comparative advantage. A. True B. False Practice Final Exam ECO: 152 Micro If a country has a comparative advantage in the production of one good it doesn't have a comparative disadvantage in the production of some other good. A. True B. False Protectionists want to increase foreign competition against u.s. goods and services. A. True B. False Engaging in exchange enables a country to shift its production possibilities curve outward. A. True B. False The organization formed to allow governments to borrow to stabilize exchange rates is the A. World Ballk B. International Trade Commission C. Customs Union D. International Monetary Fund E. NAFTA An economy that does not participate in international trade has A. A negative balance of trade B. Neither imports nor exports C. Only imports D. Only exports E. Both imports and exports An exchange rate is: A. The fee charge for exchanging one currency for another. B. The rate at which one good exchanges for another. C. The price of one country's currency in terms of the monetary units of another country. D. The price of gold in terms of the U.S. Dollar E. No longer used. In one hour, John can peel 10 potatoes or make 50 cookies. In one hour, Greg can peel 15 potatoes or make 60 cookies. For John, the opportunity cost of 1 potatoes is A. 50 cookies B. 1 cookie C. 10 cookies D. 5 cookies E. can not be determined In one hour, John can peel 10 potatoes or make 50 cookies. In one hour, Greg can peel 15 potatoes or make 60 cookies. If they are going to specialize, A. Greg should peel potatoes and John should make cookies. B. Greg should peel potatoes. C. Greg should make cookies D. John should make cookies. E. They should both go to the store. PROBLENf Country A's resources will produce 100Yo-Yos, or 200 Frisbees, or any combination containing less of both products. The resources available .~ocountry Bwill produce 100 Yb-Yos, or 50 frisbees, or any combination of the two products containing less of both products. Co-.:l"'-~Yi A Co\';"'-~ '3 1 C 7"" 50 a. O. i?:) \00 15() LOO ;Q I<:C:l i50 -r=y., ." 'ox."? S ~r .•.. .'~~ '.- __~ Graph the production possibilities information and label the graphs_ Which country has a comparative advantage in Yo-- Yes? Explain. = «. Answer Question. ,; . on the basis of the-following griph~ s o "0 csa. 1.50 r------~ ~ •• a. ." 1.25 t------,L-+-~ .~ oo s o .40. 60 80 Pounds per month (millions) Pegging the exchange rate at $1.25 will result in a: A. Surplus of 40 million pounds per month. B. Shortage of 40 million pounds per month. C. Surplus of 20 million pounds per month. D. Shortage of20 million pounds per month, E. Can not be determined. Use the following diagram to answer Question o S E 0 tit., ~cf A c8~ Q. L S 0 0 N B R Peso per Unit at 11me The equilibrium exchange rate is measured by the distance: A. From 0 to A B. FromHto G C. FromOto L D. From Oto E Use the following diagram to answer Questions 9 and 1O. . 0 5 E f!~ ~cf A C58. L 0 0 N 8 R Peso per Unlt of TIme 9. If the Mexican government establishes price OE as an exchange rate a. a shortage equal to NR b. a surplus equal to NR c. a shortage equal to OB. d. None of the above. for the peso, there will be: 10 • Given exchange rate OL, if import restrictions are now imposed on goods produced in Mexico, then: a. the exchange rate will increase to OA. b. the DO curve would increase and the exchange rate would increase to OE. c. the DD curve would decrease and the new equilibrium exchange rate could be OL. d. None of the above. 1 1 • According to the principle of comparative advantage, a country will a. use its resources to produce and export goods that have a low opportunity cost. b. use its resources to produce in a manner that will allow it to be seIfsufficient and not engage in international trade. c. increase exports but try to abolish imports. d. use its resources to produce and export goods that have a high opportunity cost. c. produce all goods. 12. When different regions of a country produce different goods, a. the principle of comparative advantage has been breached. b. the production possibilities curve shifts to the left. c. the country becomes worse off. d. the country becomes better off if the regions are pursuing their comparative advantages. ;3 . If Anna can produce either 20 lampshades or 40 baseballs in a day and Brad can produce either 30 lampshades or 90 baseballs. then a. Anna has a comparative advantage in producing lampshades. b. Brad has a comparative advantage in producing lampshades. c. Anna has a comparative advantage in producing baseballs. d. neither person has a comparative advantage because their opportunity costs are the same. e. It is not possible to determine their comparative advantage from the information given. c. prices that can be charged for capital and consumption goods combinations of goods the economy has the capacity to produce combinations of prices and outputs that can be produced combinations of resources and prices that the economy can produce combinations of resources the economy has the capacity to produce A production possibility curve shows the various a. b. d. e. Exhibit EE-l Neb ie Pede Corn Corn 120 60 A B 30 wheat 20 Wheat In Exhibit EE-l, the production possibilities curves of wheat and corn for Nabia and Pada are presented. If these two nations trade, Pada should specialize in the production of a. corn b. corn and wheat c. neither product since Nabia has the comparative advantage in the production of both d. neither product since Nabia has the absolute advantage in the production of both e. wheat In Exhibi.t EE-l, the production possibilities curves of wheat and corn for Nabia and Pada are presented. What is the most wheat Nabia would be willing to trade for one unit of Pada's corn? a. 1/3 b. 1/4 c. 3 d. 4 e. 1 In Exhibit EE-l, the production possibilities curves of wheat and corn for Nabia and Pada are presented. What is the most corn Pada would be willing to trade for one unit of Nabia's wheat? a. 1/3 b. 1/4 c. 3 d. 4 e. 1 a. 4 units of corn b. 4 units of wheat c. 1/4 unit of corn d. 15 units of corn e. 60 units of corn In Exhibit EE-l, the production possibilities curves of wheat and corn for Nabia and Pada are presented. In Nabia the cost of producifl9 one more unit of wheat is equal to In Exhibit EE-1, the production possibilities curves of wheat and corn for Nabia and Pada are presented. In Nabia the cost of producing one more unit of corn is equal to a. 4 units of wheat b. 4 units of corn c. 1/4 unit of wheat d. 15 units of wheat e. 60 units of wheat In Exhibit EE-l, the production possibilities curves of wheat and corn for Nabia and Pada are presented. In Pada the cost of producing one more unit_ of corn is equal to a. 3 units of wheat b. 3 units of corn c. 1/3 unit of wheat d. 15 units of wheat e. 30 units of wheat In Exhibit EE-l, the production possibilities curves of wheat and corn for Nabia and Pada are presented. In Pada the cost of producing one more unit of wheat is equal to a. 3 units of corn b. 1/3 unit of corn c. 1/3 unit of wheat d. 15 units of corn e. 30 units of corn In Exhibit EE-l, the production possibilities curves of wheat and corn for Nabia and Pada are presented. If these two nations trade, Nabia should specialize in the production of a. corn b. corn and wheat c. neither product since Pada has the comparative advantage in the production of both d. neither product since Pada has the absolute advantage in the production of both e. wheat - Pri ce ($) I Exhibit K-3 Monopoly IMe ATe :f(.,- ==========-> - - - - - .- - - - 1- ---.~''''f-c';+_/ 1 4 D o 6 8 9 10 Quantity Exhibit K-3 indicates that a monopolist maximizes profits at output equal to a. 0 b. 6 c. 8 d. 9 e. 11 The monopoly price that maximizes profits in Exhibit K-3 is a. $4 b. $6 c. $7 d. $8 e. $11. The maximum possible total monopoly profit in Exhibit K-3 is a. $60 b. $l6 c. $24 d. $18 e. $12 When the monopolist is maximizing total profit in Exhibit K-3, the average total cost of producing that output level is a. $4 b. $6 c. $7 d. $8 e. $ll A monopolistically competitive firm output where MR = $103 and Me = $98. lS producing at a The firm should level of Under which market structure do firms f a c e the f La t re s t (most elastic) demand curve? a. perfect competition b. monopolistic competition c. oligopoly d. monopoly a . b. continue decrease keep the lncrease none of to make $5 profit per unit. the level of output. level of output constant. the level of output. the above c. d. e. If a monopolistically competitive firm can earn a profit, it will increase production until a. MR > Ave. b. MR = ATe. c . Me > MR. d. MR = AR. e. MR = Me. In the ·long run In monopolistic competition, the demand curve facing each firm a. is perfectly elastic. b. slopes upward. c. is tangent to the firm's average total cost curve d. lies above the firm's average total cost curve. e. lS the same as the portion of the firm's marginal cost curve above average v~riable cost. Exhib it K-4 Quant ity Total Revenue 0 $ 0 1 62 2 124 3 186 Exhibit K-4 I.ndicates that th' ~s firm is operating in which type of market structure? a. monopoly b. unprofit~le c. perfect q~mpetition d. monopolistic competition e . price-maker General Motors wants example of a to merge with General Foods. This lS an a . b. vertical merger horizontal merger conglomerate merger h~stile takeover c. d. The fundamental rule of profit maximization for firms is to produce where a ATC is minimized b. MR=MC c. quantity of output is maximized d. price is maximized e. total revenue is maximized The total cost of production equals a. ATC+AVC b. ATC+AFC c. AVC+AFC d. Marginal cost + Variable cost e. Fixed cost +Variable cost A list of the number of firms in the market, starting with the most to the fewest, would be a. monopoly, monopolistic competition, oligopoly, perfect competition b. monopoly, perfect competition, oligopoly, monopolistic competition c. monopoly, oligopoly, monopolistic competition, perfect competition d. oligopoly, monopoly, monopolistic competition, perfect competition e. perfect competition, monopolistic competition, oligopoly, monopoly Which of the following is a distinguishing characteristic of the oligopoly market structure? a. easy entry b. difficult entry c. many, many firms d. many, many substitute products e. widespread location Monopolistic competition is a market structure in which there a. is only one producer b. is only one buyer c. is only one input d. are a large number of substitute products in the market e. are only a few producers of the product If a market is in a monopoly, there a. is only one producer b. is only one buyer c. is only one input d. are a number of substitute products e. are only a few producers of the product If two goods are good substitutes, cross elasticity is a. negative b. positive c. inverse d. zero e.one An increase in marginal cost that remains within the gap of the marginal revenue curve of a kinked demand oligopolist will a. lower price and lower output b. raise price and decrease output c. lower price and increase output . d. raise price and raise output e. keep price and output the same In a perfectly balanced oligopoly with five. firms, the market share of each firm is going to be a. 16 percent b. 14 percent c. 13 percent d. LO percent e. 12.5 percent Which of the following is an example of a variable cost for a bakery? a. monthly mortgage payment for the building b. monthly loan payment for ovens c. fire insurance payments .. d. flour and other ingredients for baking e. property taxes Cartel pricing refers to the output and price choice of a cartel. lbis choice most closely resembles that ofa a. b or d b. godfather oligopoly c. monopoly - d. duopoly e. more competitive industry