ECON 312 Midterm Exam

(TCO 1) As a consequence of the condition of scarcity

(TCO 1) The opportunity cost of constructing a new public highway is the

(TCO 1) A nation can increase its production possibilities by

(TCO 1) Which expression is another way of saying “marginal benefit”?

(TCO 1) The individual who brings together economic resources and assumes the risk of business ventures in a capitalist economy is called the

(TCO 1) The Soviet Union economy of the 1980s would best be classified as

(TCO 1) The simple circular-flow model shows that workers, entrepreneurs, and the owners of land and capital offer their services through

8. (TCO 1) Consumers express self-interest when they

9. (TCO 1) Which is not one of the five fundamental questions that an economy must deal with?

10. (TCO 1) The major “success indicator” for business managers in command economies like the Soviet Union and China in the past was

11. (TCO 2) An increase in demand means that

12. (TCO 2) At the point where the demand and supply curves intersect

13. (TCO 2) Black markets are associated with

14. (TCO 2) An increase in demand for oil along with a simultaneous increase in supply of oil will

15. (TCO 2) If Product Y is an inferior good, a decrease in consumer incomes will

16. (TCO 2) If the price elasticity of demand for a product is equal to 0.5, then a 10 percent decrease in price will increase quantity demanded by

17. (TCO 2) Total revenue falls as the price of a good is raised, if the demand for the good is

18. (TCO 2) You are the sales manager for a software company and have been informed that the price elasticity of demand for your most popular software is less than 1.  To increase total revenues, you should:

19. (TCO 2) A state government wants to increase the taxes on cigarettes to increase tax revenue.  This tax would only be effective in raising new tax revenues if the price elasticity of demand is

20. (TCO 2) When universities announce a large tuition increase and follow it with an announcement that more financial aid will be available, they are assuming that students who pay full tuition

21. (TCO 3) Suppose that you could prepare your own tax return in 15 hours, or you could hire a tax specialist to prepare it for you in two hours.  You value your time at $11 an hour.  The tax specialist will charge you $55 an hour.  The opportunity cost of preparing your own tax return is

22. (TCO 3) Economic profits are equal to

23. (TCO 3) The main difference between the short run and the long run is that

24. (TCO 3) The law of diminishing returns only applies in cases where

25. (TCO 3) Marginal cost can be defined as the

26. (TCO 3) If the price of a fixed factor of production increases by 50 percent, what effect would this have on the marginal-cost schedule facing a firm?