3. Suppose the price level is fixed. If investment increases by $1 trillion and the aggregate expenditure curve is shown in the figure above, equilibrium expenditure will increase by
(A) $1 trillion.
(B) less than $1 trillion.
(C) $3 trillion.
(D) indeterminate from the information given.

4. Which of the following is NOT a characteristic of monopolistic competition? (A) There is product differentiation in the market. (B) Firms set the price of their product equal to their marginal cost. (C) Firms may make an economic profit in the short run. (D) There is easy entry and exit.

5. There are 6 firms in a market and the market shares of the firms are 40 percent, 30 percent, 10 percent, 8 percent, 7 percent, and 5 percent. The four-firm concentration ratio is equal to (A) 2664. (B) 2738. (C) 88. (D) 100. 

6. The above table gives some of the costs of the Delicious Pie Company. What is the average total cost of producing 200 pies? (A) $6.50 (B) $5.00 (C) $650 (D) More information is needed to calculate the average total cost.

7. Real business cycle theory says that the factor leading to the business cycle is represented by changes in (A) only aggregate demand. (B) the growth rate of the quantity of money. (C) animal spirits. (D) productivity. 

8. Ann Taylor and Gap are two clothing companies that must decide on the leading color palette for next season. Their sales depend on the choice of color they make as well as the choice their competitor makes. Their sales are summarized in the payoff matrix above. Using the payoff matrix (A) the Nash Equilibrium is for one company to choose pink while the other company chooses orange. (B) the only Nash Equilibrium is for both companies to choose pink. (C) there are two Nash Equilibria: either both companies choose pink or both choose orange. (D) the only Nash Equilibrium is for both companies to choose orange.

9. The figure above shows the costs for the typical grower in the perfectly competitive turnip market. Currently, the price is $1,000 for a ton of turnips. In the long run, the market supply of turnips will (A) increase and the turnip grower's economic profit will decrease. (B) increase and the turnip grower's economic profit will increase. (C) decrease and the price of a ton of turnips will rise to $1,200. (D) decrease and the price of a ton of turnips will fall to $600. 

10. In 2016, consumers in Dexter consumed only books and pens. The prices and quantities for 2016 and 2017 are listed in the table above. The reference base period for Dexter's CPI is 2016. What is the cost of the CPI basket in 2017? (A) $430 (B) $540 (C) $335 (D) $320 

11. Consider the indifference maps shown above. If X and Y are perfect substitutes, your indifference curves between them would look like those in (A) Figure A. (B) Figure B. (C) Figure C. (D) Figure D. 

12. From the data in the above table, GDP equals (A) $1,120. (B) $1,290. (C) $1,280. (D) $1,360.

13. If the velocity of circulation is 6 and the quantity of money is $3 trillion, what is nominal GDP? (A) $6 trillion (B) $2 trillion (C) $333 billion (D) $18 trillion

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