[ 2009 Mock Exam (AM) ] Economics .Questions 33-44 likely, potential, employment, gap, face

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33. Demand for guest rooms in a resort hotel increases from 100 to 150 rooms per night when the nightly room rate increases from $150 to $200. The elasticity of supply of guest rooms in the resort hotel is closest to:

A. 0.72.
B. 1.40.
C. 1.50.

34. A recessionary gap is more likely to be observed when:

A. real GDP is above potential GDP.
B. real GDP is below potential GDP.
C. employment is above full-employment equilibrium.

35. Which of the following statements is most accurate in regard to the tax division between buyers and sellers of products with perfectly elastic demand?

A. Sellers pay the entire tax.
B. Buyers bear the entire tax burden.
C. Buyers and sellers share the tax burden.

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33. Demand for guest rooms in a resort hotel increases from 100 to 150 rooms per night when the nightly room rate increases from $150 to $200. The elasticity of supply of guest rooms in the resort hotel is closest to:

A. 0.72.
B. 1.40.
C. 1.50.

Answer: B
“Elasticity,” Michael Parkin
2009 Modular Level I, Volume 2, pp. 22-25
Study Session 4-13-a Calculate and interpret the elasticities of demand (price elasticity, cross elasticity, income elasticity) and the elasticity of supply, and discuss the factors that influence each measure.
The elasticity of supply equals the percent change in quantity relative to the average quantity divided by the percent change in demand relative to the average demand:
The average quantity = (100 + 150)/2 = 125, the % change in quantity = 50/125 = 40%; The average price = (150 + 200)/2 = 175, the % change in price = 50/175 = 28.6% Elasticity of supply = 40%/28.6% = 1.40

34. A recessionary gap is more likely to be observed when:

A. real GDP is above potential GDP.
B. real GDP is below potential GDP.
C. employment is above full-employment equilibrium.

Answer: B
“Aggregate Supply and Aggregate Demand,” Michael Parkin
2009 Modular Level I, Volume 2, pp. 331-332
Study Session 5-23-c Differentiate between short-run and long-run macroeconomic equilibrium, and
explain how economic growth, inflation, and changes in aggregate demand and supply influence the macroeconomic equilibrium. A below full-employment equilibrium is a macro-economic equilibrium in which potential GDP exceeds real GDP. The amount by which potential GDP exceeds real GDP is called the recessionary gap.

35. Which of the following statements is most accurate in regard to the tax division between buyers and sellers of products with perfectly elastic demand?

A. Sellers pay the entire tax.
B. Buyers bear the entire tax burden.
C. Buyers and sellers share the tax burden.

Answer: A
“Markets in Action,” Michael Parkin
2009 Modular Level I, Volume 2, pp. 76-78
Study Session 4-15-c Explain the impact of taxes on supply, demand, and market equilibrium, and describe tax incidence and its relation to demand and supply elasticity. Under perfectly elastic demand sellers pay the entire tax.

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36. A company compiles the following information:

Total revenue	$300,000
Value of buildings and machinery
- At the beginning of the year	$300,000
- At the end of the year	$280,000
Cost of raw materials	$100,000
Wages paid during the year	$ 50,000
Normal profit for the year	$ 40,000

The company’s economic profit is closest to:

A. $90,000.
B. $110,000.
C. $130,000.

37. In the short run, an increase in output at low levels of production will most likely cause:

A. an increase in the marginal cost due to the rising total fixed cost.
B. an increase in the marginal cost due to the law of diminishing returns.
C. a decrease in the marginal cost due to economies from greater specialization.

38. In regulating a natural monopoly, the most commonly adopted compromise pricing rule by a regulator is the:

A. total cost pricing rule.
B. average cost pricing rule.
C. marginal cost pricing rule.

[此贴子已经被作者于2009-6-27 17:08:37编辑过]

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36. A company compiles the following information:

Total revenue	$300,000
Value of buildings and machinery
- At the beginning of the year	$300,000
- At the end of the year	$280,000
Cost of raw materials	$100,000
Wages paid during the year	$ 50,000
Normal profit for the year	$ 40,000

The company’s economic profit is closest to:

A. $90,000.
B. $110,000.
C. $130,000.

Answer: A
“Organizing Production,” Michael Parkin 2009 Modular Level I, Volume 2, pp. 98-99, Table 1
Study Session 4-16-a Explain the types of opportunity cost and their relation to economic profit, and calculate economic profit. Economic profit is equal to total revenue minus total costs, both explicit and implicit costs (including normal profit) Total costs = 100,000 + 50,000 + 40,000 + (300,000 – 280,000) = 210,000 Economic profit = Total revenue – Total costs = 300,000 - 210,000 = 90,000

37. In the short run, an increase in output at low levels of production will most likely cause:

A. an increase in the marginal cost due to the rising total fixed cost.
B. an increase in the marginal cost due to the law of diminishing returns.
C. a decrease in the marginal cost due to economies from greater specialization.

Answer: C
“Output and Costs,” Michael Parkin 2009 Modular Level I, Volume 2, p. 135
Study Session 4-17-d Explain the firm’s production function, its properties of diminishing returns and diminishing marginal product of capital, the relation between short-run and long-run costs, and how economies and diseconomies of scale affect long-run costs.
The marginal cost decreases at low levels of output due to economies from greater specialization. However, at higher levels of production, it eventually increases because of the law of diminishing returns.

38. In regulating a natural monopoly, the most commonly adopted compromise pricing rule by a regulator is the:

A. total cost pricing rule.
B. average cost pricing rule.
C. marginal cost pricing rule.

Answer: B
“Monopoly,” Michael Parkin
2009 Modular Level I, Volume 2, pp. 200-202
Study Session 5-19-e Explain the potential gains from monopoly and the regulation of a natural monopoly. The average cost pricing rule allows the natural monopoly to cover its costs and to break even (make zero economic profit).

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39. Which of the following statements provides the best description of Nash equilibrium of two firms in the game of prisoners’ dilemma?

A. One firm complies and the other cheats.
B. Both firms cheat and each firm makes zero economic profit.
C. Both firms comply and each firm makes a positive economic profit.

40. The best characterization of the natural resources market is that:

A. supply of a nonrenewable natural resource is perfectly inelastic and firms are price takers.
B. price is determined by market demand in a renewable resources market and by supply in a nonrenewable resource market.
C. supply of a renewable natural resource is perfectly elastic and the price is equal to the present value of the next period's expected price.

41. Based on supply-side effects, an increase in income tax will most likely:

A. shift the demand curve for labor.
B. decrease the full-employment quantity of labor.
C. increase potential Gross Domestic Product (GDP).

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39. Which of the following statements provides the best description of Nash equilibrium of two firms in the game of prisoners’ dilemma?

A. One firm complies and the other cheats.
B. Both firms cheat and each firm makes zero economic profit.
C. Both firms comply and each firm makes a positive economic profit.

Answer: B
“Monopolistic Competition and Oligopoly,” Michael Parkin 2009 Modular Level I, Volume 2, pp. 229-237
Study Session 5-20-d Explain the kinked demand curve model and the dominant firm model, and describe oligopoly games including the Prisoners’ Dilemma.
Both firms realize that compliance results in an economic loss whereas cheating results in zero economic profit (p. 236). Since zero economic profit is better than an economic loss, both firms cheat.

40. The best characterization of the natural resources market is that:

A. supply of a nonrenewable natural resource is perfectly inelastic and firms are price takers.
B. price is determined by market demand in a renewable resources market and by supply in a nonrenewable resource market.
C. supply of a renewable natural resource is perfectly elastic and the price is equal to the present value of the next period's expected price.

Answer: B
“Markets for Factors of Production”, Michael Parkin
2009 Modular Level I, Volume 2, pp. 276-279
Study Session 5-21-g
Differentiate between renewable and non-renewable natural resources and describe the supply curve for each. With the supply of a renewable natural resource being fixed, the price is determined on the basis of market demand. In a nonrenewable natural resource market, the flow supply of a nonrenewable natural resource is perfectly elastic but the price is determined on the basis of supply.

41. Based on supply-side effects, an increase in income tax will most likely:

A. shift the demand curve for labor.
B. decrease the full-employment quantity of labor.
C. increase potential Gross Domestic Product (GDP).

Answer: B
“Fiscal Policy,” Michael Parkin
2009 Modular Level I, Volume 2, pp, 418-420, Figure 6 Study Session 6-26-a Explain the supply-side effects on employment, potential GDP, and aggregate supply, including the income tax and taxes on expenditure, and describe the Laffer curve and its relation to supply-side economics.
An income tax increase makes the difference between after-tax pay and before-tax pay larger. This situation weakens the incentive to work and lowers the full-employment quantity of labor (see page 419).

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42. A change in the natural rate of unemployment will most likely shift:

A. the short-run but not the long-run Phillips curves.
B. both the short-run and the long-run Phillips curves.
C. neither the short-run nor the long-run Phillips curves.

43. Which of the following goals of monetary policy is best described to be the key goal?

A. Price stability.
B. Full employment.
C. Moderating long-term interest rates.

44. The least likely reason why a firm in perfect competition is a price taker is because:

A. buyers are well informed about prices of other firms.
B. it can set its products’ price at or above the market price.
C. it produces a very small portion of the total output of a particular good.

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42. A change in the natural rate of unemployment will most likely shift:

A. the short-run but not the long-run Phillips curves.
B. both the short-run and the long-run Phillips curves.
C. neither the short-run nor the long-run Phillips curves.

Answer: B
“U.S. Inflation, Unemployment, and Business Cycles” Michael Parkin 2009 Modular Level I, Volume 2, pp. 392-395
Study Session 6-25-d Explain the impact of inflation on unemployment, and describe the short-run and long-run Phillips curve, including the effect of changes in the natural rate of unemployment. A change in the natural rate of unemployment shifts both short-run and long-run Phillips curves. Suppose the natural rate of unemployment increases from 6 to 9 percent, but the inflation remains constant at 10 percent. As a result, both short- run and long-run Phillips curves move outward adjusting to the new, higher level of natural unemployment rate. The new point of intersection between the two lines would be at 9 percent unemployment rate and 10 percent inflation rate (Figure 9, p. 395)

43. Which of the following goals of monetary policy is best described to be the key goal?

A. Price stability.
B. Full employment.
C. Moderating long-term interest rates.

Answer: A
“Monetary Policy,” Michael Parkin
2009 Modular Level I, Volume 2, pp. 446-448
Study Session 6-27-a Discuss the goals of U.S. monetary policy and the Federal Reserve’s (Fed’s) means for achieving the goals, including how the Fed operationalizes those goals. Price stability is considered to be the key goal of monetary policy in that it is the source for the other two monetary policy goals.

44. The least likely reason why a firm in perfect competition is a price taker is because:

A. buyers are well informed about prices of other firms.
B. it can set its products’ price at or above the market price.
C. it produces a very small portion of the total output of a particular good.

Answer: B
“Perfect Competition,” Michael Parkin
2009 Modular Level I, Volume 2, p. 153
Study Session 5-18-a Describe the characteristics of perfect competition, explain why firms in a perfectly competitive market are price takers, and differentiate between market and firm demand curves. A price taker is a firm that cannot influence the market price and consequently sets its own price at the market place price, not above it. The key reason why a firm in perfect competition is a price taker is because buyers are well informed about prices of other firms and it produces a tiny portion of the total market output.

jerry732

问一下，这个题的难度跟真题比如何？谢谢！

viss

31. An