George Brown College
INTRODUCTION TO ECONOMICS
ECON 1034
Final Examination
Fall 2024
Marks: 35
Mandatory:
Name: Daniel Ali Arciniegas Orejuela
Student ID # 101502690
Date: December 12, 2024
SEQUENTIAL STEPS IN YOUR FINAL EXAM
1. DOWNLOAD the Question from your GBC EMAIL or from the CONTENT AREA of
Brightspace.
2. OPEN ANOTHER WORD FILE, RENAME IT and COPY/PASTE the Question into
this new file.
3. WORK on this new file (meaning that you write answers in this new file ALONGSIDE
THE QUESTIONS AND/OR BELOW THE QUESTIONS)
4. SEND this new file to my GBC email at; mohammad.salahuddin@georgebrown.ca by
11:00 AM today.
5. PLEASE DO NOT SEND YOUR ANSWER TO ANY OTHER LOCATION, SEND IT
ONLY TO MY GBC EMAIL.
6. The SUBJECT OF THE EMAIL MUST BE "FINAL EXAM, ECON 1034, TODAY'S
DATE"
PART A: MCQs (15 marks)
1. Entry into a monopoly market is
a. Open
c. Very restricted
b. Restricted
d. None
2. Law of diminishing marginal product is connected to
a. Declining marginal cost
c. Constant marginal cost
b. Increasing maerginal cost
d. None
3. Under competitive market, there is
a. No profit
c. profit only
b. No profit, no loss
d. None
4. With monopolistic competition, consumer rights are likely to be
a. Vulnerable
c. Protected
b. Fluctuating
d. None
5. Total cost could be controlled by controlling
a. Marginal cost
c. Fixed cost
b. Average cost
d. Variable cost
6. Which one of the following Monopoly is good for consumers?
a. Pure
c. Both a and b
b. Natural
d. None
7. Price distortion is a potential issue under
a. Monopoly
c. Oligopoly
b. Duopoly
d. Perfect compoetition
8. Demand curve under Oligopoly market is
a. Steep
c. Downward slopping
b. Kinked
d. None
9. In the long run, Potential GDP is
a. Higher than real GDP
c. Equal to real GDP
b. Lower than GDP
d. None
10. To reduce overall cost of production, a company must reduce
a. Marginal cost
c. Fixed cost
b. Variable cost
d. None
PART B (20 marks)
Please answer any THREE from the following questions (Each question carries equal marks
while each part of each question also carries equal marks)
1. What are the characteristics of a perfectly competitive market? Can you
identify the advantages and disadvantages of a monopoly market for an
economy? Can a monopoly market firm influence price? Why or Why not?
A perfect competitive market is when there are many buyers and sellers, and all the
products are the same. Businesses in this market cannot control the price and have
to accept the market price. Monopolies, however, are very different because one
company controls the whole market and sets the prices. Monopolies have some good
sides and bad ones. For example, Hydro One in Ontario is a natural monopoly. It
provides electricity to many people without needing multiple companies building
the same infrastructures, which saves money. This benefitss consumers because the
prices are regulated, and the service is reliable.
But, on the other side, monopolies can lead to higher prices and less choices. In
Canada, companies like Rogers and Bell in the telecom market charge high prices
for their services since there isn’t much competition. This shows how monopolies
can set prices, which is not always good for consumers.
2. Explain the analogies and differences between an oligopoly market and
a monopolistic market. What message does the graphical shape of the demand
curve in an oligopoly market convey? How might monopoly go against
consumer interest by enjoying producer surplus? Give an example.
Oligopolies and monopolistic competition are a bit similar, but also very different.
In both, there are many businesses, and the products are not exactly the same.
However, in oligopolies, like Canadian banks such as RBC and TD, there are only a
few big companies controlling most of the market. It is very hard for new companies
to enter this market because of high barriers. In monopolistic competition, like with
restaurants, there are many businesses, and new ones can easily start. In oligopolies,
prices usually don’t change much because companies know that if they lower or
raise prices, competitors will react, and it might hurt everyone. This is why the
demand curve is "kinked." Monopolies, on the other hand, can hurt consumers by
taking too much profit. A good example is the pharmaceutical industry in Canada,
where some companies charge very high prices for patented medicines, making it
hard for people to afford them.
3. What is a Consumer Price Index (CPI)? Why is it important for a
macroeconomy? What are the potential constraints in measuring CPI? Pick
and discuss some key state institutions in your country that impact
macroeconomic stability.
The Consumer Price Index (CPI) measure how the average price of a basket of goods
and services changes over time. It’s very important for the economy because it shows
inflation trends. For example, in 2023, I read that the CPI in Canada showed a 3.4%
increase in prices compared to the year before. The Bank of Canada uses this
information to decide if they need to change interest rates to control inflation. CPI
also helps to adjust wages and pensions. For instance, the Canada Pension Plan
(CPP) increased payments by 2.5% in 2022 based on the CPI.
However, there are problems with measuring CPI… It doesn’t fully show when
people switch to cheaper products or buy new products, which can make inflation
look higher than it is. In Canada, Statistics Canada collects this data, while the Bank
of Canada uses it to make policies. For example, after pandemic spending caused
inflation, the Bank of Canada raised interest rates in 2023 to stabilize the economy.
Best of Luck!!!!!!!!!!!!!!!