ECO 365 Week 5 Final Exam (2015 version)/ECO 365 Week 5 Final Exam (2015 version)
1). The DeBeers company is a profit-maximizing monopolist that exercises monopoly power in the distribution of diamonds. If the company earns positive economic profits this year, the price of diamonds will:
Exceed the marginal cost of diamonds but equal to the average total cost of diamonds.
Exceed both the marginal cost and the average total cost of diamonds.
Be equal to the marginal cost of diamonds.
Be equal to the average total cost of diamonds.
2). Using 100 workers and 10 machines, a firm can produce 10,000 units of output; using 250 workers and 25 machines, the firm produces 21,000 units of output. These facts are best explained by:
Economies of scope
Diseconomies of scale
Diminishing marginal productivity
Economies of scale
3). Suppose that college tuition is higher this year than last and that more students are enrolled in college this year than last year. Based on this information, we can best conclude that:
despite the increase in price, quantity demanded rose due to some other factors changing.
the demand for a college education is positively sloped.
the law of demand is invalid.
this situation has nothing to do with the law of demand.
4). A monopoly firm is different from a perfectly competitive firm in that:
A monopolist’s demand curve is perfectly inelastic whereas a perfectly competitive firm’s demand curve is perfectly elastic.
A competitive firm has a u-shaped average cost curve whereas a monopolist does not.
A monopolist can influence market price whereas a perfectly competitive firm cannot.
There are many substitutes for a monopolist’s product whereas there are no substitutes for a