学号：W18203010145

Second Semester of 2019-2020 Wuhan

University
Final exam paper
Course：《 Principles of Economics 》
Class：Foreign students
学生姓名：Aimagambetova Aimira 艾美

Items Ⅰ Ⅱ Ⅲ Ⅳ Ⅴ Ⅵ total 总分人 审核人

Point value 40 10 30 20 100
Score

score 评阅人 ⅠEach of the following questions has only one correct
answer. Please choose the correct answer. （ Total 20
questions, 2 points for each question, total 40 points）

1. The income that must be forgone in order to obtain goods or services is called ( A ).
A. opportunity costs B. sunk costs C. fixed costs D. variable costs
2. The following items that are not factors of production are（C ）.
A. capital B. land C. money D. labor
3. The opportunity cost of going to a movie is ( C ).
年级：

A. the price of the ticket

B. the price of the ticket plus the cost of the soda and Popcorn
C. all the cash you spent on the movie and the value of your time
D. as long as you enjoyed the movie and thought the time and money spent was worth it, zero.
4. Changes in ( D ) will lead to a shift in the demand curve for movie tickets.
A. film supply B. video rental prices C. cinema scale D. movie price
5. If there is a shortage, it means that ( A ).
A. consumers are willing to buy more goods than manufacturers can sell
专业班级：

B. the current price is above the equilibrium price

C. a seller is willing to sell more goods than that can be sold
D. the actual number of transactions at current prices is determined by the demand curve
6. Under the condition of( A ), MR=AR。
A. perfect competition B. oligopoly
C. complete monopoly D. none of the previous answers are correct
7. The substitution effect caused by the increase in wage rate is ( D ) .
A. you can earn more money by working the same long hours.
B. you can get the same income for a shorter period of time.
院（系）：

C. workers Prefer to work longer hours, replacing the utility of leisure with the utility of income.
D. All of the previous answers are correct
8. The positive externality of an activity means that ( C )
A. the private interest of the activity is greater than its social interest.

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B. the private cost of the activity is greater than its social cost.
C. the private interest of the activity is less than its social interest.
D. the private cost of the activity is less than its social cost
9.The government may intervene in the market economy to（ D ）.
A. protect property rights
B. correct the market failure caused by externalities
C. achieve a more equal distribution of income
D. all above are right
10. If a country has high and persistent inflation, the most likely explanation is that ( A ).
A. the central bank has created an excess of money
B. unions haggle over too low wages
C. the government imposes excessive taxes
D. firms use their monopoly power to impose excessively high prices
11. In a ( B )monopolistic market, the demand curve of the firm is equal to the market demand curve.
A. competition
B. monopolistic competition
C. oligopoly
D. monopoly
12. A change in the price or output of one firm causes others to change the price or output, most likely in an ( C
) market.
A. competition
B. monopolistic competition.
C. oligopoly
D. monopoly
13. The result of a cartel breakup would be ( A ) .
A. the price falls and the output rises
B. the price goes up and the output goes down
C. the prices falls and the output falls
D. the price goes up and the output goes up
14. An increase in （ B ）will cause a change along a given demand curve, which is called （ B ）.
A. supply, a shift in the demand curve
B. supply，a change in quantity demanded
C. demand, a shift in the supply curve
D. demand, a change in quantity supplied
15. A linear demand curve that slopes downward to the right is ( A )
A. inelastic
B. unit elastic
C. inelastic at some points and elastic at others
D. elastic
16. A cake shop operating in a competitive market sells cakes for $10 each and employs workers for $10 an hour.
To make profit maximization, it employs workers until the marginal output of labor is ( D ).
A. 2 piece of cake per hour B. 10 pieces of cake per hour
C.5 pieces of cake per hour D.1 piece of cake per hour

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17. Technological advances that increase the marginal product of labor shift ( B ) to ( B ).
A. the labor demand curve, the left B. the labor demand curve, the right
C. the labor supply curve, the left D. the labor supply curve, the right
18. Which of the following conditions cannot describe a firm in a monopolistic competitive market?( C )
A. Produce something different from its competitors
B. Accept a given price in a market
C. Profit maximization can be achieved in the short and long term
D. it can freely entry or exit in Long term
19. A competitive firm achieves profit maximization by choosing the quantity of output at which（ A ）.
A. the marginal cost equals the price
B. the average total cost is the lowest
C. the average total cost equals the price
D. the marginal cost equals the average total cost
20. A firm produces 1,000 units at a total cost of $2,000. If the production increases to 1,001 units, the total cost
increases to $2,004. This information indicates that ( C )
A. the marginal cost of the firm is $2 and the average variable cost is $4.
B. the marginal cost of the firm is $2 and the average total cost is $4.
C. the marginal cost of the firm is $4 and the average total cost is $2.
D. the marginal cost of the firm is $4 and the average variable cost is $2.

score 评阅人
ⅡPlease judge right with√ and wrong with×. （ Total 10
questions, 1 points for each question, total 10 points）
21. The elasticity of a point on the demand curve is the slope of that point.（ × ）
22. As the marginal product decreases, so total output must decrease too.（× ）
23. Lower commodity prices cause the demand curve to move to the right. （× ）
24. Whether long-term or short-term, the equilibrium condition of monopoly firm is MR=MC.（√ ）
25. The average revenue curve of monopoly firm is the same as the marginal revenue curve.（×）
26. A life-saving drug without any similar alternatives would have little elasticity of demand（ √ ）
27. The demand curve for a competitor in a competitive market is a horizontal line from a given price level.( × )
28. The shift in the supply curve to the right may be due to higher raw material prices.。(×)
29. When the monopolist moves from charging a single price to full price discrimination, the consumer surplus is
zero.( × )
30. If the demand curve for a good is inelastic, an increase in the supply of that good will reduce the total revenue
to the producer.（√ ）

Score 评阅人
ⅢPlease answer the following questions. （ Total 6
questions, 5 points for each question, total 30 points）
31. What is the positive and normative analysis of Western economics?

What is normative economic analysis?

A value judgement is a subjective statement of opinion rather than a fact that can be tested by looking at the

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available evidence

Normative statements are subjective statements – i.e. they carry value judgments. For example:

Pollution is the most serious economic problem

Unemployment is more harmful than inflation

The congestion charge for drivers of petrol-guzzling cars should increase to £25

The government should increase the minimum wage to £7 per hour to reduce poverty.

The government is right to introduce a ban on smoking in public places.

The retirement age should be raised to 70 to combat the effects of our ageing population.

Resources are best allocated by allowing the market mechanism to work freely

The government should enforce minimum prices for beers and lagers sold in supermarkets and off-licenses
in a bid to control alcohol consumption

Focusing on the evidence is called adopting an empirical approach – evidence-based work is becoming more
and more important in shaping different government policies and how much funding to give to each.

What is positive economic analysis?

Positive statements are objective statements that can be tested, amended or rejected by referring to the
available evidence. Positive economics deals with objective explanation and the testing and rejection of
theories. For example:

A fall in incomes will lead to a rise in demand for own-label supermarket foods

If the government raises the tax on beer, this will lead to a fall in profits of the brewers.

The rising price of crude oil on world markets will lead to an increase in cycling to work

A reduction in income tax will improve the incentives of the unemployed to find work.

A rise in average temperatures will increase the demand for sun screen products.

Higher interest rates will reduce house prices

Cut-price alcohol has increased the demand for alcohol among teenagers

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A car scrappage scheme will lead to fall in the price of second hand cars.

32. Please draw Tony's coffee demand curve and calculate the slope of the linear demand curve.
Tony’s demand for Coffee in a week

A B C D E F G

price($) 1 2 3 4 5 6 7

Quantity (cup) 7 6 5 4 3 2 1

Slope or Δ=Δx/Δy.

X represents amount of quantity

Y represents price

Consider points A(6,2) and B(3,5)

Δ or slope=(xA-xB)/(yA-yB)=(6-3)/(2-5)=3/-3

Δor slope=-1

The slope of the linear demand curve is -1.

33. Please draw the Labor supply curve of an individual and explain what the characteristics of the curve are?
Why?

An upward-sloping labor supply curve represents a case in which the substitution effect
of higher wages outweighs the income effect. ... This means the marginal product will
equal the real

wage. In this basic competitive model, the real wage adjusts in labor markets to balance
supply and demand.

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34. The stock market has a term called “chasing the rise and killing the fall” ——when the stock price is rising,
people chase to buy; when the stock price is falling, people rush to sell. Does the phenomenon violate the law of
demand?

Definition: The law of demand states that other factors being constant (cetrisperibus), price and quantity
demand of any good and service are inversely related to each other. When the price of a product increases,
the demand for the same product will fall.

Factors that affect the law of demand are

There are two exceptions to the Law of Demand. Giffen and Veblen goods are exceptions to the Law of
Demand. ... The Law of Demand states that the quantity demanded for a good or service rises as the price
falls, ceteris paribus (or with all other things being equal).

So, the phenomena will violate the rule.

35. Please list the four factors that will cause the whole supply curve to shift and explain how the supply curve
will shift?

Supply is not constant over time. It constantly increases or decreases. Whenever a change in supply occurs,
the supply curve shifts left or right. There are a number of factors that cause a shift in the supply curve: input
prices, number of sellers, technology, natural and social factors, and expectations.production, returns from
alternative activities, technology, seller expectations, natural events, and the number of sellers.

A decrease in costs of production. This means business can supply more at each price. ..

More firms. An increase in the number of producers will cause an increase in supply.

Investment in capacity. ...

Related supply. ...

Weather. ...

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Technological improvements. ...

Lower taxes. ...

score 评阅人 Ⅳ Please analyze the following cases. （ Total 2

questions, 10 points for each question, total 20
points）
A good manager believed that the market should make goods affordable to the poor, so he set a ceiling on the
price of such basic commodities as grain and oil.
Questions:
(1) please illustrate the market welfare of Free Market Pricing in the light of Welfare Economics (consumer
surplus and producer surplus) .

The consumer surplus is the difference between the highest price a consumer is willing to pay and the actual
market price of the good. The producer surplus is the difference between the market price and the lowest
price a producer would be willing to accept. ... The two together create an economic surplus.

(2) please use the supply-demand curve and the text to analyze the consequences of the price ceiling.

When a price ceiling is set below the equilibrium price, quantity demanded will exceed quantity supplied,
and excess demand or shortages will result. A surplus will continue to exist and will grow larger over time.

However, price ceilings and price floors do promote equity in the market. Price floors such as minimum
wage benefits consumers by ensuring reasonable pay. Price ceilings such as rent control benefit consumers
by preventing sellers from over charging which, in the long run, will ensure viable and affordable homes.

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