Econ mid
If four workers can produce 18 chairs a day and five can produce 20 chairs a day, the marginal product of the fifth worker is: Select one: A. 2 chairs B. 3 chairs C. 4 chairs D. 38 chairs.
A. 2 chairs
Figure 10-12 shows the cost and demand curves for a monopolist. Refer to Figure 10-12. If the firm maximizes its profits, the deadweight loss to society due to this monopoly is equal to the area: Select one: A. ACE B. ABF C. EFG D. ABEG
A. ACE
Jonah lives in a small town where there is only one Mexican restaurant. Which of the following is likely to be true about the price elasticity of demand for meals at the Mexican restaurant? Select one: A. Demand is likely to be relatively inelastic. B. Demand is likely to be relatively elastic. C. Demand is likely to be perfectly inelastic. D. Demand is likely to be perfectly elastic.
A. Demand is likely to be relatively inelastic.
Refer to Figure 3-3. The figure above shows the supply and demand curves for two markets: the market for original Picasso paintings and the market for designer jeans. Which graph most likely represents which market? Select one: A. Graph B represents the market for original Picasso paintings and Graph A represents the market for designer jeans. B. Graph A represents the market for original Picasso paintings and Graph B represents the market for designer jeans. C. Graph B represents both the market for original Picasso paintings and designer jeans. D. Graph A represents both the market for original Picasso paintings and designer jeans.
A. Graph B represents the market for original Picasso paintings and Graph A represents the market for designer jeans.
Table 2-9 Serena Haley Bracelets 8 9 Necklaces 16 12 Table 2-9 shows the output per week of two jewelers, Serena and Haley. They can either devote their time to making bracelets or making necklaces. Refer to Table 2-9. Which of the following statements is true? Select one: A. Haley has a comparative advantage in making bracelets and Serena in making necklaces. B. Serena has a comparative advantage in making both products. C. Haley has a comparative advantage in making necklaces and Serena in making bracelets. D. Haley has a comparative advantage in making both products.
A. Haley has a comparative advantage in making bracelets and Serena in making necklaces.
If the price elasticity of demand for canned soup is estimated at -1.62. What happens to sales revenue if the price of canned soup rises? Select one: A. It falls. B. It rises. C. It rises by 1.62 percent. D. It falls by 162 percent.
A. It falls.
In most business situations where firms compete, often they can escape the prisoner's dilemma and reach the most profitable outcome. Which of the following is a reason for this? Select one: A. Most games are repeated games and firms can employ retaliation strategies against those who do not cooperate. B. Most games are one-shot games so firms learn from their mistakes. C. Firms are constantly improving their products and anticipating changing consumer tastes. D. Firms engage in aggressive advertising to overcome the barriers to loyalty.
A. Most games are repeated games and firms can employ retaliation strategies against those who do not cooperate.
A monopoly producer of foreign language translation software faces a demand and cost structure as given in Table 10-1. Refer to Table 10-1. What is the firm's profit-maximizing output and what is the price charged to sell this output? Select one: A. P = $70; Q = 13 B. P = $85; Q = 10 C. P = $65; Q = 14 D. P = $80; Q = 11
A. P = $70; Q = 13
________ is a situation in which a good or service is produced at the lowest possible cost. Select one: A. Productive efficiency B. Equity C. Optimal marginalism D. Allocative efficiency
A. Productive efficiency
Which of the following is a positive economic statement? Select one: A. Raising the tax on gasoline raises the selling price of gasoline. B. The government should revamp its immigration policies. C. The government should ban the production and sale of incandescent light bulbs. D. U.S. citizens should only buy products which are produced in the United States.
A. Raising the tax on gasoline raises the selling price of gasoline.
Which of the following statements is true? Select one: A. The average product of labor is at its maximum when the average product of labor equals the marginal product of labor. B. Whenever the marginal product of labor is greater than the average product of labor the average product of labor must be decreasing. C. The average product of labor is at its minimum when the average product of labor equals the marginal product of labor. D. The average product of labor tells us how much output changes as the quantity of workers hired changes.
A. The average product of labor is at its maximum when the average product of labor equals the marginal product of labor.
Positive technological change in the production of LCD televisions caused the price of LCD televisions to fall. Holding everything else constant, how would this affect the market for Blu-ray players (a complement to LCD televisions)? Select one: A. The demand for Blu-ray players would increase and the equilibrium price of Blu-ray players would increase. B. The demand for Blu-ray players would decrease because consumers could afford to buy fewer LCD televisions and Blu-ray players. C. The supply of Blu-ray players would increase and the equilibrium price of Blu-ray players would decrease. D. The demand for Blu-ray players would increase and the equilibrium price of Blu-ray players would decrease.
A. The demand for Blu-ray players would increase and the equilibrium price of Blu-ray players would increase.
Which of the following would cause the equilibrium price of white bread to decrease and the equilibrium quantity of white bread to increase? Select one: A. a decrease in the price of flour B. an increase in the price of rye bread, a substitute for white bread C. an increase in the price of flour D. an increase in the price of butter, a complement for white bread
A. a decrease in the price of flour
Refer to Figure 8-2. Diminishing returns to labor set in: Select one: A. after L1 B. after L2 C. after L3 D. immediately.
A. after L1
When someone takes out a mortgage loan to buy a house, the mortgage lender can take possession of the house and sell it if the borrower defaults by failing to make payments on the loan because the house is being pledged as ________ for the loan. Select one: A. collateral B. a liability C. goodwill D. insurance
A. collateral
A monopolistically competitive firm that earns an accounting profit in the short run: Select one: A. could earn an economic profit, break even or suffer an economic loss in the short run B. must also earn an economic profit in the short run C. could earn an economic profit or break even, but could not suffer an economic loss in the short run D. does not earn enough to earn an economic profit in the short run.
A. could earn an economic profit, break even or suffer an economic loss in the short run
Economic efficiency requires that a natural monopoly's price be: Select one: A. equal to marginal cost where it intersects the demand curve B. equal to the lowest price the firm can charge and still make a normal profit C. equal to average variable cost where it intersects the demand curve D. equal to average total cost where it intersects the demand curve.
A. equal to marginal cost where it intersects the demand curve
Network externalities: Select one: A. exist when the usefulness of a product increases with the number of consumers who use it B. are created when celebrity endorsements of products lead to a surge in the demand for those products C. can only exist when there are economies of scale D. prevent the dominance of a market by one firm
A. exist when the usefulness of a product increases with the number of consumers who use it
Assume you set up a sole proprietorship and your lawyer tells you that as the owner, you could stand to lose your personal wealth if the business goes bankrupt. This means a sole proprietorship: Select one: A. faces unlimited liability B. faces limited liability C. has little chance of succeeding D. is not a good type of business to set up.
A. faces unlimited liability
If a perfectly competitive apple farm's marginal revenue exceeds the marginal cost of the last bushel of apples sold, what should the farm do to maximize its profit? Select one: A. increase output B. determine what the total revenue and total cost of production are C. decrease output D. lower its price to sell more
A. increase output
If the Apple iPhone and the Samsung Galaxy are considered substitutes, then, other things equal, an increase in the price of the iPhone will: Select one: A. increase the demand for the Galaxy B. decrease the demand for the iPhone C. increase the quantity demanded for the Galaxy D. increase the quantity demanded for the iPhone.
A. increase the demand for the Galaxy
According to census figures and the Congressional Budget Office, the number of people aged 65 and older is projected to ________ and the number of uninsured people is projected to ________ by the year 2020. Select one: A. increase; decrease B. decrease; increase C. decrease; decrease D. increase; increase
A. increase; decrease
The existence of the principal-agent problem: Select one: A. increases the risk of buying stock in a corporation B. implies that managers that have the same incentives as the board of directors C. increases the risk of becoming the sole proprietor of a business D. does all of the above.
A. increases the risk of buying stock in a corporation
The price of a seller's product in perfect competition is determined by: Select one: A. market demand and market supply B. the individual seller C. a few of the sellers D. the individual demander.
A. market demand and market supply
For which of the following firms is patent protection of vital importance? Select one: A. pharmaceutical firms B. auto makers C. furniture producers D. software firms
A. pharmaceutical firms
Governments grant patents to encourage: Select one: A. research and development on new products B. firms to form public enterprises C. low prices D. competition.
A. research and development on new products
Olive oil producers want to sell more olive oil at a higher price. Which of the following events would have this effect? Select one: A. research finds that consumption of olive oil reduces the risk of heart disease B. a decrease in the cost of transporting olive oil to markets C. an increase in the price of land used to plant olives D. an increase in the price of olive oil presses
A. research finds that consumption of olive oil reduces the risk of heart disease
For which of the following products is social influence likely to have the greatest impact? Select one: A. restaurants B. high-blood pressure medication C. toothpaste D. school textbook
A. restaurants
A sole proprietorship is: Select one: A. the easiest type of business to set up B. the least profitable type of business to set up C. the most expensive type of business to set up D. the most difficult type of business to set up.
A. the easiest type of business to set up
One reason Starbucks experienced a decline in sales in the late 2000s is because: Select one: A. the product they offered was becoming less differentiated from their competitors' products B. the number of competitors in the market declined dramatically C. the coffeehouse market transitioned from being monopolistically competitive to perfectly competitive D. barriers to entry became more restrictive in the coffeehouse market.
A. the product they offered was becoming less differentiated from their competitors' products
Economic efficiency in a free market occurs when: Select one: A. the sum of consumer surplus and producer surplus is maximized B. consumer surplus is maximized C. price is as low as possible D. producer surplus is maximized.
A. the sum of consumer surplus and producer surplus is maximized
Using a broad definition, a firm would have a monopoly if: Select one: A. there is no other firm selling a substitute for its product close enough that its economic profits are competed away in the long run B. it produced a product that has no close substitutes C. it can make decisions regarding price and output without violating antitrust laws D. it does not have to collude with any other producer to earn an economic profit.
A. there is no other firm selling a substitute for its product close enough that its economic profits are competed away in the long run
If a corporation earns a profit, how do owners of the firm share in the profit? Select one: A. through dividend payments on shares of that firm's stock B. through coupon payments on that firm's bonds C. by raising the interest rate on bonds D. by selling any bonds or stocks owned and realizing a capital gain
A. through dividend payments on shares of that firm's stock
If a monopolist's marginal revenue is $35 per unit and its marginal cost is $25, then: Select one: A. to maximize profit the firm should increase output B. to maximize profit the firm should continue to produce the output it is producing C. to maximize profit the firm should decrease output D. Not enough information is given to say what the firm should do to maximize profit.
A. to maximize profit the firm should increase output
Refer to Figure 9-8. Suppose the firm produces 4,000 units. What does the shaded area labeled A represent? Select one: A. total variable cost B. total revenue C. profit D. total fixed cost
A. total fixed cost
Figure 10-4 shows the demand and cost curves for a monopolist. Refer to Figure 10-4. What is the amount of the monopoly's total revenue? Select one: A. $21,600 B. $20,400 C. $19,740 D. $7,800
B. $20,400
Table 8-7 shows cost data for Lotus Lanterns, a producer of whimsical night lights. Refer to Table 8-7. What is the marginal cost per unit of production when the firm produces 100 lanterns? Select one: A. $420 B. $32 C. $11.1 D. $8.1
B. $32
Allison's Auto Art is a company that applies pinstripes to vehicles. Allison's cost for a basic 1-color pinstriping job is $35, and she charges $95 for this service. For a total price of $175, Allison will apply a fancier 3-color pinstripe application to an automobile, a service that adds an additional $40 to the total cost of the package. What is the marginal cost of moving up from the 1-color application to the 3-color application? Select one: A. $35 B. $40 C. $80 D. $175
B. $40
Consider an industry that is made up of nine firms each with a market share (percent of sales) as follows: a. Firm A: 30% b. Firm B: 20% c. Firms C, D and E: 10% each d. Firms F, G, H and J: 5% each What is the value of the Herfindahl-Hirschman Index and how is the industry categorized? Select one: A. 1600; moderately concentrated B. 1700; moderately concentrated C. 2600; highly concentrated D. 1425; moderately concentrated
B. 1700; moderately concentrated
Table 9-1 shows the short-run cost data of a perfectly competitive firm that produces plastic camera cases. Assume that output can only be increased in batches of 100 units. Refer to Table 9-1. If the market price of each camera case is $8, what is the profit-maximizing quantity? Select one: A. 300 units B. 400 units C. 500 units D. 600 units
B. 400 units
Refer to Figure 9-2. What is the amount of profit if the firm produces Q2 units? Select one: A. It is equal to the vertical distance g to Q2. B. It is equal to the vertical distance c to g. C. It is equal to the vertical distance c to g multiplied by Q2 units. D. It is equal to the vertical distance c to Q2.
B. It is equal to the vertical distance c to g.
Eco Energy is a monopolistically competitive producer of a sports beverage called Power On. Table 11-2 shows the firm's demand and cost schedules. Refer to Table 11-2. What is the output (Q) that maximizes profit and what is the price (P) charged? Select one: A. P=$55; Q=5 cases B. P=$50; Q=6 cases C. P=$45; Q=7 cases D. P=$40; Q=8 cases
B. P=$50; Q=6 cases
Refer to Figure 3-7. Assume that the graphs in this figure represent the demand and supply curves for women's clothing. Which panel best describes what happens in this market when the wages of seamstresses rise? Select one: A. Panel (a) B. Panel (b) C. Panel (c) D. Panel (d)
B. Panel (b)
Refer to Figure 9-12. Consider a typical firm in a perfectly competitive industry that makes short-run profits. Which of the diagrams in the figure shows the effect on the industry as it transitions to a long-run equilibrium? Select one: A. Panel A B. Panel B C. Panel C D. Panel D
B. Panel B
Rank these three items in terms of the elasticity of the demand for them at any given price, from most elastic to least elastic: hot beverages, coffee and Peet's Coffee. Select one: A. coffee, Peet's Coffee, hot beverages B. Peet's Coffee, coffee, hot beverages C. coffee, hot beverages, Peet's Coffee D. hot beverages, coffee, Peet's Coffee
B. Peet's Coffee, coffee, hot beverages
Which of the following is not a characteristic of long-run equilibrium in a monopolistically competitive market? Select one: A. Marginal revenue equals marginal cost. B. Production is at minimum average total cost. C. Selling price is greater than marginal cost. D. Selling price equals average total cost.
B. Production is at minimum average total cost.
Arnie sells basketballs in a perfectly competitive market. Table 9-3 summarizes Arnie's output per day (Q), total cost (TC), average total cost (ATC) and marginal cost (MC). Refer to Table 9-3. What will Arnie's output be and how much profit will he earn if the market price of basketballs is $5.00? Select one: A. Q = 1; profit = -$10 B. Q = 3; profit = -$7.50 C. Q = 0; profit = -$10.00 D. Price and profit cannot be determined from the information given.
B. Q = 3; profit = -$7.50
Figure 10-2 above shows the demand and cost curves facing a monopolist. Refer to Figure 10-2. To maximize profit, the firm will produce: Select one: A. Q1 B. Q2 C. Q3 D. Q4.
B. Q2
Table 2-11 One Digital Camera Wheat (per pound) China 100 hours 4 hours South Korea 60 hours 3 hours Table 2-11 shows the number of labor hours required to produce a digital camera and a pound of wheat in China and South Korea. Refer to Table 2-11. Does either China or South Korea have an absolute advantage and if so, in what product? Select one: A. China has an absolute advantage in digital cameras. B. South Korea has an absolute advantage in both products. C. South Korea has an absolute advantage in wheat. D. China has an absolute advantage in wheat.
B. South Korea has an absolute advantage in both products.
Identify the one statement that does not demonstrate how social effects influence consumer choice. Select one: A. Companies such as Zappos.com and Netflix invite their consumers to write reviews about their experience with their products which are then posted on the internet for others to see. B. Students in an Economics class are required to purchase a textbook assigned by the professor. C. There is utility gained from consuming goods or services that others are consuming. D. Some products that people consume are determined by the social popularity of the products.
B. Students in an Economics class are required to purchase a textbook assigned by the professor.
Studies have shown links between calcium consumption and a reduction in osteoporosis. How does this affect the market for calcium? Select one: A. The calcium demand curve shifts to the left because this new information will increase the price of calcium. B. The calcium demand curve shifts to the right because of a change in tastes in favor of calcium. C. The calcium supply curve shifts to the right because of a change in tastes in favor of calcium. D. The calcium supply curve shifts to the left because this new information will increase the price of calcium.
B. The calcium demand curve shifts to the right because of a change in tastes in favor of calcium.
Refer to Figure 10-1. Which of the following statements about the firm depicted in the diagram is true? Select one: A. The fact that this firm is a natural monopoly is shown by the continually declining marginal revenue curve as output rises. B. The fact that this firm is a natural monopoly is shown by the continually declining long-run average total cost as output rises. C. The fact that this firm is a natural monopoly is shown by the fact that marginal cost lies below the long-run average total cost where the firm maximizes its profits. D. The fact that this firm is a natural monopoly is shown by the continually declining market demand curve as output rises.
B. The fact that this firm is a natural monopoly is shown by the continually declining long-run average total cost as output rises.
A perfectly competitive firm produces 3,000 units of a good at a total cost of $36,000. The fixed cost of production is $20,000. The price of each good is $10. Should the firm continue to produce in the short run? Select one: A. Yes, it should continue to produce because its price exceeds its average fixed cost. B. Yes, it should continue to produce because it is minimizing its loss. C. No, it should shut down because it is making a loss. D. There is insufficient information to answer the question.
B. Yes, it should continue to produce because it is minimizing its loss.
A decrease in the demand for eggs due to changes in consumer tastes, accompanied by a decrease in the supply of eggs as a result of an outbreak of Avian flu, will result in: Select one: A. a decrease in the equilibrium quantity of eggs and no change in the equilibrium price B. a decrease in the equilibrium quantity of eggs; the equilibrium price may increase or decrease C. a decrease in the equilibrium price of eggs and no change in the equilibrium quantity D. a decrease in the equilibrium price of eggs; the equilibrium quantity may increase or decrease.
B. a decrease in the equilibrium quantity of eggs; the equilibrium price may increase or decrease
An investor is more likely to buy a firm's stock if the firm's income statement shows ________ and if its balance sheet shows ________. Select one: A. a large net worth; a large price-earnings ratio B. a large after-tax profit; a large net worth C. a large price-earnings ratio; a large dividend yield D. low opportunity costs; large liabilities
B. a large after-tax profit; a large net worth
An increase in the demand for lobster due to changes in consumer tastes, accompanied by a decrease in the supply of lobster as a result bad weather reducing the number of fishermen trapping lobster, will result in: Select one: A. a decrease in the equilibrium quantity of lobster; the equilibrium price may increase or decrease B. an increase in the equilibrium price of lobster; the equilibrium quantity may increase or decrease C. a decrease in the equilibrium quantity of lobster and no change in the equilibrium price D. an increase in the equilibrium price of lobster and no change in the equilibrium quantity.
B. an increase in the equilibrium price of lobster; the equilibrium quantity may increase or decrease
Vineyards can grow either red wine grapes or white wine grapes on their land. Which of the following would cause the supply of red wine grapes to decrease? Select one: A. an increase in the price of red wine B. an increase in the price of white wine grapes C. a decrease in the price of white wine grapes D. an increase in the demand for red wine grapes
B. an increase in the price of white wine grapes
Which of the following is not a barrier to entry? Select one: A. economies of scale B. an inelastic demand curve C. ownership of a key input D. a patent
B. an inelastic demand curve
Arlene quits her $125,000-a-year job to take care of her ailing parents. What is the opportunity cost of her decision? Select one: A. the value she attributes to the satisfaction she receives from taking care of her parents B. at least $125,000 C. zero, since she will no longer be earning a salary D. it depends on the "going rate" for home-care providers
B. at least $125,000
Figure 9-9 shows cost and demand curves facing a profit-maximizing, perfectly competitive firm. Refer to Figure 9-9. Identify the short-run shut down point for the firm. Select one: A. a B. b C. c D. d
B. b
A new area of economics studies situations in which people appear to be making choices that do not appear to be economically rational. This area is called: Select one: A. irrational economics B. behavioral economics C. new wave economics D. social economics.
B. behavioral economics
If a corporation goes bankrupt, which of the following has first claim on the firm's assets? Select one: A. employees B. bondholders C. stockholders D. the state where chartered
B. bondholders
An oligopoly firm is similar to a monopolistically competitive firm in that: Select one: A. both firms are in industries characterized by an interdependent firm B. both firms have market power C. both firms face the prisoner's dilemma D. both operate in a market in which there are entry barriers.
B. both firms have market power
Academic book publishers hire editors, designers, and production and marketing managers who help prepare books for publication. Because these employees work on several books simultaneously, the number of people the company hires will not go up and down with the quantity of books the company publishes during any particular year. The salaries and benefits of people in these job categories will be included in: Select one: A. fixed cost and marginal cost but not variable cost B. fixed cost and total cost but not variable cost C. marginal cost and total cost but not fixed cost D. fixed cost but not variable cost and total cost.
B. fixed cost and total cost but not variable cost
Production Choices for Dina's Diner Choice Quantity of Sliders Produced Quantity of Hot Wings Produced A 160 0 B 120 50 C 80 100 D 40 150 E 0 200 Refer to the table above. Assume Dina's Diner only produces sliders and hot wings. A combination of 80 sliders and 50 hot wings would appear: Select one: A. along Dina's production possibilities frontier B. inside Dina's production possibilities frontier C. outside Dina's production possibilities frontier D. at the vertical intercept of Dina's production possibilities frontier.
B. inside Dina's production possibilities frontier
Figure 9-4 shows the cost and demand curves for a profit-maximizing firm in a perfectly competitive market. Refer to Figure 9-4. If the market price is $30 and the firm is producing output, what is the amount of the firm's profit or loss? Select one: A. loss of $2,520 B. loss of $1,080 C. profit of $1,300 D. profit of $1,440
B. loss of $1,080
One reason why, in the last four decades, the number of new auto makers in the world has been very small compared to the past is that: Select one: A. governments restrict who can produce automobiles B. new producers cannot match the economies of scale of existing auto makers C. the automobile cannot be improved upon in any way by new producers D. new auto makers cannot obtain necessary inputs to produce new cars.
B. new producers cannot match the economies of scale of existing auto makers
Included on the board of directors of Microsoft are Dina Dublon, former chief financial officer of JP Morgan Chase, the president of Harvey Mudd college Maria M. Klawe, and the vice chairman of Bank of America Charles H. Noski. These three board members do not have a direct management role with Microsoft and are therefore referred to as: Select one: A. competitive directors B. outside directors C. honorary directors D. inside directors.
B. outside directors
Unlike firms that sell stock in financial markets, which are known as ________ firms, companies which do not sell stock in financial markets are known as ________ firms. Select one: A. open; closed B. public; private C. stock market; bond market D. corporate; proprietary
B. public; private
A critical function of the government in facilitating the operation of a market economy is: Select one: A. ensuring an equal distribution of income to all citizens B. setting up and enforcing private property rights C. producing goods and services for low income households D. controlling the market prices of food items.
B. setting up and enforcing private property rights
As output increases: Select one: A. average variable cost becomes smaller and smaller B. the difference between average total cost and average variable cost decreases C. marginal cost increases continuously D. the difference between average total cost and average variable cost becomes greater and greater.
B. the difference between average total cost and average variable cost decreases
Because a monopoly's demand curve is the same as the market demand curve for its product: Select one: A. the monopoly's average total cost always falls as it increases its output B. the monopoly must lower its price to sell more of its product C. the monopoly is a price taker D. the monopoly's marginal revenue equals its price.
B. the monopoly must lower its price to sell more of its product
A firm has an incentive to decrease supply now and increase supply in the future if it expects that: Select one: A. more firms will enter the market in the future B. the price of its product will be higher in the future than it is today C. the prices of inputs used to produce the product will rise in the future D. the price of its product will be lower in the future than it is today.
B. the price of its product will be higher in the future than it is today
By tying the salaries of top corporate managers to the price of the corporation's stock, corporations hope to avoid: Select one: A. paying high salaries to their managers B. the principal-agent problem C. conflict between the CFO and the CEO D. corporate governance.
B. the principal-agent problem
A network externality occurs when: Select one: A. there is production cost savings from being networked with suppliers B. the usefulness of a good is affected by how many others use the good C. the usefulness of a good is affected by celebrities who use the good D. there is production cost savings from being networked with buyers.
B. the usefulness of a good is affected by how many others use the good
A monopoly is characterized by all of the following except: Select one: A. there are no close substitutes to the firm's product B. there are only a few sellers each selling a unique product C. entry barriers are high D. the firm has market power.
B. there are only a few sellers each selling a unique product
Refer to Figure 3-6. The figure above represents the market for canvas tote bags. Assume that the price of tote bags is $15. At this price: Select one: A. there is a shortage equal to 55 tote bags; the price of tote bags will rise until demand is equal to supply B. there is a shortage, equal to 55 tote bags, that will be eliminated when the price rises to $25 C. the quantity demanded exceeds the quantity supplied of tote bags by 75. The price will eventually rise to $25 where quantity demanded will equal quantity supplied D. the demand exceeds the supply of tote bags by 55. Some consumers will have an incentive to offer to buy tote bags at a higher price.
B. there is a shortage, equal to 55 tote bags, that will be eliminated when the price rises to $25
If a firm produces 20 units of output and incurs a total cost of $1,000 and a variable cost is $700, calculate the firm's average fixed cost of production if it expands output to 25 units. Select one: A. $300 B. $15 C. $12 D. It is impossible to determine without additional information.
C. $12
Vipsana's Gyros House sells gyros. The cost of ingredients (pita, meat, spices, etc.) to make a gyro is $2.00. Vipsana pays her employees $60 per day. She also incurs a fixed cost of $120 per day. Calculate Vipsana's variable cost per day when she produces 50 gyros using two workers? Select one: A. $100 B. $124.40 C. $220 D. $240
C. $220
Laura's Pizza Place incurs $800,000 per year in explicit costs and $100,000 in implicit costs. The restaurant earns $1.3 million in revenues. Based on this information, what is accounting profit for Laura's Pizza Place? Select one: A. $200,000 B. $400,000 C. $500,000 D. $900,000
C. $500,000
The price elasticity of demand for Stork ice cream is -4. Suppose you're told that following a price increase, quantity demanded fell by 10 percent. What was the percentage change in price that brought about this change in quantity demanded? Select one: A. 40 percent B. 25 percent C. 2.5 percent D. 0.4 percent
C. 2.5 percent
Bella can produce either a combination of 60 silk roses and 80 silk leaves or a combination of 70 silk roses and 55 silk leaves. If she now produces 60 silk roses and 80 silk leaves, what is the opportunity cost of producing an additional 10 silk roses? Select one: A. 2.5 silk leaves B. 10 silk leaves C. 25 silk leaves D. 55 silk leaves
C. 25 silk leaves
Keegan has $30 to spend on Pita Wraps and Bubble Tea. The price of a Pita Wrap is $6 and the price of a glass of Bubble Tea is $3. Table 7-1 shows his total utility from different quantities of the two items. Refer to Table 7-1. What is Keegan's optimal consumption bundle? Select one: A. 5 pita wraps and 0 bubble teas B. 4 pita wraps and 2 bubble teas C. 3 pita wraps and 4 bubble teas D. 3 pita wraps and 3 bubble teas
C. 3 pita wraps and 4 bubble teas
If a consumer receives 20 units of utility from consuming two candy bars, and 25 units of utility from consuming three candy bars, the marginal utility of the third candy bar is: Select one: A. 25 utility units B. 20 utility units C. 5 utility units D. unknown as more information is needed to determine the answer.
C. 5 utility units
Keegan has $30 to spend on Pita Wraps and Bubble Tea. The price of a Pita Wrap is $6 and the price of a glass of Bubble Tea is $3. Table 7-1 shows his total utility from different quantities of the two items. Refer to Table 7-1. If Keegan can drink all the bubble tea he wants for free, how many glasses will he consume? Select one: A. 4 glasses B. 5 glasses C. 6 glasses D. 7 glasses
C. 6 glasses
Consider an industry that is made up of nine firms each with a market share (percent of sales) as follows: a. Firm A: 30% b. Firm B: 20% c. Firms C, D and E: 10% each d. Firms F, G, H and J: 5% each What is the value of the four-firm concentration ratio and how is the industry categorized? Select one: A. 50%; monopolistic competition B. 75%; oligopoly C. 70%; oligopoly D. 80%; strongly oligopolistic
C. 70%; oligopoly
Figure 10-9 shows the demand and cost curves for a monopolist. Refer to Figure 10-9. What is the economically efficient output level? Select one: A. 600 units B. 800 units C. 940 units D. 1160 units
C. 940 units
Which of the following is an example of positive technological change? Select one: A. A firm conducts a new advertising campaign. As a result, the demand for the firm's surf boards increases. B. A firm buys an additional machine that it uses to make surf boards. As a result, the firm is able to increase its weekly production of surf boards. C. A firm's workers participate in a training program designed to increase the number of surf boards they can produce per day. D. A firm offers workers a higher wage to work on weekends and at night. As a result, the firm is able to increase its weekly production of surf boards.
C. A firm's workers participate in a training program designed to increase the number of surf boards they can produce per day.
Jeremy is thinking of starting up a small business selling NASCAR memorabilia. He is considering setting up his business as a sole proprietorship. What is one advantage to Jeremy of setting up his business as a sole proprietorship? Select one: A. As a sole proprietor, Jeremy would face limited liability. B. As a sole proprietor, Jeremy would have the ability to share risk with shareholders. C. As a sole proprietor, Jeremy would have both ownership and control over the business. D. All of the above would be advantages of setting up his business as a sole proprietorship.
C. As a sole proprietor, Jeremy would have both ownership and control over the business.
If the 15th unit of output has a marginal cost of $29.50 and the average cost of producing 14 units of output is $30.23, what will happen to the average cost of production if the 15th unit is produced? Select one: A. Average cost could increase or decrease depending on what happens to fixed cost. B. Average cost could increase or decrease depending on what happens to variable cost. C. Average cost will fall. D. Average cost increases as more is produced.
C. Average cost will fall.
Figure 2-13 shows the production possibilities frontiers for Tahiti and Bora Bora. Each country produces two goods, milk and honey. Refer to Figure 2-13. Which country has a comparative advantage in the production of honey? Select one: A. Tahiti B. They have equal productive abilities. C. Bora Bora D. neither country
C. Bora Bora
In October 2013, General Motors (GM) posted a price-earnings ratio of 10.13. If the price of the stock at that time was $36 per share, which of the following must have been true? Select one: A. GM's dividend yield for the year was 36.5%. B. GM's coupon payment was $36 per year. C. GM's earnings per share was $3.55. D. GM's revenues that month were $364.68 million.
C. GM's earnings per share was $3.55.
Godrickporter and Star Connections are the only two airport shuttle and limousine rental service companies in the mid-sized town of Godrick Hollow. Each firm must decide on whether to increase its advertising spending to compete for customers. Table 11-6 shows the payoff matrix for this advertising game. Refer to Table 11-6. What is the Nash equilibrium in this game? Select one: A. Star Connections increases its advertising budget, but Godrickporter does not. B. There is no Nash equilibrium. C. Godrickporter increases its advertising budget, but Star Connections does not. D. Both Godrickporter and Star Connections increase their advertising budgets.
C. Godrickporter increases its advertising budget, but Star Connections does not.
Which of the following is a microeconomics question? Select one: A. Why do economies experience periods of recession? B. Will government intervention lower the unemployment rate? C. How will Apple decide on a selling price for the iPad? D. Why has growth in the economy slowed down over the past decade?
C. How will Apple decide on a selling price for the iPad?
Refer to Figure 8-10. Suppose for the past 8 years the firm has been producing Qd units per period using plant size ATC4. Now, following a permanent change in demand, it plans to cut production to Qc units. What will happen to its average cost of production? Select one: A. In the short run, its average cost falls from $47 to $37, and in the long run, average cost rises to $41. B. In the short run, its average cost rises from $47 to $55, and in the long run, average cost falls to $37. C. In the short run, its average cost rises from $47 to $55, and in the long run, average cost falls to $41. D. In the short run, its average cost falls from $47 to $41, and in the long run, average cost falls even further to $37.
C. In the short run, its average cost rises from $47 to $55, and in the long run, average cost falls to $41.
Is a monopolistically competitive firm allocatively efficient? Select one: A. Yes, because price equals average total cost. B. No, because it does not produce at minimum average total cost. C. No, because price is greater than marginal cost. D. Yes, because it produces where marginal cost equals marginal revenue.
C. No, because price is greater than marginal cost.
Refer to Figure 3-7. Assume that the graphs in this figure represent the demand and supply curves for used clothing, an inferior good. Which panel describes what happens in this market as a result of a decrease in income? Select one: A. Panel (a) B. Panel (b) C. Panel (c) D. Panel (d)
C. Panel (c)
If the price of gasoline decreases, what will be the impact in the market for public transportation? Select one: A. The quantity of public transportation demanded decreases. B. The quantity of public transportation demanded increases. C. The demand curve for public transportation shifts to the left. D. The demand curve for public transportation shifts to the right.
C. The demand curve for public transportation shifts to the left.
Tom Searchinger, a senior attorney at the Environmental Defense Fund, observed that generous farm subsidies have encouraged farmers to produce more corn and more wheat. How does this affect the market for fertilizer? Select one: A. The supply of fertilizer decreases. B. The demand for fertilizer decreases. C. The demand for fertilizer increases. D. The supply of fertilizer increases.
C. The demand for fertilizer increases.
Assume that a perfectly competitive market is in long-run equilibrium. Suppose as a result of a health hazard associated with the industry's product, demand decreases drastically. What is the immediate result of this event? Select one: A. The typical firm's average total cost curve shifts downward. B. The market supply increases to offset the fall in demand. C. The market price falls and the typical firm suffers an economic loss. D. The typical firm's marginal cost curve shifts to the left.
C. The market price falls and the typical firm suffers an economic loss.
Figure 9-4 shows the cost and demand curves for a profit-maximizing firm in a perfectly competitive market. Refer to Figure 9-4. If the market price is $30, should the firm represented in the diagram continue to stay in business? Select one: A. Yes, because it is making a profit. B. No, it should shut down because it is making a loss. C. Yes, because it is covering part of its fixed cost. D. No, it should shut down because it cannot cover its variable cost.
C. Yes, because it is covering part of its fixed cost.
What is productive efficiency? Select one: A. a situation in which resources are allocated to their highest profit use B. a situation in which resources are allocated such the last unit of output produced provides a marginal benefit to consumers equal to the marginal cost of producing it C. a situation in which resources are allocated such that goods can be produced at their lowest possible average cost D. a situation in which firms produce as much as possible
C. a situation in which resources are allocated such that goods can be produced at their lowest possible average cost
If an increase in income leads to a decrease in the demand for popcorn, then popcorn is: Select one: A. a necessity B. a neutral good C. an inferior good D. a normal good.
C. an inferior good
The value of the four-firm concentration ratio that many economists consider indicative of the existence of an oligopoly in a particular industry is: Select one: A. anything greater than 10 percent B. anything greater than 20 percent C. anything greater than 40 percent D. anything greater than 30 percent.
C. anything greater than 40 percent
Which type of businesses earns the majority of profits in the United States? Select one: A. partnerships B. sole proprietorships C. corporations D. none of these
C. corporations
The endowment effect suggests that that people: Select one: A. have a strong sense of fairness B. act in ways to distort market prices C. have a strong attachment to their entitlement, regardless of whether they paid to acquire them D. are concerned about the welfare of others.
C. have a strong attachment to their entitlement, regardless of whether they paid to acquire them
Perfect competition is characterized by all of the following except: Select one: A. a horizontal demand curve for individual sellers B. sellers are price takers C. heavy advertising by individual sellers D. homogeneous products.
C. heavy advertising by individual sellers
A merger between the Ford Motor Company and General Motors would be an example of a: Select one: A. vertical merger B. conglomerate merger C. horizontal merger D. trust.
C. horizontal merger
Refer to the figure above. Point A is: Select one: A. technically efficient B. unattainable with current resources C. inefficient in that not all resources are being used D. the equilibrium output combination.
C. inefficient in that not all resources are being used
Refer to Table 7-11. Katie Graham owns a kayak rental service in Santa Barbara. Table 6.3 below shows her estimated demand schedule for kayak rentals per week. She would like to increase her sales revenue by changing the price she charges for rentals. At present she charges $75. Based on the information in the table, Katie: Select one: A. should raise her price to earn the most revenue B. should lower her price to $60 to increase her revenue because the demand for kayak rentals is price elastic C. is not able to increase her revenue by changing her price because the demand for kayak rentals is unit-elastic D. should raise her price to $80 to increase her revenue because the demand for kayak rentals is price inelastic.
C. is not able to increase her revenue by changing her price because the demand for kayak rentals is unit-elastic
Refer to Figure 9-1. If the firm is producing 700 units: Select one: A. it is making a profit B. it is making a loss C. it should cut back its output to maximize profit D. it should increase its output to maximize profit.
C. it should cut back its output to maximize profit
The minimum efficient scale is: Select one: A. the smallest output level where the firm finally reaches productive efficiency B. the level of output where diminishing returns have not set in yet C. level of operation where long-run average costs are lowest D. the plant size that yields the most profit.
C. level of operation where long-run average costs are lowest
Who operates and controls a corporation in its day-to-day activities? Select one: A. the board of directors B. employees C. management D. stockholders
C. management
Competition forces firms to produce and sell products as long as the ________ to consumers exceeds the ________ of production. Select one: A. marginal cost; marginal benefit B. marginal cost; marginal cost C. marginal benefit; marginal cost D. marginal benefit; marginal benefit
C. marginal benefit; marginal cost
A firm's accounting profit is also its: Select one: A. income statement B. statement of liabilities C. net income D. economic profit.
C. net income
The difference between a firm's assets and liabilities is its: Select one: A. accounting profit B. implicit costs C. net worth D. economic profit.
C. net worth
A monopolistically competitive firm faces a downward-sloping demand curve because: Select one: A. there are few substitutes for its product B. its market decisions are affected by the decisions of its rivals C. of product differentiation D. it is able to control price and quantity demanded.
C. of product differentiation
If a typical firm in a perfectly competitive industry is incurring losses, then: Select one: A. some firms will exit in the long run, causing market supply to decrease and market price to fall increasing losses for the remaining firms B. some firms will enter in the long run, causing market supply to increase and market price to rise increasing profit for all firms C. some firms will exit in the long run, causing market supply to decrease and market price to rise increasing profits for the remaining firms D. all firms will continue to lose money.
C. some firms will exit in the long run, causing market supply to decrease and market price to rise increasing profits for the remaining firms
Refer to Figure 11-2. The marginal revenue from selling the additional unit Qb instead of Qa equals: Select one: A. the area (E + F) - (G + H) B. the area (G + H) C. the area (H - E) D. the area G.
C. the area (H - E)
A possible advantage of a horizontal merger for the economy is that: Select one: A. the merging firms could avoid losses B. the degree of competition in the industry will be intensified C. the merged firm might reap economies of scale which could translate into lower prices D. the government stands to collect more corporate income tax revenue.
C. the merged firm might reap economies of scale which could translate into lower prices
Which of the following is an example of an implicit cost a firm might incur? Select one: A. the revenue a firm generates in using its resources B. the rental value of the office space the company owns and uses for itself C. the out-of-pocket expense to hire resources D. taxes owed to the state and Federal governments
C. the out-of-pocket expense to hire resources
If, when you consume another piece of candy, your marginal utility is zero, then: Select one: A. you should consume less candy B. you have not yet reached the point of diminishing marginal utility C. you have maximized your total utility from consuming candy D. you want more candy.
C. you have maximized your total utility from consuming candy
Which of the following is not a factor of production? Select one: A. an acre of farmland B. a drill press in a machine shop C. the manager of the local tire shop D. $1,000 in cash
D. $1,000 in cash
Figure 11-8 shows cost and demand curves for a monopolistically competitive producer of iced-tea. Refer to Figure 11-8. What is the firm's profit-maximizing price? Select one: A. $12 B. $13 C. $14 D. $16
D. $16
Golda Rush quit her job as a manager for Home Depot to start her own hair dressing salon, Goldilocks. She gave up a salary of $40,000 per year, invested her savings of $30,000 (which was earning 5 percent interest) and borrowed $10,000 from a close friend, agreeing to pay 5 percent interest per year. In her first year, Golda spent $18,000 to rent a salon, hired a part-time assistant for $12,000 and incurred another $15,000 on equipment and hairdressing material. Based on this information, what is the amount of her implicit costs? Select one: A. $80,000 B. $70,000 C. $42,000 D. $41,500
D. $41,500
Refer to Figure 8-1. The marginal product of the 7th worker is: Select one: A. 66 B. 9.43 C. 2 D. -2.
D. -2.
Table 7-2 above shows Keira's utility from soup and sandwiches. The price of soup is $2 per cup and the price of a sandwich is $3. Keira has $18 to spend on these two goods. Refer to Table 7-2. If Keira maximizes her utility, how many units of each good should she buy? Select one: A. 4 cups of soup and 3.5 sandwiches B. 6 cups of soup and 2 sandwiches C. 1 cup of soup and 5 sandwiches D. 3 cups of soup and 4 sandwiches
D. 3 cups of soup and 4 sandwiches
Refer to Figure 7-5. Using the midpoint formula, calculate the absolute value of the price elasticity of demand between e and f. Select one: A. 0.32 B. 0.4 C. 2.5 D. 3.125
D. 3.125
Lydia runs a small nail salon in the town of New Hope. She is debating whether she should extend her hours of operation. Lydia figures that her sales revenue will depend on the number of hours the nail salon is open as shown in the table above. She would have to hire a worker for those hours at a wage rate of $10 per hour. Refer to Table 1-1. Using marginal analysis, how many hours should Lydia extend her nail salon's hours of operations? Select one: A. 2 hours B. 3 hours C. 4 hours D. 5 hours E. 6 hours
D. 5 hours
If 11 workers can produce a total of 54 units of a product and a 12th worker has a marginal product of 6 units, then the average product of 12 workers is: Select one: A. 60 units B. 54 units C. 48 units D. 5 units.
D. 5 units.
Which of the following describes a difference between allocative efficiency and productive efficiency in a perfectly competitive market? Select one: A. Allocative efficiency is achieved only in the long run. Productive efficiency is achieved in the short run and the long run. B. Allocative efficiency is achieved only in the long run. Productive efficiency is achieved only in the short run. C. Allocative efficiency is achieved only in the short run. Productive efficiency is achieved only in the long run. D. Allocative efficiency is achieved in the short run and the long run. Productive efficiency is achieved only in the long run.
D. Allocative efficiency is achieved in the short run and the long run. Productive efficiency is achieved only in the long run.
Refer to Figure 3-1. An increase in the expected future price of the product would be represented by a movement from: Select one: A. A to B B. B to A C. D1 to D2 D. D2 to D1.
D. D2 to D1
Southwest Airlines wants to raise $20 million to finance the renovation of their corporate offices, and the company wishes to raise the funds through direct finance. Which of the following methods could it use? Select one: A. It could issue $20 million in stocks. B. It could sell $20 million in bonds. C. It could borrow $20 million from a bank. D. It could choose either A or B.
D. It could choose either A or B.
Jenna runs a small boutique in Capitola. She tells one of her suppliers that she is willing to pay $6 for a pair of wool hand warmers and not a dime more. On the basis of this information, what can you conclude about her price elasticity of demand for wool hand warmers? Select one: A. It is perfectly inelastic. B. It is elastic. C. The price elasticity coefficient is 0. D. It is perfectly elastic
D. It is perfectly elastic.
The president of Toyota's Georgetown plant was quoted as saying, "Demand for high volumes saps your energy. Over a period of time, it eroded our focus [and] thinned out the expertise and knowledge we painstakingly built up over the years." Based on this quote, what must be true of the plant's average cost of production curve? Select one: A. It is a ray from the origin. B. It is U-shaped. C. It is downward-sloping. D. It is upward-sloping.
D. It is upward-sloping.
For each bottle of wine that Italy produces, it gives up the opportunity to make 10 pounds of cheese. France can produce 1 bottle of wine for every 25 pounds of cheese it produces. Which of the following is true about the comparative advantage between the two countries? Select one: A. France has the comparative advantage in wine and cheese. B. France has the comparative advantage in wine. C. Italy has the comparative advantage in cheese. D. Italy has the comparative advantage in wine.
D. Italy has the comparative advantage in wine.
Refer to Figure 11-5. The candy store represented in the diagram is currently selling Qa units of candy at a price of Pa. Is this candy store maximizing its profit and if it is not, what would you recommend to the firm? Select one: A. Yes, it is maximizing its profit by charging the highest price possible. B. No, it is not; since its marginal cost is constant, it should produce and sell as much candy as it can. It should sell Qd units at a price of Pd. C. No, it is not; it should lower its price to Pc and sell Qc units. D. No, it is not; it should lower its price to Pb and sell Qb units.
D. No, it is not; it should lower its price to Pb and sell Qb units.
Which of the following statements is true about scarcity? Select one: A. Scarcity is not a problem for the wealthy. B. Scarcity is only a problem when a country has too large a population. C. Scarcity arises when there is a wide disparity in income distribution. D. Scarcity refers to the situation in which unlimited wants exceed limited resources.
D. Scarcity refers to the situation in which unlimited wants exceed limited resources.
Assume there is a surplus in the market for hybrid automobiles. Which of the following statements correctly describes this situation? Select one: A. Some consumers will be unable to obtain hybrid automobiles at the market price and will have an incentive to offer to buy the product at a higher price. B. The surplus will cause an increase in the equilibrium price of hybrid automobiles. C. The supply of hybrid automobiles is greater than the demand for hybrid automobiles. D. The price of hybrid automobiles will fall in response to the surplus; as the price falls the quantity demanded will increase and the quantity supplied will decrease.
D. The price of hybrid automobiles will fall in response to the surplus; as the price falls the quantity demanded will increase and the quantity supplied will decrease.
Which of the following is an example of a long run adjustment? Select one: A. A soybean farmer turns on the irrigation system after a month long dry spell. B. Your university offers Saturday morning classes next fall. C. Ford Motor Company lays off 2,000 assembly line workers. D. Wal-Mart builds another Supercenter.
D. Wal-Mart builds another Supercenter.
Last month, the Tecumseh Corporation supplied 400 units of three-ring binders at $6 per unit. This month, the company supplied the same quantity of binders at $4 per unit. Based on this evidence, Tecumseh has experienced: Select one: A. a decrease in supply B. an increase in the quantity supplied C. a decrease in the quantity supplied D. an increase in supply.
D. an increase in supply.
Refer to Figure 8-5. The vertical difference between curves F and G measures: Select one: A. fixed costs B. marginal costs C. sunk costs D. average fixed costs.
D. average fixed costs.
If, when a firm doubles all its inputs, its average cost of production increases, then production displays: Select one: A. economies of scale. B. declining fixed costs C. diminishing returns D. diseconomies of scale.
D. diseconomies of scale.
Some markets have many buyers and sellers but fall into the category of monopolistic competition rather than perfect competition. The most common reason for this is: Select one: A. there are high barriers to entering these markets B. firms in these markets sell identical products C. firms in these markets make high profits D. firms in these markets do not sell identical products.
D. firms in these markets do not sell identical products.
Grace Makutsi finally bought a pair of blue shoes that she had been coveting for a long time. In less than a week she discovered that the shoes were uncomfortable. Grace went back to wearing her old pair and stashed away the new pair. When asked by her boss, Mme. Ramotswe why does she not simply give away the new pair, she said: "But I paid so much for them." Grace's behavior: Select one: A. is rational: she should not discard a valuable item B. supports the endowment effect which states that ownership of an item makes it more valuable C. is rational because the more you pay for an item the more valuable it is D. ignores the fact that the purchase price is now a sunk cost and has no bearing on whether she should give them away or not.
D. ignores the fact that the purchase price is now a sunk cost and has no bearing on whether she should give them away or not.
All of the following are characteristics of game theory except: Select one: A. strategies that players employ to attain their objectives B. rules that determine what actions are allowable C. payoffs that are the results of the interaction among players' strategies D. independence among players.
D. independence among players.
A perfectly competitive firm's supply curve is its: Select one: A. marginal cost curve B. marginal cost curve above its minimum average total cost C. marginal cost curve above its minimum average fixed cost D. marginal cost curve above its minimum average variable cost.
D. marginal cost curve above its minimum average variable cost.
In a typical year, ________ new firms open in the United States. Select one: A. approximately 125,000 B. less than 200,000 C. more than 1 million D. more than 600,000
D. more than 600,000
Which of the following is an example of implicit collusion? Select one: A. product differentiation B. a second-price auction C. a retaliation strategy D. price leadership
D. price leadership
A Nash equilibrium is: Select one: A. reached when each player chooses the best strategy for himself and for the group B. reached when an oligopoly's market demand and supply intersect C. an equilibrium comprising non-dominant strategies only D. reached when each player chooses the best strategy for himself, given the other strategies chosen by the other players in the group.
D. reached when each player chooses the best strategy for himself, given the other strategies chosen by the other players in the group.
If a 35 percent increase in price of golf balls led to a 42 percent decrease in quantity demanded, then the demand for golf balls is: Select one: A. perfectly elastic B. relatively inelastic C. unit-elastic D. relatively elastic.
D. relatively elastic.
A major difference between monopolistic competition and perfect competition is: Select one: A. the degree by which the market demand curves slope downwards B. the number of sellers in the markets C. the barriers to entry in the two markets D. that products are not standardized in monopolistic competition unlike in perfect competition.
D. that products are not standardized in monopolistic competition unlike in perfect competition.
If the price of smartphones was to increase, then: Select one: A. the demand for smartphone apps would increase B. the quantity of smartphone apps demanded would decrease C. the quantity of smartphone apps demanded would increase D. the demand for smartphone apps would decrease.
D. the demand for smartphone apps would decrease.
A monopolistically competitive firm earning profits in the short run will find the demand for its product decreasing and becoming more elastic in the long run as new firms move into the industry until: Select one: A. the firm exits the market B. the original firm is driven into bankruptcy C. the firm's demand curve is perfectly elastic D. the firm's demand curve is tangent to its average total cost curve.
D. the firm's demand curve is tangent to its average total cost curve.
In the world oil market, oil is supplied up to the point where: Select one: A. the marginal cost of the last barrel is at a maximum B. the marginal cost of the last barrel is the greatest distance from the price buyers are willing to pay for that last barrel C. the marginal cost of the last barrel is zero D. the marginal cost of the last barrel is just equal to the price buyers are willing to pay for that last barrel.
D. the marginal cost of the last barrel is just equal to the price buyers are willing to pay for that last barrel.
Refer to Figure 10-10. What is the area that represents producer surplus under a monopoly? Select one: A. the triangle 0P3H B. the rectangle P1P3HF C. the triangle 0P2E D. the trapezium 0P1FH
D. the trapezium 0P1FH
Refer to Figure 9-11. Suppose the prevailing price is $20 and the firm is currently producing 1,350 units. In the long-run equilibrium: Select one: A. there will be fewer firms in the industry and total industry output decreases B. there will be fewer firms in the industry but total industry output increases C. there will be more firms in the industry and total industry output remains constant D. there will be more firms in the industry and total industry output increases.
D. there will be more firms in the industry and total industry output increases.
The demand curve for a Giffen good is: Select one: A. vertical B. non-linear but downward-sloping C. non-existent D. upward-sloping.
D. upward-sloping.
Consider the following statements: a. Car owners purchase more gasoline from a gas station that sells gasoline at a lower price than other rival gas stations in the area. b. Banks do not take steps to increase security since they believe it is less costly to allow some bank robberies than to install expensive security monitoring equipment. c. Firms produce more of a particular DVD when its selling price rises. Which of the above statements demonstrates that economic agents respond to incentives? Select one: A. a only B. b only C. c only D. a and b E. a, b, and c
E. a, b, and c
Figure 2-4 shows various points on three different production possibilities frontiers for a nation. Refer to Figure 2-4. Consider the following events: a. an increase in the unemployment rate b. a decrease in a nation's money supply c. a war that kills a significant portion of a nation's population Which of the events listed above could cause a movement from Y to W? Select one: A. a, b, and c B. a and b only C. a and c only D. a only E. c only
E. c only
