Econ Exam B
The income elasticity of demand is ________ if the good is ________ good. A. positive; an inferior B. negative; a normal C. positive; a normal D. less than one; an inferior E. positive; a substitute
C. positive; a normal [From Ch5-H]
Goods are ________ when the income elasticity of demand is less than zero. A. complements B. substitutes C. elastic D. inferior E. normal
D. inferior [From Ch5-H]
Tacos and pizza are substitutes. If a 2 percent change in the price of a taco leads to a 4 percent change in the demand for pizza, the cross elasticity of demand equals A. 2. B. −1/2. C. 1/2. D. 4. E. −2.
A. 2. [From Ch5-H]
Which of the following statements is correct for the price elasticity of demand along a linear, downward−sloping demand curve? A. At high prices, demand is elastic but at low prices demand is inelastic. B. At low prices, demand is elastic but at high prices demand is inelastic. C. The price elasticity of demand is not defined for a linear demand curve because the slope is constant. D. The price elasticity of demand is constant because the slope is constant. E. None of the above answers is correct.
A. At high prices, demand is elastic but at low prices demand is inelastic. [From Test 2]
Why do publishers print the first edition of a book by a popular author in hard cover and not in paperback? A. Readers who want to read the book as soon as it comes out will be willing to pay a higher price compared to those who can wait for the paperback edition. B. Hard cover books are long lasting and paperbacks can rip easily. C. A hardcover is the publisher's way of rewarding the avid readers. D. Publishers are not sure of the demand. E. Publishers cannot price discriminate.
A. Readers who want to read the book as soon as it comes out will be willing to pay a higher price compared to those who can wait for the paperback edition. [From Q-Price Makers]
If Microsoft wanted to prove to the Justice Department that its Windows software has many substitutes that personal computer owners can use, Microsoft hopes to find A. a large positive value for the cross elasticity of Windows and other software. B. that the demand for Windows' is inelastic. C. a negative income elasticity for Windows. D. a positive income elasticity for Windows. E. that the demand for Windows is elastic.
A. a large positive value for the cross elasticity of Windows and other software. [From Test 2]
In a perfectly competitive market, one farmer's barley is A. a perfect substitute for another farmer's barley. B. slightly different from another farmer's barley. C. a monopolized product in that farmer's local market. D. completely different from another farmer's barley. E. a monopolized product in the national market.
A. a perfect substitute for another farmer's barley. [From H-11.1]
If the cross elasticity of demand between good A and good B is negative, then a decrease in the price of good A results in A. an increase in the demand for good B. B. a movement downward along the demand curve for good B. C. a decrease in the supply of good B. D. a decrease in the demand for good B. E. an increase in the supply of good B.
A. an increase in the demand for good B. [From Ch5-H]
Suppose the San Francisco 49ers lower ticket prices by 15 percent and as a result the quantity of tickets demanded increases by 10 percent. This set of results shows that San Francisco 49ers tickets have A. an inelastic demand. B. an elastic demand. C. an elastic supply. D. an inelastic supply. E. a unit elastic demand.
A. an inelastic demand. [From Ch5-H]
A natural monopoly is one that arises from A. economies of scale. B. any government−imposed barrier to entry. C. mergers. D. copyright law. E. patent law.
A. economies of scale [From H-PS]
As more time passes, the price elasticity of gasoline A. increases. B. stays the same. C. becomes perfectly elastic. D. decreases. E. becomes perfectly inelastic.
A. increases. [From Q5-10]
We know that a perfectly competitive firm is a price taker because A. its demand curve is horizontal. B. its MC curve slopes upward. C. it has no supply curve. D. MC and ATC are equal at the profitminus−maximizing amount of output. E. its ATC curve is Uminus−shaped.
A. its demand curve is horizontal. [From Q-PT]
Which of the following is found ONLY in oligopoly? A. one firm's actions affect another firm's profit B. sellers face a downward sloping demand curve for their product C. producers who sell identical products D. the firm's demand curve is horizontal E. entry into the industry is blocked
A. one firm's actions affect another firm's profit [From H-PS]
If a large number of firms are competing, the market could be A. perfect competition or monopolistic competition. B. monopolistic competition or monopoly. C. monopolistic competition or oligopoly. D. oligopoly or monopoly. E. perfect competition or monopoly.
A. perfect competition or monopolistic competition. [From H-PS]
If a 1 percent increase in the price of X increases the quantity demanded of Y by 2 percent, then X and Y are A. substitutes and the cross elasticity of demand equals 2. B. complements and the income elasticity of demand equals 2. C. normal goods and the income elasticity of demand of each equals 2. D. substitutes and the cross elasticity of demand equals 1/2. E. complements and the cross elasticity of demand equals 2.
A. substitutes and the cross elasticity of demand equals 2. [From Ch5-H]
In a perfectly competitive market, the type of decision a firm has to make is different in the short run than in the long run. Which of the following is an example of a perfectly competitive firm's shortminus−run decision? A. the profit−maximizing level of output B. whether or not to enter or exit an industry C. whether or not to change its plant size D. how much to spend on advertising and sales promotion E. what price to charge buyers for the product
A. the profit−maximizing level of output [From H-11.1]
One requirement for an industry to be perfectly competitive is that A. there are no restrictions on entry into or exit from the market. B. there are multiple restrictions on entry into or exit from the market. C. sellers and buyers have imperfect information about prices. D. there are many firms selling different products. E. the many firms sell slightly different products.
A. there are no restrictions on entry into or exit from the market. [From Q-PT]
Chuck owns a factory that produces leather footballs. His total fixed cost equaled $86,000 last year. His total cost equaled $286,000 last year. Hence Chuck's A. total variable cost equaled $200,000. B. total variable cost was zero. C. incurred an economic loss. D. total variable cost equaled $372,000. E. None of the above answers is correct.
A. total variable cost equaled $200,000. [From Test 2]
Lauren runs a chili restaurant in San Francisco. Her total revenue last year was $110,000. The rent on her restaurant was $48,000, her labor costs were $42,000, and her materials, food and other variable costs were $20,000. Lauren could have worked as a biologist and earned $50,000 per year. An economist calculates her implicit costs as A. $50,000. B. $150,000. C. $63,000. D. $110,000. E. $0 because Lauren did not work as a biologist.
A. $50,000. [From Test 2]
If a small percentage change in the price brings a very large percentage change in the quantity supplied, then the supply is almost perfectly ________ and the supply curve is almost ________. A. elastic; horizontal B. elastic; 45 degrees C. elastic; vertical D. inelastic ; vertical E. inelastic; horizontal
A. elastic; horizontal [From Q5-10]
Which of the following must a firm be able to do to successfully price discriminate? i. divide buyers into different groups according to their willingness to pay ii. prevent resale of the good or service iii. identify into which group (high willingness to pay or low willingness to pay) a buyer falls A. i, ii, and iii B. i and iii C. i and ii D. iii only E. ii only
A. i, ii, and iii [From Test 2]
In part, perfect competition arises if i. each firm's minimum efficient scale is large relative to demand. ii. each firm produces a good or service identical to those produced by its many competitors. iii. there are significant barriers to entry. A. ii only B. iii only C. i only D. ii and iii E. i and ii
A.ii only [From Q-PT]
If the price of a good rises, then moving along a demand curve the percentage change in the quantity demanded will be A. negative. B. positive. C. zero. D. either positive, negative, or zero depending on how the demand curve shifted. E. undefined.
A: negative [From Q5-1]
Suppose the demand for rescue services in our national parks is perfectly inelastic. This fact would mean that a 31 percent increase in rescue fees leads to a A. no change in the quantity demanded. B. 31 percent increase in demand. C. decrease in the quantity demanded to 0 rescues. D. 31 percent decrease in demand. E. 31 percent decrease in the quantity demanded.
A: no change in the quantity demanded. [From Q5-1]
Which of the following statements is correct? A. The demand for luxuries is less elastic than the demand for necessities. B. The demand for New Balance shoes is more elastic than the demand for shoes in general. C. The demand for a narrowly defined good is less elastic than the demand for a more broadly defined good. D. The larger the proportion of income spent on a good, the smaller the elasticity of demand. E. The demand for salt is very elastic.
B. The demand for New Balance shoes is more elastic than the demand for shoes in general. [From Q5-10]
The U.S. Postal Service's monopoly on first−class mail service is the result of A. a natural monopoly. B. a public franchise. C. a government license. D. an ownership barrier to entry. E. a patent.
B. a public franchise. [From H-PS]
A cartel is a group of firms A. that compete primarily with each other rather than the other firms in the market. B. acting together to limit output, raise price, and increase economic profit. C. legally fixing prices. D. acting separately to limit output, lower price, and decrease economic profit. E. acting together to erect barriers to entry.
B. acting together to limit output, raise price, and increase economic profit. [From Test 2]
A market is ________ when a small number of firms compete. A. either monopolistically competitive or an oligopoly B. an oligopoly C. monopolistically competitive D. a monopoly E. perfectly competitive
B. an oligopoly [From H-11.1]
A firm faces a small number of competitors. This firm is competing in A. monopolistic competition. B. an oligopoly. C. perfect competition. D. a monopoly. E. a perfect multi−firm monopoly.
B. an oligopoly. [From H-PS]
To be able to price discriminate, a firm must A. raise prices for all customers. B. be able to identify and separate different types of buyers. C. lower prices for all customers. D. sell a product that can be resold. E. Both answers B and C are correct.
B. be able to identify and separate different types of buyers. [From Q-Price Makers]
Suppose that a perfectly competitive firm's marginal revenue equals $12 when it sells 10 units of output. If the marginal cost of producing the 10th unit is $14, to maximize its profit the firm should A. increase the price it charges for its product. B. decrease its production. C. increase its production. D. do nothing because it is already maximizing its profit. E. shut down.
B. decrease its production. [From Q-PT]
For the perfectly competitive broccoli producers in California, the market demand curve for broccoli is A. a horizontal line. B. downward sloping. C. upward sloping. D. the same as the demand curve each firm faces. E. nonexistent.
B. downward sloping. [From H-11.1]
Which of the following is NOT a characteristic of monopolistic competition? A. differentiated product B. few firms compete C. no barriers to entry or exit D. small market share E. easy entry and exit
B. few firms compete [From H-PS]
Patents A. grant the holder a monopoly that lasts forever. B. increase the incentive to innovate. C. increase the incentive to capture economies of scale. D. are granted only to competitive firms and not monopolies. E. require that monopolies increase the amount they produce.
B. increase the incentive to innovate. [From H-PS]
If the percentage change in the price of a good exceeds the percentage change in the quantity supplied, then the supply is A. elastic. B. inelastic. C. unit elastic. D. perfectly elastic. E. perfectly inelastic.
B. inelastic. [From Ch5-H]
Once a monopoly has determined how much it produces, it will charge a price that A. is independent of the amount produced. B. is determined by its demand curve. C. is determined by the intersection of the marginal cost and average total cost curves. D. minimizes marginal cost. E. is equal to its average total cost.
B. is determined by its demand curve. [From Q-Price Makers]
If the price of a good rises, then moving along a demand curve the percentage change in the quantity demanded will be A. positive. B. negative. C. zero. D. either positive, negative, or zero depending on how the demand curve shifted. E. undefined.
B. negative. [From Ch5-H]
If the price of a good rises, then moving along a demand curve the percentage change in the quantity demanded will be A. positive. B. negative. C. zero. D. either positive, negative, or zero depending on how the demand curve shifted. E. undefined.
B. negative. [From Test 2]
Which of the following market types has only a few competing firms? A. monopolistic competition B. oligopoly C. perfect competition D. monopoly E. perfect competition and monopolistic competition
B. oligopoly [From Q-PT]
A monopoly occurs when A. there are many firms producing the same product. B. one firm sells a good that has no close substitutes and a barrier blocks entry for other firms. C. each of many firms produces a product that is slightly different from that of the other firms. D. one firm is larger than the many other firms that make an identical product. E. a few firms control the market.
B. one firm sells a good that has no close substitutes and a barrier blocks entry for other firms. [From Q-PT]
Which of the following is found ONLY in oligopoly? A. producers who sell identical products B. one firm's actions affect another firm's profit C. sellers face a downward sloping demand curve for their product D. the firm's demand curve is horizontal E. entry into the industry is blocked
B. one firm's actions affect another firm's profit [From Q-Price Makers]
A cartel is a collusive agreement among a number of firms that is designed to A. restrict output and lower prices to a predatory level. B. restrict output and raise prices. C. expand output and lower prices to a predatory level. D. expand output and lower prices but not to a predatory level. E. expand output and raise prices.
B. restrict output and raise prices. [From Q-Price Makers]
A large number of sellers all selling an identical product implies which of the following? A. market chaos B. the inability of any seller to change the price of the product C. vertical market supply curves D. horizontal market supply curves E. large losses incurred by all sellers
B. the inability of any seller to change the price of the product [From Q-PT]
A perfectly competitive market arises when A. there are many buyers but few sellers. B. the market demand is very large relative to the output of one seller. C. a firm has control over a unique resource. D. each of the many firms produces a slightly different product. E. the market demand is small relative to the output of a firm.
B. the market demand is very large relative to the output of one seller. [From H-11.1]
A major factor in the success of the Gallo brothers was A. growing their own grapes. B. their innovation in an industry that avoided innovation. C. the "guiding hand" of government. D. none of these.
B. their innovation in an industry that avoided innovation. [From Q-PT]
In monopolistic competition, each firm supplies a small part of the market. This occurs because A. firms produce differentiated products. B. there are a large number of firms. C. there are a large number of buyers. D. there are no barriers to exit. E. there are barriers to entry.
B. there are a large number of firms. [From H-PS]
If a good has many close substitutes, then its demand is most likely A. perfectly inelastic. B. elastic. C. unit elastic. D. inelastic. E. elastic or inelastic depending on whether the price of the good is increasing or decreasing
B: elastic. [From Q5-1]
If the price elasticity of demand for moose hunting lessons is 4.23, then the demand for moose hunting lessons is A. unit elastic. B. elastic. C. perfectly unit elastic. D. perfectly elastic. E. inelastic.
B: elastic. [From Q5-1]
Which of the following is true? A. The Internal Revenue Service taxes the firm's normal profit but not its economic profit. B. Profit as calculated by accountants is always smaller than economic profit. C. Profit as calculated by accountants and economic profit are not necessarily equal. D. Economic profit ignores implicit costs. E. The Internal Revenue Service taxes the firm's economic profit but not its normal profit.
C. Profit as calculated by accountants and economic profit are not necessarily equal. [From Test 2]
The women's dress industry is monopolistically competitive because each firm has A. no market share. B. struck a deal with the many other firms about what price will be charged. C. a very small market share. D. no competition for their market share. E. a large market share.
C. a very small market share. [From Q-Price Makers]
The extent to which the demand for a good changes when the price of a substitute or complement changes, other things remaining the same, is measured as the A. income elasticity of demand. B. price elasticity of supply. C. cross elasticity of demand. D. cross income elasticity of demand. E. price elasticity of demand.
C. cross elasticity of demand. [From Ch5-H]
Which of the following statements is correct? The A. income elasticity of demand for inferior goods is zero. B. cross elasticity of demand for complements is positive. C. income elasticity of demand for normal goods is positive. D. cross elasticity of demand for substitutes is negative. E. income elasticity of demand for inferior goods is positive.
C. income elasticity of demand for normal goods is positive. [From Q5-10]
When the percentage change in the quantity supplied is less than the percentage change in price, the supply is A. perfectly elastic. B. elastic. C. inelastic. D. unit elastic. E. perfectly unit elastic.
C. inelastic. [From Ch5-H]
Which of the following firms is most likely to be a monopoly? A. local restaurant B. clothing store C. local distributor natural gas D. local book store E. local bank
C. local distributor natural gas [From H-PS]
If the wheat industry is perfectly competitive with a market price of $4 per bushel and Farmer Brown charged $5 per bushel, how many bushels would Farmer Brown sell? A. just as many as he would at a price of $4 B. some, but fewer than he would at a price of $4 C. none D. more than he would at a price of $4 E. More information is needed about the prices charged by the other wheat farmers.
C. none [From H-11.1]
A singleminus−price monopoly is producing at an output level where marginal revenue is $15, marginal cost is $13, and price is $20. This monopoly is A. maximizing its profit but should shut down. B. not maximizing its profit and should decrease output to increase its profit. C. not maximizing its profit and should increase output to increase its profit. D. maximizing its profit and should not shut down. E. maximizing its profit but still should decrease output to earn even more profit.
C. not maximizing its profit and should increase output to increase its profit. [From Q-Price Makers]
Each firm in a perfectly competitive industry A. attains economies of scale so that its efficient size is large compared to the market as a whole. B. has control over at least one unique resource to separate themselves from their competitors. C. produces a good that is identical to that of the other firms. D. produces a good that is slightly different from that of the other firms. E. has an important influence on the market price of the good or service being produced.
C. produces a good that is identical to that of the other firms. [From H-11.1]
A perfectly competitive firm can A. set a higher price to customers who are willing to pay more. B. sell additional output only by lowering its price. C. sell all of its output at the prevailing market price. D. raise its price in order to increase its total revenue. E. usually not sell all the output it produces, but still "over−produces" because there are some periods when it can sell the extra output at very profitable prices.
C. sell all of its output at the prevailing market price. [From H-11.1]
If a monopoly wants to sell a larger quantity, it must A. implement new technology. B. increase the barrier to entry that protects it. C. set a lower price. D. set a higher price. E. maintain the current price.
C. set a lower price. [From H-PS]
If a 1 percent increase in the price of X increases the quantity demanded of Y by 2 percent, then X and Y are A. substitutes and the cross elasticity of demand equals 1/2. B. complements and the cross elasticity of demand equals 2. C. substitutes and the cross elasticity of demand equals 2. D. complements and the income elasticity of demand equals 2. E. normal goods and the income elasticity of demand of each equals 2.
C. substitutes and the cross elasticity of demand equals 2. [From Q5-10]
One reason why the demand for gasoline is inelastic is because A. buses run on diesel fuel rather than gasoline. B. people have a long time to shop around for automobiles that use less gas. C. substitutes for gas are hard to find. D. substitutes for gas abound. E. gasoline is a luxury item.
C. substitutes for gas are hard to find. [From Test 2]
Total cost includes A. the cost of fixed resources only. B. the cost of variable resources only. C. the cost of both variable and fixed resources. D. the cost of neither variable nor fixed resources. E. all explicit costs and all the implicit costs that actually must be paid using money.
C. the cost of both variable and fixed resources. [From Test 2]
Price discrimination is possible, in part, because A. costs of production vary as output increases. B. monopolies don't profit maximize. C. the willingness to pay can vary among groups of buyers. D. monopolies are regulated. E. monopolies face horizontal demand curves.
C. the willingness to pay can vary among groups of buyers. [From Q-Price Makers]
One of the requirements for a monopoly is that A. products are high priced. B. the product cannot be produced by small firms. C. there is a product with no close substitutes. D. there is no barrier to entry. E. there are several close substitutes for the product.
C. there is a product with no close substitutes. [From H-PS]
Suppose a local photographer increases his prices by 8 percent and quantity demanded decreases by the same percentage. This set of facts indicates that the demand for his services is A. elastic. B. perfectly inelastic. C. unit elastic. D. perfectly elastic. E. inelastic.
C. unit elastic. [From Q5-1]
Suppose Pat's Paints is a perfectly competitive firm. If Pat's Paints' marginal revenue equals $5 per can, and Pat decides to sell 100 cans of paint, Pat's total revenue equals A. $20. B. $5. C. $500. D. $100. E. Information on the price of a can of paint is needed to answer the question.
C. $500. [From H-11.1]
Of the following, which good has the most elastic demand? A. food B. breakfast food C. Post Raisin Brand purchased at a Safeway grocery store D. Post Raisin Bran E. cereal
C: Post Raisin Brand purchased at a Safeway grocery store [From Q5-1]
If the percentage change in the quantity demanded is not zero but is less than the percentage change in the price, demand is A. perfectly elastic. B. unit elastic. C. inelastic. D. elastic. E. perfectly inelastic.
C: inelastic. [From Q5-1]
What does monopolistic competition have in common with perfect competition? A. product differentiation B. a standardized product C. the ability to earn an economic profit in the long run D. a large number of firms and freedom of entry and exit E. barriers to exit but no barriers to entry
D. a large number of firms and freedom of entry and exit [From Q-Price Makers]
If a product is narrowly defined, it is likely to A. be unique, and therefore its demand is inelastic. B. have a larger proportion of income spent on it. C. be unique and have many substitutes. D. have many substitutes and therefore its demand is elastic. E. have few substitutes, and therefore its demand is less elastic.
D. have many substitutes and therefore its demand is elastic. [From Test 2]
If Melissa owns a software company that incurs no fixed costs, then A. she will earn an economic profit. B. her total variable cost is less than her total cost. C. her marginal cost must equal zero. D. her total cost equals her total variable cost. E. her total cost equals zero.
D. her total cost equals her total variable cost. [From Test 2]
If demand for a seller's product is perfectly elastic, which of the following is true? i. The firm will sell no output if it sets the price its product above the market price. ii. There are many perfect substitutes for the seller's product. iii. The firm will sell no output if it sets the price its product below the market price. A. ii only B. i only C. ii and iii D. i and ii E. iii only
D. i and ii [From H-11.1]
Which of the following is an implicit cost in Jim's business venture? i. the salary Jim could have earned at another job ii. the interest Jim must pay on the loan he incurred to help open his business iii. the interest Jim lost when he used his savings to help open his business A. i only B. ii only C. iii only D. i and iii E. ii and iii
D. i and iii [From Q5-10]
A market is classified as monopolistically competitive when A. a small number of firms compete. B. there is one firm that sells a good or service with no close substitutes. C. there is a barrier that blocks entry by other firms. D. many firms produce a slightly differentiated product. E. many firms produce the same product.
D. many firms produce a slightly differentiated product. [From Q-PT]
The characteristics that describe a perfectly competitive industry include A. many firms selling a slightly differentiated product. B. one firm selling to many buyers. C. a few firms selling to many buyers. D. many firms selling an identical product. E. None of the above answers is correct.
D. many firms selling an identical product. [From H-11.1]
Suppose the demand for rescue services in our national parks is perfectly inelastic. This fact would mean that a 31 percent increase in rescue fees leads to a A. 31 percent increase in demand. B. 31 percent decrease in the quantity demanded. C. 31 percent decrease in demand. D. no change in the quantity demanded. E. decrease in the quantity demanded to 0 rescues.
D. no change in the quantity demanded. [From Ch5-H]
If the demand for a good is elastic, then A. a change in price leads to a smaller percentage change in the quantity demanded. B. a change in the quantity demanded is smaller than the change in price. C. the quantity demanded divided by the price exceeds 1.00. D. people substantially decrease the quantity of the good they buy if its price increases by a small percentage. E. people do not change the quantity they demand when the price of the good changes.
D. people substantially decrease the quantity of the good they buy if its price increases by a small percentage. [From Ch5-H]
<< Image with vertical demand shown>> The figure above shows the supply curve for a good with a A. perfectly elastic supply. B. unit elastic supply. C. inelastic supply. D. perfectly inelastic supply. E. elastic supply.
D. perfectly inelastic supply. [From Ch5-H]
A firm in monopolistic competition ________ influence its price and ________ influence the market average price. A. can; only in the short run can B. cannot; can C. cannot; cannot D. can; cannot E. can; can
D. can; cannot [From H-PS]
In the short run, a perfectly competitive firm ________ earn an economic profit and ________ incur an economic loss. A. will never; will never B. will never; might C. might; will never D. might; might E. will definitely; will never
D. might; might [From H-11.1]
Demand for a product tends to be more elastic the longer the time period considered because A. the inverse relationship between the price and the quantity demanded weakens over time. B. buyers get used to the new price. C. sellers have more time to expand production. D. buyers have more time to search for substitutes. E. price increases over time make the price larger relative to buyers' incomes.
D: buyers have more time to search for substitutes. [From Q5-1]
The price elasticity of demand measures the ________ that results from a ________. A. percentage change in price; percentage change in the quantity demanded B. percentage change in the quantity demanded; change in price C. change in price; change in the quantity demanded D. percentage change in the quantity demanded; percentage change in price
D: percentage change in the quantity demanded; percentage change in price [From Q5-1]
Which of the following is correct? A. The cross elasticity of demand for substitute goods is negative. B. The cross elasticity of demand for normal goods is positive. C. The income elasticity of demand for a normal good is negative. D. The cross elasticity of demand equals the percentage change in demand divided by the percentage change in income. E. The cross elasticity of demand for substitute goods is positive.
E. The cross elasticity of demand for substitute goods is positive. [From Ch5-H]
Which of the following statements is correct? A. The demand for a narrowly defined good is less elastic than the demand for a more broadly defined good. B. The larger the proportion of income spent on a good, the smaller the elasticity of demand. C. The demand for salt is very elastic. D. The demand for luxuries is less elastic than the demand for necessities. E. The demand for New Balance shoes is more elastic than the demand for shoes in general.
E. The demand for New Balance shoes is more elastic than the demand for shoes in general. [From Ch5-H]
A cartel is A. a market structure with a large number of small firms. B. another name for an oligopoly. C. a market with only two firms. D. a market structure with a small number of large firms. E. a group of firms acting together to raise price, decrease output, and increase economic profit.
E. a group of firms acting together to raise price, decrease output, and increase economic profit. [From H-PS]
The women's dress industry is monopolistically competitive because each firm has A. a large market share. B. no competition for their market share. C. no market share. D. struck a deal with the many other firms about what price will be charged. E. a very small market share.
E. a very small market share. [From H-PS]
From a firm's viewpoint, opportunity cost is the A. cost of acquiring the opportunity to sell to its customers. B. price a firm can charge for its output. C. best alternative use customers can find for the firm's output. D. accounting cost of resources. E. cost the firm must pay for the factors of production it employs to attract them from their best alternative use.
E. cost the firm must pay for the factors of production it employs to attract them from their best alternative use. [From Q5-10]
The market demand curve in a perfectly competitive market is ________ and the demand curve for a perfectly competitive firm's output is ________. A. horizontal; horizontal B. downward sloping; upward sloping C. horizontal; downward sloping D. downward sloping; downward sloping E. downward sloping; horizontal
E. downward sloping; horizontal [From Q-PT]
A two−firm oligopoly is called a A. dualminus−market. B. cartel. C. monopolistic oligopoly. D. double monopoly. E. duopoly.
E. duopoly. [From Test 2]
The price elasticity of demand for Red Delicious apples, a certain type of apple, is likely A. unit elastic. B. perfectly inelastic. C. perfectly elastic. D. inelastic. E. elastic.
E. elastic. [From Q5-10]
Which of the following is correct? i. All linear demand curves have a constant slope and a constant price elasticity of demand. ii. The price elasticity of demand changes while moving along a downwardminus−sloping linear demand curve. iii. The magnitude of the slope of all linear demand curves is equal to the price elasticity of demand. A. i, ii, and iii B. i only C. i and ii D. iii only E. ii only
E. ii only [From Q5-10]
One characteristic of monopolistic competition is that it has A. many firms producing identical goods. B. large barriers to entry. C. one firm producing a unique good. D. a few firms producing a slightly differentiated product. E. many firms producing a slightly differentiated product.
E. many firms producing a slightly differentiated product. [From Q-Price Makers]
Which market structure is characterized by the following characteristics? i. a large number of firms compete ii. each firm produces a differentiated product iii. firms are free to enter and exit A. duopoly B. monopoly C. oligopoly D. perfect competition E. monopolistic competition
E. monopolistic competition [From H-PS]
The longer the time that has elapsed since the price of a good changed, the A. steeper the demand curve. B. fewer substitutes available for the good. C. less elastic the demand for that good. D. smaller the amount of that good bought. E. more elastic the demand for that good.
E. more elastic the demand for that good. [From Test 2]
Suppose the demand for rescue services in our national parks is perfectly inelastic. This fact would mean that a 31 percent increase in rescue fees leads to a A. 31 percent decrease in demand. B. decrease in the quantity demanded to 0 rescues. C. 31 percent decrease in the quantity demanded. D. 31 percent increase in demand. E. no change in the quantity demanded.
E. no change in the quantity demanded. [From Test 2]
In which market structure is there a large number of firms producing slightly differentiated products? A. monopoly B. oligopoly C. only perfect competition D. either perfect competition or monopolistic competition E. only monopolistic competition
E. only monopolistic competition [From H-11.1]
In a perfectly competitive market, the market price is $23. At the current level of output, a firm has a marginal cost of $28. What should the firm do? A. raise the price of its product B. produce a larger output to earn more profit C. shut down D. nothing, it is currently maximizing profit E. produce less output to earn more profit
E. produce less output to earn more profit [From H-11.1]
A firm's marginal revenue is A. the change in total revenue minus the change in total cost. B. less than the market price for a perfectly competitive firm. C. total revenue minus total cost. D. the change in total revenue that results from an increase in the demand for the good or service. E. the change in total revenue that results from a one−unit increase in the quantity sold.
E. the change in total revenue that results from a one−unit increase in the quantity sold. [From H-11.1]
If the price elasticity of demand for a good is 2, then a 10 percent increase in the price of that good ________ the quantity demanded by ________ percent. A. decreases; 2 B. increases; 20 C. increases; 8 D. decreases; 10 E. decreases; 20
E. decreases; 20 [From Q5-10]
If the demand for a good is elastic, then A. a change in the quantity demanded is smaller than the change in price. B. the quantity demanded divided by the price exceeds 1.00. C. people do not change the quantity they demand when the price of the good changes. D. a change in price leads to a smaller percentage change in the quantity demanded. E. people substantially decrease the quantity of the good they buy if its price increases by a small percentage.
E: people substantially decrease the quantity of the good they buy if its price increases by a small percentage. [From Q5-1]
