ECO 561 Final Exam

Aug 6th, 2016
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1) If a firm in a purely competitive industry is confronted with an equilibrium price of $5, its marginal revenue: A. will be greater than $5 B. will also be $5 C. will be less than $5 D. may be either greater or less than $5 2) A firm that is motivated by self interest should: A. always use large amounts of cheap inputs and small amounts of expensive inputs in producing its output B. hire each input so the productivity of each is equal at the margin C. always use large amounts of the most productive inputs and small amounts of the least productive inputs in producing its output D. employ the combination of resources that will produce the profit-maximizing output at the minimum cost 3) If price is above the equilibrium level, competition among sellers to reduce the resulting: A. shortage will increase quantity demanded and decrease quantity supplied B. surplus will increase quantity demanded and decrease quantity supplied C. surplus will decrease quantity demanded and i

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ECO 561 Final Exam1) If a firm in a purely competitive industry is confronted with an equilibrium price of $5, itsmarginal revenue:A. will be greater than $5B. will also be $5C. will be less than $5D. may be either greater or less than $52) A firm that is motivated by self interest should:A. always use large amounts of cheap inputs and small amounts of expensive inputs in producingits outputB. hire each input so the productivity of each is equal at the marginC. always use large amounts of the most productive inputs and small amounts of the leastproductive inputs in producing its outputD. employ the combination of resources that will produce the profit-maximizing output at theminimum cost3) If price is above the equilibrium level, competition among sellers to reduce the resulting:A. shortage will increase quantity demanded and decrease quantity suppliedB. surplus will increase quantity demanded and decrease quantity suppliedC. surplus will decrease quantity demanded and increase quantity suppliedD. shortage will decrease quantity demanded and increase quantity supplied4) Camille's Creations and Julia's Jewels both sell beads in a competitive market. If at the marketprice of $5, both are running out of beads to sell (they can't keep up with the quantity demandedat that price), then we would expect both Camille's and Julia's to:A. lower their price and increase their quantity suppliedB. raise their price and reduce their quantity suppliedC. lower their

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