Econ 202 Name_________________________Exam 3Spring 2011 Due: No Later Than Midnight Friday May 13
(5 Point Deduction for each day it is late.)
Multiple Choice: Each of the following questions or incomplete statements is followed by a series of suggested answers or completions.  Select the one best response for each question. (1 point each) [This exam has a maximum possible value of 75 points. 30 of these points come from the multiple choice questions – there are four extra multiple choice questions – and 45 of these points come from the essay questions.]

1. The “wastefulness” of excess capacity is not considered totally bad by economists because
A. advertisers make more income that is then circulated to the rest of the economy via the
multiplier.
B. the monopolistically competitive firm has a negatively sloped demand curve.
C. the monopolistically competitive firm allocates resources more efficiently than firms in other
market structures.
D. excess capacity may allow for a greater diversity of products than would otherwise be available.

2. Which of the following will create a demand for U.S. dollars in the foreign exchange market?
A. travel abroad by U.S. citizens
B. the desire of foreigners to buy U.S. stocks
C. the desire of U.S. citizens to purchase foreign stocks
D. U.S. imports

3. Consumers who clip and redeem discount coupons:
A. cause total revenue to decrease for firms that issue coupons for their products.
B. exhibit a unitary price elasticity of demand since all consumers have the ability to use
coupons.
C. exhibit the same price elasticity of demand for a given product as consumers who do not
clip and redeem coupons. D. exhibit a more elastic demand for a given product than consumers who do not clip and
redeem coupons. E.  exhibit a more inelastic demand for a given product than consumers who do not clip and
redeem coupons.

4. Antitrust laws ________ whereas social…