FINAL EXAM

Question 1

Distinguish between changes in demand and changes in quantity demanded

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Question 2

Distinguish between changes in supply and changes in quantity supplied

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Question 3

Understand how the interaction of demand and supply determine the equilibrium price and quantity sold in markets

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Question 4

Evaluate the effects of changes in demand and supply on the market price and equilibrium quantity

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Question 5

Understand the rationing function of prices

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Question 6

Explain the effects of price ceilings and price floors

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Question 7

Explain how market failures such as externalities might justify the economic functions of government

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Question 8

Distinguish between private goods and public goods

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Question 9

Explain the nature of the free-rider problem and the role of the government

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Question 10

Understand the relationship between the price elasticity of demand and total revenues

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Question 11

Describe the cross price elasticity of demand and how it may be used to indicate whether two goods are substitutes or complements

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Question 12

Explain the income elasticity of demand in the face of normal and inferior goods

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Question 13

Discuss why marginal utility first rises but ultimately tends to decline as a person consumers more of a good or service

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Question 14

Explain why an individual’s optimal choice entails equalizing the marginal utility per dollar spent across all goods and services

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Question 15

Contrast the substitution and real-income effects of a price change on the quality demanded of a good or service

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Question 16

Discuss the difference between the short-run and the long-run from the perspective of a firm

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Question 17

Understand why the marginal physical product of labor eventually declines as more units of labor are employed

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Question 18

Identify situations of economies and diseconomies of scale and define a firm’s minimum efficient scale

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Question 19

Identify the characteristics of a perfectly competitive market structure in the short run and long run

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Question 20

Discuss the process by which a perfectly competitive firm decides how much output to produce

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Question 21

Explain how the equilibrium price is determined in a perfectly competitive market

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Question 22

Describe the demand and marginal revenue conditions a monopolist faces

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Question 23

Discuss how a monopolist determines how much output to produce and what price to charge

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Question 24

Evaluate the profits earned by a monopolist and how price discrimination affects these profits

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Question 25

Contrast the output and pricing decisions of monopolistically competitive firms with those of perfectly competitive firms

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Question 26

Contrast the output and pricing decisions of monopolistically competitive firms with those of a monopoly

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Question 27

Explain why brand names and advertising are important features of monopolistically competitive industries

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Question 28

Outline the fundamental characteristics of olipology

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Question 29

Understand how to apply game theory to evaluate the pricing strategies of oligopolistic firms

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Question 30

Identify features of an industry that help or hinder efforts to form a cartel that seeks to restrain output and earn economic profits

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Question 31

Understand why a firm’s marginal revenue product curve is its labor demand curve

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Question 32

Explain in what sense the demand for labor is “derived” demand and the key factors that influence this demand

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Question 33

Describe how equilibrium wage rates are determined for perfectly competitive firms

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