# final ext - Copy ```JIGJIGA UNIVERSITY
Department of economics
Final Exam for the course Microeconomics
Exam weight: 50 marks
Time allotted 1:45 marks
Set by: Ahmed. M
Instructions
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Attempt all the questions.
Show all the necessary steps clearly and neatly.
Cheating has no excuse.
Make sure that the exam has five pages including cover page.
Name……………………………………………………………………………………………………
I.D…………………………………………………………………………………………………………..
Section……………………………………………………………………………………………………..
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Part I: Choose (1.5% each)
1) is a special case of oligopoly in which there are only two firms in the industry is
a) Duopoly
b) Oligopoly.
c) Perfectly competitive Market.
d) Monopoly.
e) None of the above.
2) Suppose the total cost of producing T-shirts can be represented by TC=30 + 4Q, what is
average variable cost producing 5 T-shirts.
a)4
b) 6
c) 10
d) 50
e) 2
3) Under perfectly competitive market the Economic (Excess) profit point occurs when
a) P &lt; AVC b) P &gt; AVC c) P = AC d) MR = MC e) P &lt; AC
4) The decision to shut down the plant operation will operate when
a) P &lt; AC, and P &gt; AVC
c) P &lt; AVC
b) P = AC.
d) P &gt; AC
5) In monopolistically competitive firms producing a closely related goods are called?
a) Product group
c) firms
b) Industry group
d) None of the above
6) The additional cost that the firm incurs to producing the additional levels of output is
called
a) Fixed Cost
c) Average Cost
b) Total Revenue
d) Marginal Cost
7) cost of inputs that vary (change) as output changed is called
a) Explicit cost
c) Implicit cost
b) Variable cost
d) Economic cost
8) When the long run average cost is declining the firm is experiencing
a) Diseconomies of scale.
b) Constant Economies of scale.
c) Increasing Economies of scale
d) B and d are answers
9) To maximize profits, a firm in a perfectly competitive industry will
a) Adjust output until marginal revenue equals marginal cost.
b) Adjust price until average revenue equals average total cost.
c) Adjust average total cost until it equals price.
d) Adjust price until marginal revenue equals marginal cost.
10) A perfectly competitive firm
a) May charge a little above market price to imply that its product is superior
b) May charge a little below market price to get more customers
c) Will always charge the market price.
d) None of the above
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11) Perfectly competitive market structure is characterized by except?
a) Costless information and mobility.
b) Product homogeneity.
c) Large number of buyers and sellers.
d) Free entry and exit.
e) Price taker.
f) None of the above
12) It’s a situation when a monopolist sells the same product at different prices to different
a) Price discrimination
b) Excess capacity
c) Multi-plant monopoly
d) All of the above
e) None of the above
13) The curve that shows the efficient combination of labor and capital that can produce the
same level of output (quantity).
a) Isoquant curve
c) Isocost line
b) Ridge line
d) Indifference curve
e) None of the above
14) It’s the types of market structure when many sellers and buyers producing homogenous
and heterogeneous product exist in the market
a) Duopoly
b) monopoly
c) Monopolistic competitive
d) Oligopoly
e) None of the above
15) Marginal cost passes through the minimum point of average variable cost to the left of
the minimum point of average cost because,
a) When AVC is at its minimum point AFC is falling and it takes time for the AC to
reach its minimum point.
b) Both AC and AVC are falling when MC is increasing.
c) AVC decreases faster than the rate at which MC rises.
d) All of the above.
16) In Economics Goods that technically cover the same wants are
a) Technological Substitutes
b) Economic Substitutes
c) Close substitutes
d) None of the Above
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17) Is the locus of all combination of factors the firm can purchase with a given monetary
cost outlay.
a) Isocost line
b) product line
b) Expantion path
d) ridge line
18) Is the rate at which one input can be substituted for another without changing the level of
outputs
a)
b)
c)
d)
Technical progress
Factor intensity
Marginal rate of technical substitution
Isoquant curve
19) Pick out the wrong
a) Short run ATC is U- shape
b) the AVC curve is the mirror image of the APL curve
c) Marginal cost is the extra cost incurred to produce another unit of output.
d) None of the above
20) Where there is only one seller in the market, this types of market structure is called
a) Monopoly
b) oligopoly
c) perfectly competitive market
d) none of the above
Part two: Short Discussions (5% each)
1) State and explain the sources of Monopoly?
2) List and discuss with the types of Economies of Scale?
Part three: Select only One question (5%)
1) Suppose a cost function of a given plant is given as: C(Q) = 4Q2+Q+140.calculate
a) TVC of producing of 4 units.
b) What is MC of 4th unit?
c) The AC of 4 units.
2) The price of a firm operating under perfectly is given by 60 and if the total cost of
producing its output is given by C = 4Q2 + 40Q + 10, find
a) The output level that maximizes the profit of the firm?
b) Total revenue?
c) Profit?
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