ECN 360 Midterm Exam

ECN 360 Grand Canyon Midterm Exam


1. An inferior good has an income elasticity of demand that is




positive but less than 1.

2. In the above figure, when this monopolistically competitive firm produces its profit-maximizing output, it sets a per-unit price of





3. Refer to the above figure. The profit maximizing quantity for this firm is





4. Refer to the above figure. Ajax and Greenco are oligopolists. Above you are given the payoff matrix for the two firms giving the payoff associated with different pricing strategies. What is the best strategy for Greenco if Ajax decides on charging a high price?

There is no best strategy.

High price

Low price

Not enough information is given to determine the best strategy.

5. In the above figure, the long-run cost curve between points A and B illustrates

diminishing marginal product.

diseconomies of scale.

economies of scale.

constant returns to scale.

6. The perfectly competitive firm cannot influence the market price because

its production is too small to affect the market.

it has market power.

its costs are too high.

it is a price maker.

7. In the above figure, what is the profit-maximizing output and price?

10, $8

12, $10

10, $10

8, $7

8. The demand curve faced by a monopolistically competitive firms is



downward sloping.

unitary elastic.

9. In the ECN 360 above figure, the monopolistically competitive firm's profit-maximizing output is

1,000 units.

300 units.

700 units.

900 units.

10. Which of the read more following will cause a shift here in the demand curve of labor?

An increase or decrease in the productivity of labor.

An increase or decrease in the demand for the product labor produces.

A decline in the price of a complementary input .

all of the above

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