Monopoly Quiz

1) Fill in the chart with the given data.

P 2 8 11 Q 0 3 6 39 TR MR TVC 12 TC 27 MC AVC AFC ATC 11

2) Draw a monopolist firm in economic profit. 3) Label the following: Highest Price = $40 Monopolist Price = $36 Quantity = 20 MR=MC = $16 Lowest Price = $2 4) Solve: Consumer Surplus = $_____ Producer Surplus = $_____ 5) Fill in (color) the following: Red: Consumer Surplus Pink: Producer Surplus Yellow: Deadweight Loss

Observational Assessment

Economics: Chapter 1 Test Please answer questions on Edusoft answer sheet & your own paper. DO NOT WRITE ON THE TEST!!!
Multiple Choice ____ 1. The situation in which some necessities have little value while some non-necessities have a much higher value is known as a. the paradox of value. c. trade-offs. b. opportunity cost. d. economic interdependence. ____ 2. Manufactured goods needed to produce other goods and services are called a. nondurable goods. c. Gross Domestic Product (GDP). b. capital goods. d. consumer goods. 3. To arrive at an economic decision, a decision-making grid may be used to evaluate a. productivity. c. alternative choices of action. b. only durable goods. d. only capital goods. 4. Division of labor is a characteristic of a. home craft businesses. b. assembly line production. c. classroom education. d. entrepreneurship.

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5. The study of economics is important because it enables us to a. describe our standard of living. b. increase our consumption of consumer goods. c. become better decision makers. d. determine what goods ought to be produced.

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6. Study the graph. Suppose this nation starts with producing all military goods. It then decides to produce a mix of civilian and military goods represented by point B. What represents the cost in military goods given up? a. the vertical distance between point x and point y b. the horizontal distance between point y and point z c. the horizontal distance between point z and point E d. the vertical distance from point A to point x It is the maxim of every prudent master of a family, never to attempt to make at home what it will cost him more to make than to buy. The ta[i]lor does not attempt to make his own shoes, but buys them of the shoemaker. The shoemaker does not attempt to make his own clothes, but employs a ta[i]lor.... All of them find it [in their best interests] to employ their whole industry in a way in which they have some advantage over their neighbours, and to purchase...whatever else they have occasion for.
Source: Adam Smith, An Inquiry into the Nature and Causes of the Wealth of Nations, 1776

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7.

What economic concept is Adam Smith describing in this passage? a. division of labor c. productivity b. specialization d. paradox of value

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8. In this production possibilities curve, what could cause production to move from point a to point e? a. factories that are available but idle c. the availability of additional resources b. increased productivity d. economic growth 9. A popular model used to illustrate the concept of opportunity cost is a. the production possibilities curve. c. the paradox of value. b. entrepreneurship. d. the factors of production.

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____ 10. An economy at its production possibilities frontier is operating a. with slow economic growth. c. without division of labor. b. at full potential. d. as a free enterprise economy. ____ 11. Entrepreneurs are considered the driving force in an economy because they a. own a great deal of land. b. are the greatest number of people in an economy. c. start new businesses. d. provide most of the labor. ____ 12. Actions in one part of the country or world that have an economic impact on what happens elsewhere are examples of a. opportunity costs. c. specialization. b. trade-offs. d. economic interdependence.

____ 13. Which of the following choices best describes what this production possibilities curve is depicting? a. alternative possibilities c. cost of idle resources b. opportunity cost d. economic growth ____ 14. In the production possibilities curve shown in this graph, what could cause production to move from point b to point d? a. a strike by industry workers b. increased productivity c. an increase in butter production while gun production remains the same d. an increase in gun production while butter production remains the same

____ 15. What factor of production do these images illustrate? a. labor b. land c. capital d. entrepreneurship

____ 16. In the time period covered by the production possibilities curve, the company decides to make 4 gallons of red paint. How many gallons of blue paint can the company make with the available time and resources? a. 2 c. 6 b. 3 d. 8

____ 17. What factor of production do these images illustrate? a. land c. capital b. labor d. entrepreneurship Short Answer

18. In the diagram, what should appear in place of the question mark? . . . James Dewar, manager of Chicago's Continental Bakery, wanted to find another use for his company's shortcake pans. He decided to fill the small, oblong cakes with a banana-cream filling and name them after the "Twinkle Toe" shoes he saw advertised on a billboard in St. Louis. Banana cream-filled Twinkies -- selling two for a nickel -- debuted as part of the Hostess baked-goods line.
Source: The Washington Post, April 13, 2005

19. Identify the capital in this passage. 20. Describe the entrepreneurship in this passage.

21. Name and describe the factor of production that is missing from this illustration.

The Ferrets professional baseball team has only enough money to sign either one superstar or three young players. The superstar could help the team win the championship this year but would not be with the team long. The young players are talented but not yet ready for the major leagues. 22. If the Ferrets decide to sign the young players, explain the trade-off would they be making?

Money Earned While Working versus Grade Earned from Studying

23. Describe the scarce resource depicted in this graph? 24. In the situation depicted by the graph, suppose the student decided to study one more hour to try to get a B instead of a C. What is the opportunity cost of this decision? Explain.

25. Explain what the diagram depicts? Describe the process and label all parts.