Econ 202
ECON 202 Exam 3 Review 2026 Graded A+
Figure 15.1
Price/Unit - Quantity Demanded - Total Cost of Production
$85 10 $530
$80 11 $540
$75 12 $550
$70 13 $560
$65 14 $575
$60 15 $595
$55 16 $625
A monopoly producer of foreign language translation software faces a demand and cost
structure as given in Table 15-1. What is the marginal revenue from the sale of the 12th
unit?
A. $75
B. $50
C. $20
D. -$5 -Correct Answer ✔-C. $20
Compensating differentials are
A. higher wages that compensate the more experienced workers in a field.
B. wages paid to workers where the supply of labor is great relative to demand.
C. non-monetary benefits from being employed, such as health-care benefits.
D. higher wages that compensate workers for unpleasant aspects of a job. -Correct
Answer ✔-D. higher wages that compensate workers for unpleasant aspects of a job.
Which of the following is a characteristic shared by a perfectly competitive firm and a
monopoly?
A. Each sets a price for its product that will maximize its revenue.
B. Each maximizes profits by producing a quantity for which marginal revenue equals
marginal cost.
C. Each must lower its price to sell more output.
D. Each maximizes profits by producing a quantity for which price equals marginal cost.
-Correct Answer ✔-B. Each maximizes profits by producing a quantity for which
marginal revenue equals marginal cost.
A monopoly is a firm that is the only seller of a good or service that does not have a
close substitute.
A. True
B. False -Correct Answer ✔-A. True
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,Econ 202
Arnold Kim began blogging about Apple products during his fourth year of medical
school. Kim's Website, MacRumors.com, became so successful that he decided to give
up his medical career and work full time on his Website, despite the nearly $200,000 he
had invested in his education. In making his decision, the $200,000 he spent on his
education
A. should be considered since it is money he could have used to invest in his Website.
B. should be ignored since it represents a sunk cost.
C. should be considered since it is money he has spent and needs to recoup.
D. should be ignored only if Kim can earn more than $200,000 by running his Website. -
Correct Answer ✔-B. should be ignored since it represents a sunk cost.
Marginal cost is equal to the
A. change in total cost divided by the change in output.
B. change in total product divided by the change in output.
C. change in average product divided by the change in output.
D. change in average total costs divided by the change in output. -Correct Answer ✔-A.
change in total cost divided by the change in output.
One reason patent protection is vitally important to pharmaceutical firms is
A. the high salaries pharmaceutical firms pay to scientists and doctors make their labor
costs higher than for any other business. Profits from patents are needed to pay these
labor costs.
B. successful new drugs are not profitable. If firms are not granted patents many would
go out of business and health care would be severely diminished.
C. that taxes on profits from drugs are very high; profits from patent protection enable
firms to pay these taxes.
D. the approval process for new drugs through the Food and Drug Administration can
take more than 10 years and is very costly. Patents enable firms to recover costs
incurred during this process. -Correct Answer ✔-D. the approval process for new drugs
through the Food and Drug Administration can take more than 10 years and is very
costly. Patents enable firms to recover costs incurred during this process.
The U.S. Congress has given two government entities the authority to police mergers.
These two entities are
A. the Antitrust Division of the U.S. Department of Justice and the Council of Economic
Advisors.
B. the antitrust division of the Department of State and the Securities and Exchange
Commission.
C. the Federal Trade Commission and the Internal Revenue Service.
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, Econ 202
D. the Federal Trade Commission and the Antitrust Division of the U.S. Department of
Justice. -Correct Answer ✔-D. the Federal Trade Commission and the Antitrust Division
of the U.S. Department of Justice.
In situations where new technologies are considered substitutes for workers, demand
for these workers will ________, resulting in ________ in the equilibrium wage.
A. increase; a decrease
B. decrease; a decrease
C. increase; an increase
D. decrease; an increase -Correct Answer ✔-B. decrease; a decrease
Which of the following is true of a payoff matrix?
A. It is the representation of only the best response of each player.
B. It does not represent all the costs and benefits associated with the choices of the
players.
C. It takes into account all relevant costs and benefits associated with each action of the
players.
D. It shows the payment made to each factor of production for the production of a good.
-Correct Answer ✔-C. It takes into account all relevant costs and benefits associated
with each action of the players.
One reason why the average salary of Major League Baseball players is higher than the
average salary of college professors is
A. college professors accept lower salaries in exchange for better working conditions.
B. the marginal revenue product of baseball players is greater than the marginal
revenue product of college professors.
C. competition among baseball club owners forces player salaries to be much higher
than the players' marginal revenue products.
D. the careers of most baseball players are much shorter than the careers of most
college professors. -Correct Answer ✔-B. the marginal revenue product of baseball
players is greater than the marginal revenue product of college professors.
Some colleges now offer massive open online courses (MOOCs), where students do
not need to be in the same classroom as their instructors. The fixed cost of an online
course is relatively ________, but after the courses are placed online, the marginal cost
of providing instruction to an additional student is ________.
A. high; low
B. low; high
C. low; low
D. high; high -Correct Answer ✔-A. high; low
Econ 202
ECON 202 Exam 3 Review 2026 Graded A+
Figure 15.1
Price/Unit - Quantity Demanded - Total Cost of Production
$85 10 $530
$80 11 $540
$75 12 $550
$70 13 $560
$65 14 $575
$60 15 $595
$55 16 $625
A monopoly producer of foreign language translation software faces a demand and cost
structure as given in Table 15-1. What is the marginal revenue from the sale of the 12th
unit?
A. $75
B. $50
C. $20
D. -$5 -Correct Answer ✔-C. $20
Compensating differentials are
A. higher wages that compensate the more experienced workers in a field.
B. wages paid to workers where the supply of labor is great relative to demand.
C. non-monetary benefits from being employed, such as health-care benefits.
D. higher wages that compensate workers for unpleasant aspects of a job. -Correct
Answer ✔-D. higher wages that compensate workers for unpleasant aspects of a job.
Which of the following is a characteristic shared by a perfectly competitive firm and a
monopoly?
A. Each sets a price for its product that will maximize its revenue.
B. Each maximizes profits by producing a quantity for which marginal revenue equals
marginal cost.
C. Each must lower its price to sell more output.
D. Each maximizes profits by producing a quantity for which price equals marginal cost.
-Correct Answer ✔-B. Each maximizes profits by producing a quantity for which
marginal revenue equals marginal cost.
A monopoly is a firm that is the only seller of a good or service that does not have a
close substitute.
A. True
B. False -Correct Answer ✔-A. True
Econ 202
,Econ 202
Arnold Kim began blogging about Apple products during his fourth year of medical
school. Kim's Website, MacRumors.com, became so successful that he decided to give
up his medical career and work full time on his Website, despite the nearly $200,000 he
had invested in his education. In making his decision, the $200,000 he spent on his
education
A. should be considered since it is money he could have used to invest in his Website.
B. should be ignored since it represents a sunk cost.
C. should be considered since it is money he has spent and needs to recoup.
D. should be ignored only if Kim can earn more than $200,000 by running his Website. -
Correct Answer ✔-B. should be ignored since it represents a sunk cost.
Marginal cost is equal to the
A. change in total cost divided by the change in output.
B. change in total product divided by the change in output.
C. change in average product divided by the change in output.
D. change in average total costs divided by the change in output. -Correct Answer ✔-A.
change in total cost divided by the change in output.
One reason patent protection is vitally important to pharmaceutical firms is
A. the high salaries pharmaceutical firms pay to scientists and doctors make their labor
costs higher than for any other business. Profits from patents are needed to pay these
labor costs.
B. successful new drugs are not profitable. If firms are not granted patents many would
go out of business and health care would be severely diminished.
C. that taxes on profits from drugs are very high; profits from patent protection enable
firms to pay these taxes.
D. the approval process for new drugs through the Food and Drug Administration can
take more than 10 years and is very costly. Patents enable firms to recover costs
incurred during this process. -Correct Answer ✔-D. the approval process for new drugs
through the Food and Drug Administration can take more than 10 years and is very
costly. Patents enable firms to recover costs incurred during this process.
The U.S. Congress has given two government entities the authority to police mergers.
These two entities are
A. the Antitrust Division of the U.S. Department of Justice and the Council of Economic
Advisors.
B. the antitrust division of the Department of State and the Securities and Exchange
Commission.
C. the Federal Trade Commission and the Internal Revenue Service.
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, Econ 202
D. the Federal Trade Commission and the Antitrust Division of the U.S. Department of
Justice. -Correct Answer ✔-D. the Federal Trade Commission and the Antitrust Division
of the U.S. Department of Justice.
In situations where new technologies are considered substitutes for workers, demand
for these workers will ________, resulting in ________ in the equilibrium wage.
A. increase; a decrease
B. decrease; a decrease
C. increase; an increase
D. decrease; an increase -Correct Answer ✔-B. decrease; a decrease
Which of the following is true of a payoff matrix?
A. It is the representation of only the best response of each player.
B. It does not represent all the costs and benefits associated with the choices of the
players.
C. It takes into account all relevant costs and benefits associated with each action of the
players.
D. It shows the payment made to each factor of production for the production of a good.
-Correct Answer ✔-C. It takes into account all relevant costs and benefits associated
with each action of the players.
One reason why the average salary of Major League Baseball players is higher than the
average salary of college professors is
A. college professors accept lower salaries in exchange for better working conditions.
B. the marginal revenue product of baseball players is greater than the marginal
revenue product of college professors.
C. competition among baseball club owners forces player salaries to be much higher
than the players' marginal revenue products.
D. the careers of most baseball players are much shorter than the careers of most
college professors. -Correct Answer ✔-B. the marginal revenue product of baseball
players is greater than the marginal revenue product of college professors.
Some colleges now offer massive open online courses (MOOCs), where students do
not need to be in the same classroom as their instructors. The fixed cost of an online
course is relatively ________, but after the courses are placed online, the marginal cost
of providing instruction to an additional student is ________.
A. high; low
B. low; high
C. low; low
D. high; high -Correct Answer ✔-A. high; low
Econ 202
