Solutions for Exam 1 - Industrial Economics | ECON 4350, Exams of Managerial Economics

Download Solutions for Exam 1 - Industrial Economics | ECON 4350 and more Exams Managerial Economics in PDF only on Docsity! \ Dr. David R. Kamerschen 153 Student Learning Center q Iq loq r0"F (1) (a) (b) (c) (d) (3) (3) (4) (l) (6) (7) .. I ;;"J*i',r'JH'er7'2004 (t_rT S \ ECON 4350; 6350 First Examination Don E. Waldman &ElizabethJ. Jensen Industrial Organization: Theory and Practice Second Edition (Addison-Wesley, 200 1) There are 26 objective questions on this examination. Each question counts 5.0 points for a tbtal of 130.0 points. To calculate your grade, multiply the number of conect rnswers by 5.0. Mark your answers carefully on the answer sheet that has been provided for you. In answering the multiple choice questions select the best single alternative answer. In answering the tue-false questions remember that if a statement is not always true. then it should be considered false. On your answer sheet indicate True':'A. False = B. (2) NOTE: AT THE TOp OF YOTJRANSWER SHEET, PU"r YOUR NAME, LAST NAME FrRST (yOU DO NOT NEED TO pUT YOUR STUDENT ID NTTMBER) AT TIIE TOP LEFT-HAI\D CORNER COURSE NUMBER (e.g., ECN 4350 or ECN 6350); NUMBER OF EXAM (e.g:, Exam 1, Exam 2, etc.); AND DATE ON YOT]RANSWER SIIEET. Make sure that you have answered each question. Be sure to transfer your answer from your examination by filling in the 6bubbles" on the answer sheet. ' 'i USEAPENCILONLY At,the end of the examination, turn in your answer sheet. You may keep your copy of the examination. The answer sheet will be returned to you and the answers will be discussed at our next class meeting so be sure to bring your copy of the examination with you. You are responsible for keeping your answer sheet after it is returned to you. You are strongly advised against academic dishonesty in any forr4 as the inskuctor will follow stictly the prevailing University of Georgia policy regarding honesty and integrity. This policy is set out in the manual entitled A Culture ofHonesty: Policies and Procedures "Academic honesty is defined broadly and simply* the performance of all academic work without cheating, lying, stealing, or receiving assistance from any other person or using any source of information not appropriately authorized or attributed." During the examinations you may look up for inspiration, or down in desperation--but not to the side for information! Allocate yow time wisely, according to marginalist principles. ls3 The answers tb the objective questions will'be posted outside€S Student Leaming, following the completion time of the examination. Please do not mingle outside the classroom after the examination as the people in the next class need to get into their seats. SHOW CONSIDERATION FOR YOUR CLASSMATES AND DO NOT TEAR THE ANSWER SIIEETS OFF THE WALL. GOOD LUCK. BE SURE TO CHECK THAT YOI.'R EXAMINATION HAS 26 OUESTIONS AND 4 PAGES Chapters 1-3 @) ,,, '\\--;:*-'\, r D a. monopolistic market structure results in poor economic performance b. product differentiation results in less advertising expenses c. perfect competition results in price equal to marginal cost d. a and c are correct e. All of these are correct 2), Opportunity cost is l) Which; if any of the (SCP) approach? a. ,b. c. d. e. 4d. e. a, b. c. d. e. reported by the firms in their finaneial statements derived from the definition of accounting cost - derived from the definition of economic cost a and b are correct All of these are correct ,LE Which of the following statements is false? < a. sunk cost is non-recoverable portion of the fixed cost 'f b. total cost is the sum of fixed and variable costs F c. average fixed cost falls as output increases 4) The long-run average cost curve is U-shaped because of the law of labor and raw materials are examples of variable costs None of these are false diminishing returns returns to scale diminishing marginal utility supply and demand All of these are correct prices fluctuate in the absence of major changes in derhand conditions the firm faces highly elastic demand for price increases the firm faces highly inelastic demand for price increases the firm faces highly elastic demand for price decreases None of these are correct nR &r 5) 6) For perfect competition, which of the following statements would be false? a. ' o firms do not view other firms as rivals b. there is large number of buyers and sellers c. there is free access to information for all economic agents' d. there is free eritry and exit e. None of these are false According to the kinked demand curve theory of oligopoly a -r .t t a. b. c. d. e. /a a \ 20) One of Michael Porter's five forces is a. suppliers and customers ,A b. incumbent rivalsJa -H f-' c' Potential entrants' I t- d. substitute products e. All of these are correct ,E -il ! d r 21) Market power is a prerequisite for technical progress according to the _ School. a. Austrian b. Chicaeo c. SCP , d. None of these are correct e. All of these are correct 22) The assumption of profit -u*i-irution is most likely to hold in a. the long run b. the short run c. competitive markets - d. monopoly markets e. a and c are correct Ifalifixed costs are'sunk, average variable cosl is identical to average costs. a. avoidable b. nonrecoverable c. fixed d. totai e. All of these are correct. 24) The central question addressed by indusrial econo-mics is a. Is there market power and if sb, how do you measure it? b. How do firms acquire and maintain market power? c. What are the implicationb of market power? d. What'is the role for public policy as regards market power? e. All of these are correct 25) A possible managerial goal other than profit maximization is . a. sales maximization b. pursuit of a high growth rate c. utility maximization d. expense preference andjob security e. 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Make dark marks that fill the oval completely. Erase cleanly any mark you wish to change. Make no stray marks. CORRECTMARK INCORRECTMARKS| {X0o rttrltllltIttlltltltttlll