ECON 312 Midterm Exam

Graph Description
Student Answer: will be four units of bicycles.
will be two units of bicycles.
will be zero because unemployed resources are available.
of doing so cannot be determined from the information given.
24. Question : (TCO 3) Assume that the owners of the only gambling casino in Wisconsin spend large
sums of money lobbying state government officials to protect their gambling monopoly. Economists
refer to these expenditures as
Student Answer: rent-seeking.
price discrimination.
X-efficiency.
network effects.
25. Question : (TCO 3) a.) A pure monopolist determines that at the current level of output the marginal
cost of production is $2, average variable costs are $2.75, and average total costs are $2.95. The
marginal revenue is $2.75. What would you recommend that the monopolist do to maximize profits? b.)
Why might a business owner keep their business open but let it deteriorate, rather than shut it down?
Will this profitability last?
26. Question : (TCO 2) What effect should each of the following have on the demand for gasoline in a
competitive market? State what happens to demand. Explain your reasoning in each case and relate it to
a demand determinant.
(a) an increase in the number of cars
(b) the economy moves into a recession
(c) an increase in the price of car insurance, taxes, maintenance
(d) consumer expectations of substantial price increases in gasoline
DeVry ECON 312 Final Exam
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