Microeconomics - ECO402 Final Term Paper

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ECO402 Microeconomics
Final Term Examination –
Question No. 1
Mar
ks :1
Economies of scale and economies of scope
are synonymous. ~ True
~ False
Q uestion No. 2
Mar
ks : 1
Refer to the graph below. The marginal revenue curve is represented by
curve:
Q1uestinNo3.
Mar
ks :
ECO402 Final term
Government intervention without market failure creates .
If the market supply of labor increased relative to demand (baby

boomers or female ee ntry), a surplus of labor would exist and
the wage rate would: ~~ Fall
~~ Rise
 No effect
 All of the given options
Q uestion No. 5
Mar
ks : 3
State the main consequence of product differentiation? Write down
the characteristics o f monopolistic competition.
Q uestion No. 6
Mar
ks : 1
Diminishing returns to labor occur at the______________ unit of input:
 7th
 2nd
 5th
4
th
~
Question No. 7
Mar
ks : 1
Monopoly can charge any price that it wishes regardless to the
market trend or the demand for the good.
 True
ECO402 Final term
 False
Q uestion No. 8
Mar
ks : 1
The short run supply curve of a monopolist is:
 The rising portion of the MC curve,
 The rising portion of the MC curve above AVC,
 The rising portion of the MC curve above AC,
~ None of the given option.
Q uestion No. 9
Mar
ks : 1
T otal profit= Total revenue
Q uestion No. 10
Mar
ks : 1
Opportunity cost, most broadly defined, is:
 The additional cost of producing an additional unit of output,
 What we forgo, or give up, when we make a choice or a decision,
 A cost that cannot be avoided, regardless of what is done in the future,
 The additional cost of buying an additional unit of a product,
Que stion No. 11 M

arks :
10
Define oligopoly. How oligopoly market equilibrium is different from

perfect competition and monopolistic com petition?
How is oligopoly different from?
a) Perfect competition?
b) Monopolistic competition?
c) Monopoly?
Q uestion No. 12
Mar
ks : 1
The MRP for firms with market power is equal to:

ECO402 Final term
· MP x W
· MP x MR
· MP x P
· MP x MC
Qu estion No. 13 M
arks :
3
D efine price discrimination. Why 1st degree price discrimination is practically
difficult?
Q uestion No. 14
Mar
ks : 1
Which of the following characteristics is common to both perfect

competition and monopolistic competition?
 Average total cost is minimized in the long run.
 Marginal revenue equals price.
 Economic profits are zero in the long run.
 Price equals marginal cost.
The price of a good is $100, and the marginal cost of the good
is $90. A competitive firm should produce that unit.
 True
 False
Question No. 16
Mar
ks : 1
Slope of total revenue is _______________ .
Question No. 17
Mar
ks : 1
One characteristic often seen in real world oligopolies is:
 Fluctuating prices.
 Zero economic profit.
 Low barriers to entry.
 Price rigidity.
Question No. 18
Mar
ks : 3
ECO402 Final term
What type of difference is shown by economic rent?
Question No. 19
Mar
ks : 1
Different combinations of labor and capital that have the same

total costs can be shown by a(n):
 Isoquant line
 Isocost line
 Production function.
 Total cost curve.
Question No. 20
Mar
ks : 1
In an oligopoly, there are only a few firms and a firm can control
price, regardless of the actions of other firms in the industry.
 True
 False
Question No. 21
Mar
ks : 1
If factor prices rise as industry output expands in the long run, we have:
 A constantcost industry,
 A decreasingcost industry,
 An increasing cost industry,
 Any of the given option
The difference between what consumer is willing to pay for an item and what
he actually pays is called _______ .
Question No. 23
Mar
ks : 1
Demand for a product is elastic when:
 A fall in the price of the product causes total expenditures by consumers
on the product to fall
 The percentage change in quantity demanded equals the percentage change in
price.
 Total expenditures by consumers for the product increase when the product's
price falls.
 A fall in the price of the product does not affect the firm's revenue.
ECO402 Final term
Question No.
24 Marks : 10
Use the table below to answer the following questions.
# of Total Product Marginal Average

Workers Product Product
per day
0 0
1 4
2 10
3 18
4 22
5 24
6 22
a) Fill in the table above.
b) At what point (number of workers) does the firm

experience diminishing returns? Explain.
Question No. 25
Mar
ks : 1
The total variable costs of producing no output are:
 0
 100
 400
 Incalculable from the information given in this question.
Differentiate between Natural monopoly and artificial monopoly?
Question No. 27
Mar
ks : 1
ECO402 Final term
Who lose from import quotas?
 Consumers of imported goods.
 Consumers of exported goods.
 Producers of imported goods.
 Firms that hold import licenses.
Question No. 28
Mar
ks : 1
OPEC is best example of cartel:
 True
 false
Question No. 29
Mar
ks : 1
measures the percentage change in

quantity demanded resulting from a one percent change in income.
Question No. 30
Mar
ks : 1
A monopsony is a situation where there is a (n):

 Single buyer.
 Single seller.
 Oligopoly.
 Competitor with a monopolist.
Question No. 31
Mar
ks : 3
Differentiate between import tariff and import quotas?
Question No. 32
Mar
ks : 1
and
The general shape of the marginal cost curve is that it then :
 is horizontal, declines
ECO402 Final term
 is horizontal, rises
 rises, declines
 declines, rises

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WWW.VUTUBE.EDU.

Refer to the graph below. The marginal revenue curve is represented by

If the market supply of labor increased relative to demand (baby

Diminishing returns to labor occur at the______________ unit of input:

T otal profit= Total revenue

Que stion No. 11 M

Define oligopoly. How oligopoly market equilibrium is different from

The MRP for firms with market power is equal to:

Which of the following characteristics is common to both perfect

Different combinations of labor and capital that have the same

Use the table below to answer the following questions.

# of Total Product Marginal Average

a) Fill in the table above.

b) At what point (number of workers) does the firm

measures the percentage change in

A monopsony is a situation where there is a (n):

The general shape of the marginal cost curve is that it then :

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