EC 201 MSU :)

Angela has already decided to buy one pound of apples. Her marginal utility from consuming a second pound of apples is $3. The price of apples is $2 per pound. On the basis of this information, what can we say? a) Angela should buy at least one more pound of apples, and maybe more. b) Angela should buy exactly one more pound of apples, and no more. c) Angela should not buy any more apples. d) None of the above is true. e) Not enough information has been given to answer the question.

a) Angela should buy at least one more pound of apples, and maybe more.

Buyers come to believe that the price of kumquats will increase one week from today. What will this do to the market for kumquats this week? a) Demand will increase (i.e., the demand curve will shift to the right). b) Demand will decrease (i.e., the demand curve will shift to the left). c) Supply will increase (i.e., the supply curve will shift to the right). d) Supply will decrease (i.e., the supply curve will shift to the left). e) Nobody has any idea.

a) Demand will increase (i.e., the demand curve will shift to the right).

The price of good X increases. As a result, the supply for good Y decreases (i.e., the supply curve for good Y shifts to the left). On the basis of this information, what can we say about good X and good Y? a) Good X is an input in the production of good Y. b) Good X is a normal good, and good Y is an inferior good. c) Good X is an inferior good, and good Y is a normal good. d) Good X and good Y are complements. e) Good X and good Y are substitutes.

a) Good X is an input in the production of good Y.

Smith Company is a perfectly competitive firm. The market price of its output is $10. The firm is currently producing 100 units of output. At this level of output, the firm's average total cost is $10 per unit, its average variable cost is $9 per unit, and its marginal cost is $10 per unit. On the basis of this information, what can we say? a) Smith Company is maximizing its profit, and should stay in business. b) Smith Company is not maximizing profit; it can increase profit by increasing output. c) Smith Company is not maximizing profit; it can increase profit by decreasing output. d) Smith Company is suffering a loss, but it should stay in business in the short run. e) Smith Company should go out of business in the short run.

a) Smith Company is maximizing its profit, and should stay in business.

Assume that peanut butter and jelly are complements. The price of peanut butter decreases. As a result of the decrease in the price of peanut butter, what will happen in the market for jelly? a) The demand for jelly will increase (i.e., the demand curve for jelly will shift to the right). b) The supply of jelly will increase (i.e., the supply curve for jelly will shift to the right). c) The demand for jelly will decrease (i.e., the demand curve for jelly will shift to the left). d) The supply of jelly will decrease (i.e., the supply curve for jelly will shift to the left). e) The market for jelly will not be affected by a change in the price of peanut butter.

a) The demand for jelly will increase (i.e., the demand curve for jelly will shift to the right).

Why does monopoly lead to deadweight loss? a) The loss in consumer surplus is greater than the monopoly profits. b) The monopoly is more efficient than a group of competitive firms would be. c) The monopoly produces a quantity at which marginal revenue is negative. d) The monopoly charges a price that is equal to marginal cost. e) All of the above.

a) The loss in consumer surplus is greater than the monopoly profits.

Total fixed cost is represented graphically by a) a horizontal line. b) a vertical line. c) a line that always slopes downward as we go from left to right. d) a line that decreases at first, and then increases. e) a chartreuse monkey.

a) a horizontal line.

Ezekiel's Bar and Grill sells onion rings. In an attempt to increase the total revenue that it receives from selling onion rings, Ezekiel's decreases the price of onion rings. what does this imply about Ezekiel's beliefs, regarding the own-price elasticity of demand for its onion rings? a) demand is elastic b) demand is unit elastic c) demand is inelastic, but not perfectly inelastic d) demand is perfectly inelastic e) the own-price elasticity of demand has nothing to do with whether Ezekiel's revenues will increase as a result of a change in the price

a) demand is elastic

The price of good A increases. As a result of the price increase, there is a decrease in the total revenue received by sellers of good A. What does this imply about the own-price elasticity of demand for good A? a) demand is elastic b) demand is unit elastic c) demand is inelastic, but not perfectly inelastic d) demand is perfectly inelastic. e) not enough information has been given to answer the question

a) demand is elastic

The income elasticity of demand for good B is 0.5. Based on this information, which of the following is true? a) good B is a normal good b) good B is an inferior good c) the demand for good B is inelastic d) (a) and (c) e) not enough information has been given to answer the question

a) good B is a normal good

For any firm for which price is greater than or equal to average variable cost, regardless of market structure, profits are maximized by producing and selling the quantity at which a) marginal revenue is equal to marginal cost. b) price is equal to marginal cost. c) average total cost is minimized. d) all of the above are true. e) (a) and (b) only are true.

a) marginal revenue is equal to marginal cost.

The own-price elasticity of demand for motor oil is 0.4. the quantity of moot oil demanded decreases by 8%. what must have happened to the price of motor oil, to lead to this decrease in quantity demanded? a) price increased by 20% b) price increased by 8% c) price increased by 4% d) price increased by 10% e) not enough information has been given to answer the question

a) price increased by 20%

When a firm is earning positive economic profit, a) price is greater than average total cost. b) price is less than average total cost. c) price is equal to average total cost. d) price and average total cost do not bear any relationship to each other. e) all of the above are true!!!

a) price is greater than average total cost.

Assume that hot dogs and mustard are complements. there is a decrease in the price of mustard. as a result, what will happen to the equilibrium price and equilibrium quantity of hot dogs? a) price will increase; quantity will increase. b) price will increase; quantity will decrease. c) price will decrease; quantity will increase. d) price will decrease; quantity will decrease. e) not enough information is given to answer the question.

a) price will increase; quantity will increase

Because of an increase in the size of the elderly population and an increase in the number of extremely obese people, there is an increase in the number of potential buyers of walkers. As a result, what will happen to the equilibrium price and equilibrium quantity of walkers? a) price will increase; quantity will increase. b) price will increase; quantity will decrease. c) price will decrease; quantity will increase. d) price will decrease; quantity will decrease. e) not enough information is given to answer the question.

a) price will increase; quantity will increase

Assume that the supply curve for paintings by Artemis Gordon is a vertical line. (Note that this means that the supply curve does not obey the Law of Supply.) Also, assume that paintings by Artemis Gordon are a normal good. There is an increase in the incomes of potential buyers of Artemis Gordon paintings. As a result, what will happen to the equilibrium price and equilibrium quantity of Artemis Gordon paintings? a) price will increase; quantity will increase. b) price will increase; quantity will decrease. c) price will decrease; quantity will increase. d) price will decrease; quantity will decrease e) price will stay the same; quantity will stay the same

a) price will increase; quantity will increase.

Luxury automobiles are a normal good. there is an increase in the incomes of people who are potential buyers of luxury automobiles. As a result, what will happen to the equilibrium price and equilibrium quantity of luxury automobiles? a) price will increase; quantity will increase. b) price will increase; quantity will decrease. c) price will decrease; quantity will increase. d) price will decrease; quantity will decrease e) none of the above

a) price will increase; quantity will increase.

The demand curve of personal computer mice shifts to the right (i.e., there is an increase in the demand for mice.) As a result, what will happen to the equilibrium price and equilibrium quantity of computer mice? a) price will increase; quantity will increase. b) price will increase; quantity will decrease. c) price will decrease; quantity will increase. d) price will decrease; quantity will decrease. e) not enough information has been given to answer the question.

a) price will increase; quantity will increase.

The demand for good Y is inelastic. Due to an earthquake, there is a decrease in the supply of good Y (i.e., the supply curve shifts to the left). What will happen to the total revenues of sellers of good Y? a) total revenue will increase b) total revenue will decrease c) total revenue will stay the same d) none of the above!!!! e) not enough information has been given to answer the question

a) total revenue will increase

Industry X is perfectly competitive. At the market equilibrium, consumer surplus is $100 million, and firms earn zero economic profit. Then an evil sorcerer gets control of all of the firms, and turns the industry into a monopoly. The monopoly is able to earn economic profit of $50 million, and consumer surplus decreases to $25 million. What is the deadweight loss of this monopoly? a) Zero: there is no deadweight loss. b) $25 million. c) $50 million. d) $75 million. e) $100 million.

b) $25 million.

Which of the following will lead to an increase in the demand for ibuprofen (i.e., a rightward shift in the demand for ibuprofen)? a) A decrease in the price of ibuprofen. b) A decrease in the price of boxing gloves, which are a complement for ibuprofen. c) A decrease in incomes, assuming that ibuprofen is a normal good. d) A decrease in the price of the equipment that is used in producing ibuprofen. e) Both (a) and (b) will lead to an increase in the demand for ibuprofen.

b) A decrease in the price of boxing gloves, which are a complement for ibuprofen.

There is a decrease in the price of a pair of blue jeans. What effect would this have on the demand curve for blue jeans? a) A rightward shift in the demand curve, without any movement along the existing demand curve. (In other words, an increase in demand.) b) A movement downward and to the right along the existing demand curve, without any shift to a new demand curve. (In other words, an increase in quantity demanded.) c) BOTH a rightward shift in the demand curve, AND a movement downward and to the right along the existing demand curve. (In other words, both an increase in demand and an increase in quantity demanded.) d) NEITHER a shift in the demand curve NOR a movement along the existing demand curve. e) Not enough information has been given to answer the question.

b) A movement downward and to the right along the existing demand curve, without any shift to a new demand curve. (In other words, an increase in quantity demanded.)

A monopolist maximizes profit by producing the quantity at which marginal revenue is equal to marginal cost. Since its marginal costs are positive, this means that the monopolist will produce a quantity at which marginal revenue is positive. What does this imply about the elasticity of demand for its output, when the firm is producing its profit-maximizing quantity? a) Demand is inelastic. b) Demand is elastic. c) Demand is unit-elastic. d) All of the above. e) None of the above, because it is not possible to calculate elasticity of demand for a monopolist.

b) Demand is elastic.

Jones Company is a perfectly competitive firm. The market price of its output is $10. The firm is currently producing 50 units of output. At this level of output, the firm's average total cost is $8 per unit, its average variable cost is $6 per unit, and its marginal cost is $8. On the basis of this information, what can we say? a) Jones Company is maximizing its profit, and should stay in business. b) Jones Company is not maximizing profit; it can increase profit by increasing output. c) Jones Company is not maximizing profit; it can increase profit by decreasing output. d) Jones Company is suffering a loss, but it should stay in business in the short run. e) Jones Company should go out of business in the short run.

b) Jones Company is not maximizing profit; it can increase profit by increasing output.

The szczyff industry is perfectly competitive. The firms in the industry are currently earning positive economic profits. What do we expect will happen in the future in this industry? a) Nothing will change. b) New firms will enter the industry, and the market price will fall until zero economic profits are restored. c) New firms will enter the industry, and the market price will fall until the existing firms are suffering economic losses. d) Some firms will exit the industry, and the market price will increase until zero economic profits are restored. e) Not enough information has been given to answer the question.

b) New firms will enter the industry, and the market price will fall until zero economic profits are restored.

Which of the following industries comes closest to fitting the definition of a perfectly competitive industry? a) Automobile manufacturing b) Soybean farming c) Electric-power utilities d) Personal-computer operating systems e) Commercial aircraft manufacturing

b) Soybean farming

Silk is an important input in the production of silk neckties. There is an increase in the price of silk. As a result of the increase in the price of silk, what happens in the market for silk neckties? a) Supply will increase (i.e., the supply curve will shift to the right). b) Supply will decrease (i.e., the supply curve will shift to the left). c) Demand will increase (i.e., the demand curve will shift to the right). d) Demand will decrease (i.e., the demand curve will shift to the left). e) Both (b) and (c) will occur.

b) Supply will decrease (i.e., the supply curve will shift to the left).

A profit-maximizing perfectly competitive firm will choose to produce and sell the quantity at which price is equal to marginal cost: P=MC. Also, the tendency in a perfectly competitive industry is toward zero economic profit, which means that price is equal to average total cost: P = ATC. If P = MC, and if P = ATC, then MC = ATC. Thus, when an industry of profit-maximizing perfectly competitive firms is experiencing zero economic profit, marginal cost is equal to average total cost. In this situation, a) The average-total-cost curve is upward sloping as we go from left to right on the diagram. b) The average-total-cost curve is at its minimum. c) The average-total-cost curve is downward sloping as we go from left to right on the diagram. d) The average-fixed-cost curve is upward sloping as we go from left to right on the diagram. e) The average-variable-cost curve goes around and around in cute little curlicues.

b) The average-total-cost curve is at its minimum.

The price of tarfsnods increase by 20%. As a result of the price increase, the quantity of transfers demanded falls by 20%. Which of the following is true? a) demand is inelastic; the price increase will lead to an increase in total revenue. b) demand is unit elastic; total revenue will be unchanged c) demand is elastic; the price increase will lead to a decrease in total revenue d) demand is unit elastic; the price increase will lead to an increase in total revenue e) demand is unit elastic; the price increase will lead to a decrease in total revenue.

b) demand is unit elastic; total revenue will be unchanged

There is a decrease in the number of sellers of bib overalls. as a result, what will happen to the equilibrium price and equilibrium quantity of bib overalls? a) price will increase; quantity will increase. b) price will increase; quantity will decrease. c) price will decrease; quantity will increase. d) price will decrease; quantity will decrease. e) none of the above. The decrease in the number of sellers will not have any effect on either the equilibrium price or the equilibrium quantity.

b) price will increase; quantity will decrease

Low-fat milk is an input in the production of skinny lattes. there is an increase in the price of low-fat milk. As a result, what will happen to the equilibrium price and equilibrium quantity of skinny lattes? a) price will increase; quantity will increase. b) price will increase; quantity will decrease. c) price will decrease; quantity will increase. d) price will decrease; quantity will decrease. e) both (a) and (c) are correct

b) price will increase; quantity will decrease.

There is a leftward shift in the supply curve for swimsuits (i.e., there is a decrease in the supply of swimsuits). As a result, what will happen to the equilibrium price and equilibrium quantity of swimsuits? a) price will increase; quantity will increase. b) price will increase; quantity will decrease. c) price will decrease; quantity will increase. d) price will decrease; quantity will decrease. e) draco malfoy may or may not know the answer to this question. But even if he did know, he wouldn't tell you.

b) price will increase; quantity will decrease.

The own-price elasticity of demand fro toothpicks is 0.6. The price of toothpicks falls by 10%. As a result, what will happen to the total revenue received by sellers of toothpicks? a) total revenue will increase b) total revenue will decrease c) total revenue will stay the same d) all of the above will occur, at the same time! e) not enough information has been given to answer the question

b) total revenue will decrease

Garcia Company is a perfectly competitive firm. The market price of its output is $10. The firm is currently producing 100 units of output. At this level of output, the firm's average total cost is $8 per unit, its average variable cost is $6 per unit, and its marginal cost is $10 per unit. What is the firm's profit? a) Zero b) $100 c) $200 d) $400 e) Not enough information has been given to answer the question.

c) $200

For Company X, total fixed cost is $20. When Q=0, total variable cost (TVC) is $zero. When Q=1, TVC=$4. When Q=2, TVC=$10. When Q=3, TVC=$19. What is the marginal cost of the second unit of output (i.e., the additional cost associated with increasing the quantity of output from Q=1 to Q=2)? a) Zero b) $4 c) $6 d) $9 e) Not enough information has been given to answer the question.

c) $6

The demand curve for kumquats shifts to the right (i.e., there is an increase in demand for kumquats). At the same time, the supply curve for kumquats shifts to the left (i.e., there is a decrease in the supply of kumquats.) As a result, what will happen to the equilibrium price and equilibrium quantity of kumquats? a) price will increase; quantity will increase b) price will increase; quantity will decrease c) (i) price will increase (ii) quantity could increase, decrease, or stay the same, so that we cannot determine the direction of change in quantity without more precise information d) (i) price will decrease (ii) quantity could increase, decrease, or stay the same, so that we cannot determine the direction of change in quantity without more precise information. e) (i) price could increase, decrease, or stay the same, so that we cannot determine the direction of change in price without more precise information (ii) quantity will increase

c) (i) price will increase (ii) quantity could increase, decrease, or stay the same, so that we cannot determine the direction of change in quantity without more precise information

The price of flibboos goes down from $4.50 to $3.50. As a result, the quantity demanded increases from 95 to 105. What is the own-price elasticity of demand? a) zero b) 0.2 c) 0.4 d) 0.8 e) 1.6

c) 0.4

If the marginal cost of the next unit is greater than the average total cost of all previous units, what can be said about average total cost? a) Average total cost will decrease. b) Average total cost will stay the same. c) Average total cost will increase. d) All of the above will occur. e) Not enough information has been given to answer the question.

c) Average total cost will increase.

Assume that diamond earrings are a normal good. There is an increase in consumer incomes. As a result of the increase in incomes, what will happen in the market for diamond earrings? a) Supply will increase (i.e., the supply curve will shift to the right). b) Supply will decrease (i.e., the supply curve will shift to the left). c) Demand will increase (i.e., the demand curve will shift to the right). d) Demand will decrease (i.e., the demand curve will shift to the left). e) Not enough information has been given to answer the question.

c) Demand will increase (i.e., the demand curve will shift to the right).

There is a decrease in consumer incomes. As a result of this decrease in consumer incomes, the demand curve for smart phones shifts to the left. In other words, there is a decrease in the demand for smart phones. On the basis of this information, what can we say about the market for smart phones? a) Smart phones are an inferior good. b) The demand curve for smart phones does not obey the Law of Demand. c) Smart phones are a normal good. d) Smart phones are neither normal nor inferior. e) Not enough information has been given to answer the question.

c) Smart phones are a normal good.

A new technology makes it possible to produce more flat-screen televisions, without using any more inputs. As a result of this technological improvement, what will happen in the market for flat-screen televisions? a) Demand will increase (i.e., the demand curve will shift to the right). b) Demand will decrease (i.e., the demand curve will shift to the left). c) Supply will increase (i.e., the supply curve will shift to the right). d) Supply will decrease (i.e., the supply curve will shift to the left). e) Not enough information has been given to answer the question.

c) Supply will increase (i.e., the supply curve will shift to the right).

Milk is an important input in the production of butter. There is a decrease in the price of milk. As a result of the decrease in the price of milk, what will happen in the market for butter? a) Demand will increase (i.e., the demand curve will shift to the right). b) Demand will decrease (i.e., the demand curve will shift to the left). c) Supply will increase (i.e., the supply curve will shift to the right). d) Supply will decrease (i.e., the supply curve will shift to the left). e) Not enough information has been given to answer the question.

c) Supply will increase (i.e., the supply curve will shift to the right).

If the market demand curve is a downward-sloping straight line, what can we say about the marginal-revenue curve (MR)? a) The MR curve is a horizontal line, given by the current price. b) The MR curve is the same as the demand curve c) The MR curve is also a straight line, and the slope of the MR curve is twice as large as the slope of the demand curve d) The MR curve wobbles about in a bizarre way e) Not enough information has been given to answer the question

c) The MR curve is also a straight line, and the slope of the MR curve is twice as large as the slope of the demand curve

Assume that apples and bananas are substitutes. There is an increase in the price of apples. As a result, what will happen in the market for bananas? a) The supply curve for bananas will shift to the right (i.e., there will be an increase in the supply of bananas). b) The supply curve for bananas will shift to the left (i.e., there will be a decrease in the supply of bananas). c) The demand curve for bananas will shift to the right (i.e., there will be an increase in the demand for bananas). d) The demand curve for bananas will shift to the left (i.e., there will be a decrease in the demand for bananas). e) There will be an increase in both the supply and demand for bananas (i.e., both the supply curve for bananas and the demand curve for bananas will shift to the right).

c) The demand curve for bananas will shift to the right (i.e., there will be an increase in the demand for bananas).

Which of these characteristics is the reason why a perfectly competitive industry has a tendency to move toward zero economic profit? a) The industry has many firms, each of which is small relative to the market. b) The firms produce output that is homogeneous, or standardized, or undifferentiated. c) The industry is characterized by free entry and exit. d) All of the above are reasons why perfectly competitive industries tend toward zero economic profit. e) Only (a) and (b) are reasons for the tendency toward zero economic profit.

c) The industry is characterized by free entry and exit.

As a result of a hurricane, several refineries are damaged, and are temporarily unable to produce gasoline. Thus it could be said that the technology of producing gasoline has deteriorated. This term-56could be characterized as a) a leftward shift in the demand curve for gasoline. b) a rightward shift in the demand curve for gasoline. c) a leftward shift in the supply curve for gasoline. d) a rightward shift in the supply curve for gasoline. e) Neither a shift in the demand curve nor a shift in the supply curve.

c) a leftward shift in the supply curve for gasoline.

The deadweight loss from monopoly is represented graphically by the area of ____, and the monopoly's profit is represented graphically by the area of ____. a) a rectangle, a rectangle b) a trapezoid, a triangle c) a triangle, a rectangle d) a rectangle, a trapezoid e) a triangle, a triangle

c) a triangle, a rectangle

As quantity increases, average fixed cost a) increases. b) stays the same. c) decreases. d) decreases at first, and then increases. e) bounces around wildly in a completely chaotic fashion.

c) decreases.

The cross-price elasticity of demand for good C and good D is -0.2. On the basis of this information, which of the following is true? a) good C and D are both inferior goods b) good C and D are substitutes c) good C and D are complements d) good C and D both have a supply curve that does not obey the Law of Supply e) Without knowing where C stands for "cashews" or "cummerbunds," it is impossible to figure out the answer to this question

c) good C and D are complements

Profit per unit is equal to a) price. b) marginal cost. c) price minus average total cost. d) total revenue minus total cost. e) price minus marginal cost.

c) price minus average total cost.

A new technology makes it possible to produce more flash drives, without using any additional resources. As a result, what will happen to the equilibrium price and equilibrium quantity of flash drives? a) price will increase; quantity will increase. b) price will increase; quantity will decrease. c) price will decrease; quantity will increase. d) price will decrease; quantity will decrease. e) choices (b), (c), and (d) are correct, but (a) is incorrect.

c) price will decrease; quantity will increase.

There is a rightward shift in the supply curve for printer paper (i.e., there is an increase in the supply of printer paper). As a result, what will happen to the equilibrium price and equilibrium quantity of printer paper? a) price will increase; quantity will increase. b) price will increase; quantity will decrease. c) price will decrease; quantity will increase. d) price will decrease; quantity will decrease. e) draco malfoy knows the answer to this question, but he isn't telling.

c) price will decrease; quantity will increase.

Titanium is an input in the production of dental implants. there is a decrease in the price of titanium. as a result, what will happen to the equilibrium price and equilibrium quantity of dental implants? a) price will increase; quantity will increase. b) price will increase; quantity will decrease. c) price will decrease; quantity will increase. d) price will decrease; quantity will decrease e) most people just can't relate to this question

c) price will decrease; quantity will increase.

Industry A could be organized as a monopoly, or it could be organized competitively. If it is organized as a monopoly, its output will be _____ than if it were competitive, and the price will be _______ than if it were competitive. a) larger, larger. b) larger, smaller. c) smaller, larger. d) smaller, smaller. e) both larger and smaller, both larger and smaller!!!

c) smaller, larger.

If a perfectly competitive industry is monopolized, consumers will be forced to pay higher prices, and they will consume a smaller quantity. As a result, consumer surplus will decrease. The decrease in consumer surplus is represented graphically by a) a vertical line. b) the area of a triangle. c) the area of a trapezoid. d) the area of a rectangle. e) the area of an irregularly shaped object that looks a little bit like the outline of the Lower Peninsula.

c) the area of a trapezoid.

Apples and bananas are substitutes. On the basis of this information, what can we say? a) apples and bananas are both normal goods b) the own-price elasticity of demand for apples is greater than 1, and the own-price elasticity of demand for bananas is also greater than 1 c) the cross-price elasticity of demand for apples with respect to the price of bananas is greater than zero d) all of the above are correct e) only (a) and (c) are correct

c) the cross-price elasticity of demand for apples with respect to the price of bananas is greater than zero

Assume that the demand curve for good E is a straight line. As we move downward and to the right along the demand curve, what happens to the own-price elasticity of demand? a) the elasticity increases b) the elasticity stays the same c) the elasticity decreases d) the elasticity increases at first, and then decreases e) it's impossible to answer this question, unless more information is given

c) the elasticity decreases

In Lower Slobbovia, the government imposes a price floor in th market for zbisznys. The price floor is above the equilibrium price of zbisnys, and the law is enforced. As a result, the quantity that is actually brought and sold will decrease. The decrease in the quantity brought and sold will be larger if a) the elasticity of supply is larger b) the elasticity of supply is smaller c) the elasticity of demand is larger d) the elasticity of demand is smaller e) zbisnys' are an inferior good

c) the elasticity of demand is larger

This table includes Jason's total utility from tacos gigantes: Quantity Total Utility 0 $0 1 $ 5 2 $ 9 3 $12 4 $14 What is the marginal utility of the second taco gigante (.e., the marginal utility of going from Q=1 to Q=2)? a) $1 b) $2 c) $3 d) $4 e) $5

d) $4

There is a leftward shift in the demand curve for edible fruit arrangements (i.e., there is a decrease in demand for edible fruit arrangements). At the same time, there is a leftward shift in the supply curve for edible arrangements (i.e., there is a decrease in the supply of edible fruit arrangements). As a result, what will happen to the equilibrium price and equilibrium quantity of edible fruit arrangements? a) price will decrease; quantity will decrease b) price will increase; quantity will decrease c) (i) price will decrease (ii) quantity could increase, decrease, or stay the same, so that we cannot determine the direction of change in quantity without more precise information d) (i) price could increase, decrease, or stay the same, so that we cannot determine the direction of change in quantity without more precise information (ii) quantity will decrease e) (i) price could increase, decrease, or stay the same, so that we cannot determine the direction of change in price without more precise information (ii) quantity will increase

d) (i) price could increase, decrease, or stay the same, so that we cannot determine the direction of change in quantity without more precise information (ii) quantity will decrease

The price of Good X decreases from $1.10 per unit to $0.90 per unit. As a result, the quantity demanded increases from 800 units per week to 1200 units per week. What is the own-price elasticity of demand for Good X? a) zero b) 0.5 c) 1.0 d) 2.0 e) 2.75

d) 2.0

This table includes Jason's total utility from tacos gigantes: Quantity Total Utility 0 $ 0 1 $ 5 2 $ 9 3 $12 4 $14 The price of a taco gigante is $3. How many tacos gigantes should Jason buy? a) zero b) 1 c) 2 d) 3 e) 4

d) 3

Which of the following will lead to a decrease in the demand for print cartridges (i.e., a leftward shift in the demand curve for print cartridges)? a) An increase in the price of printers, which are a complement for print cartridges. b) A decrease in the incomes of buyers of print cartridges, assuming that print cartridges are a normal good. c) A change in beliefs about the future price of print cartridges, so that buyers of print cartridges come to believe that the price will be much lower in the future. d) All of the above. e) (a) and (c) only.

d) All of the above.

The demand curve for gwickdoops is given by P = 20 - Qd. Another way to write exactly the same demand curve for gwickdoops is Qd = 20 - P. Because of a leftward shift in the supply curve for gwickdoops, the price of a gwickdoop increases from $10 to $16. As a result of this increase in price, what happens to the consumer surplus of consumers of gwickdoops? (Hint: To solve this problem, you may find it useful to draw a diagram with a straight-line demand curve, and draw a price line at $10 and another price line at $16, and then calculate the areas of some triangles.) a) Consumer surplus does not change. b) Consumer surplus decreases by $4. c) Consumer surplus decreases by $16. d) Consumer surplus decreases by $42. e) Consumer surplus decreases by $100.

d) Consumer surplus decreases by $42.

The price of good A decreases. As a result, the demand for good B increases (i.e., the demand curve for good B shifts to the right). On the basis of this information, what can we say about good A and good B? a) Good A is an input in the production of good B. b) Good A is a normal good, and good B is an inferior good. c) Good A is an inferior good, and good B is a normal good. d) Good A and good B are complements. e) Good A and good B are substitutes.

d) Good A and good B are complements.

Lee Company is a perfectly competitive firm. The market price of its output is $10. The firm is currently producing 100 units of output. At this level of output, the firm's average total cost is $12 per unit, its average variable cost is $9 per unit, and its marginal cost is $10 per unit. On the basis of this information, what can we say? a) Lee Company is maximizing its profit, and should stay in business. b) Lee Company is not maximizing profit; it can increase profit by increasing output. c) Lee Company is not maximizing profit; it can increase profit by decreasing output. d) Lee Company is suffering a loss, but it should stay in business in the short run. e) Lee Company should go out of business in the short run.

d) Lee Company is suffering a loss, but it should stay in business in the short run.

Malfoy Corporation is a monopolist. Its marginal costs decrease (i.e., its entire marginal-cost curve shifts downward). How will the firm change its price and quantity as a result? a) Malfoy will increase price and leave quantity of output unchanged. b) Malfoy will increase price and increase quantity of output. c) Malfoy will increase price and reduce quantity of output. d) Malfoy will reduce price and increase quantity of output. e) Malfoy will reduce price and decrease quantity of output.

d) Malfoy will reduce price and increase quantity of output.

For a monopoly for which the demand curve is a downward-sloping straight line, the total revenue curve is a) an upward-sloping straight line. b) a horizontal line. c) a vertical line. d) a line that increases, eventually reaches a maximum, and then decreases. e) a spiral line that will make you dizzy if you stare at it for too long.

d) a line that increases, eventually reaches a maximum, and then decreases.

Which of the following is true for BOTH the own-price elasticity of demand and the elasticity of supply? a) if the demand curve or supply curve is vertical, we say that demand or supply is perfectly inelastic b) if the demand curve or supply curve is horizontal, we say that demand or supply is perfectly elastic c) both demand and supply are likely to have a larger elasticity, if there is more time for people to adjust to a change in price. d) all of the above e) (a) and (c) only

d) all of the above

The demand curve facing Colossal Corporation is a downward-sloping straight line. On the basis of this information, we can say that a) the firm is not a perfectly competitive firm. b) the MR curve is also downward sloping, and it is twice as steep as the demand curve. c) Colossal Corporation will charge a price that is greater than marginal cost. d) all of the above are true. e) only (a) and (b) are true.

d) all of the above are true.

XYZ Corporation is a monopoly. At its current level of output, if XYZ sells one more unit of output, its total revenue will decrease. This implies that a) the firm's marginal revenue is negative. b) the firm cannot be maximizing profit; to increase profit, the firm should sell a smaller quantity at a higher price. c) the firm is facing inelastic demand. d) all of the above are true. e) (a) and (c) only are true.

d) all of the above are true.

Consumer surplus is a) the difference between the maximum amount that consumers are willing to pay and the total amount that they actually pay. b) the difference between total utility and total expenditure. c) represented graphically by the area under the demand curve, but above the price line. d) all of the above. e) none of the above.

d) all of the above.

The consumer's optimal purchase rule is to buy and consume the quantity at which a) the difference between total utility and total expenditure is maximized. b) marginal utility is equal to price. c) consumer surplus is maximized. d) all of the above. e) (a) and (c) only.

d) all of the above.

The deadweight loss of monopoly is a) the difference between (i) the consumers' loss when going from perfect competition to monopoly, and (ii) the producers' gain when going from perfect competition to monopoly. b) represented graphically by the area of a triangle. c) a dollar measure of society's loss from having an industry organized as a monopoly, instead of under competition. d) all of the above. e) (a) and (b) only.

d) all of the above.

Economic cost is _________ accounting cost, and economic profit is ________ accounting profit. a) less than, greater than. b) less than, less than. c) greater than, greater than. d) greater than, less than. e) all of the above!!!!

d) greater than, less than.

Assume that oranges and grapefruits are substitutes. There is a decrease in the price of oranges. As a result, what will happen to the equilibrium price and equilibrium quantity of grapefruit? a) price will increase; quantity will increase. b) price will increase; quantity will decrease. c) price will decrease; quantity will increase. d) price will decrease; quantity will decrease. e) not enough information is given to answer the question.

d) price will decrease; quantity will decrease.

Assume that pink slime is an inferior good. There is an increase in the incomes of potential buyers of pink slime. As a result, what will happen to the equilibrium price and equilibrium quantity of pink slime? a) price will increase; quantity will increase. b) price will increase; quantity will decrease. c) price will decrease; quantity will increase. d) price will decrease; quantity will decrease. e) not enough information is given to answer the question.

d) price will decrease; quantity will decrease.

The demand curve for soccer balls shifts to the left (i.e., there is a decrease in the demand for soccer balls). As a result, what will happen to the equilibrium price and equilibrium quantity of the soccer balls? a) price will increase; quantity will increase. b) price will increase; quantity will decrease. c) price will decrease; quantity will increase. d) price will decrease; quantity will decrease. e) the answer is beyond human comprehension.

d) price will decrease; quantity will decrease.

The own-price elasticity of demand for Belgian endive is 1.5. The price of Belgian endive increase by 10%. As a result of the increase in price, what will happen to quantity demanded? a) quantity demanded will fall by 1.5% b) quantity demanded will fall by 6.666% c) quantity demanded will fall by 10% d) quantity demanded will fall by 15% e) quantity demanded will remain unchanged

d) quantity demanded will fall by 15%

The short-run supply curve of a perfectly competitive firm is given by a) the average-total-cost curve. b) the marginal-cost curve. c) the marginal-cost curve if price is equal to or greater than average total cost; for prices less than average total cost, quantity supplied is zero. d) the marginal-cost curve if price is equal to or greater than average variable cost; for prices less than average variable cost, quantity supplied is zero. e) the marginal-cost curve if price is equal to or greater than average fixed cost; for price less than average fixed cost, quantity supplied is zero.

d) the marginal-cost curve if price is equal to or greater than average variable cost; for prices less than average variable cost, quantity supplied is zero.

For Company X, total fixed cost is $20. When Q=0, total variable cost (TVC) is $zero. When Q=1, TVC=$4. When Q=2, TVC=$10. When Q=3, TVC=$19. When the quantity of output is 3 units, what is average total cost? a) Zero dollars b) Infinity c) $8 d) $15 e) $13

e) $13

For good A, the demand curve is given by Qd = 40 - P. The supply curve is given by Qs = P. When the market is at equilibrium, what is the value of consumer surplus? (Hint: To solve this problem, you will need to calculate the area of a triangle.) a) $ 10 b) $ 20 c) $ 50 d) $100 e) $200

e) $200

Waytoobig Corporation is a monopolist. If it charges a price of $7, the firm is able to sell 3 units of output. If the firm wants to sell a fourth unit of output, it must decrease the price to $6. What is the marginal revenue of the fourth unit of output? a) $7 b) $6 c) $5 d) $4 e) $3

e) $3

Perfectly competitive firms are "price takers." In other words, perfectly competitive firms take the market price as given. Which of these characteristics of perfect competition is necessary for firms to be price takers? a) There are many firms, each of which is small relative to the market. b) The firms produce output that is homogeneous, or standardized, or undifferentiated. c) There is free entry into the industry and free exit from the industry. d) All of the above are necessary for firms to be price takers. e) (a) and (b) only are necessary for firms to be price takers.

e) (a) and (b) only are necessary for firms to be price takers.

A business firm's marginal cost is a) the additional cost that the firm must incur to produce one additional unit of output. b) the increase in total variable cost associated with producing one additional unit of output. c) average variable cost. d) all of the above. e) (a) and (b) only.

e) (a) and (b) only.

Average revenue, or revenue per unit, is equal to a) total revenue divided by the number of units of output. b) price. c) profit. d) all of the above. e) (a) and (b) only.

e) (a) and (b) only.

Marginal cost is a) the change in total cost from producing one additional unit of output. b) the change in total variable cost from producing one additional unit of output. c) the change in total fixed cost from producing one additional unit of output. d) all of the above. e) (a) and (b) only.

e) (a) and (b) only.

Average total cost is equal to a) total cost divided by the quantity of output. b) average fixed cost plus average variable cost. c) marginal cost. d) marginal cost divided by the quantity of output. e) (a) and (b).

e) (a) and (b).

In Lower Slobbovia, the price of a zizwomp is $10. But then the government of Lower Slobbovia issues a law saying that it is illegal to buy or sell zizwomps for more than $5. The government of Lower Slobbovia is well known for its brutality, and it is generally believed that anyone caught violating the law will be shot. As a result of this price control, what will happen in the market for zizwomps in Lower Slobbovia? a) Buyers will move down and to the right along their existing demand curves. b) Sellers will move down and to the left along their existing supply curves. c) The demand curve will shift to the right. d) The demand curve will shift to the left. e) (a) and (b).

e) (a) and (b).

Humongous Corporation is a monopoly. At a quantity of 1 million units, its total-revenue curve is at its maximum. What else will be true at this quantity? a) Marginal revenue is equal to zero. b) Marginal revenue is equal to average revenue. c) Demand is unit elastic. d) Demand is elastic. e) (a) and (c) are both correct.

e) (a) and (c) are both correct.

Which of the following would be expected to shift the supply curve for hand sanitizer to the right? a) A decrease in the prices of inputs used in production of hand sanitizer. b) An increase in the price of hand sanitizer. c) Discovery of a new technology that makes it possible to produce more hand sanitizer without using more inputs. d) All of the above. e) (a) and (c) only.

e) (a) and (c) only.

Which of the following is/are a difference between a monopoly and a perfectly competitive firm? a) The demand curve for the output of a perfectly competitive firm is perfectly elastic, whereas the demand curve for the output of a monopolist is downward sloping. b) For the perfectly competitive firm, marginal revenue is equal to price, whereas for the monopoly firm, marginal revenue is less than price. c) A perfectly competitive firm will charge a price equal to marginal cost, whereas a monopoly will charge a price that is greater than marginal cost. d) A perfectly competitive firm will not be able to earn positive economic profits for a long time, because new firms will enter, whereas a monopoly is protected by barriers to entry, and thus may be able to have positive economic profits for a long time. e) All of the above.

e) All of the above.

In class and in the textbook, you have seen average-total-cost and average-variable-cost curves that are "U-shaped" (i.e., the curves slope downward, reach a minimum, and then slope upward). Each of these curves reaches its minimum point at the quantity at which a) it is intersected by the average-fixed-cost curve. b) it is intersected by the total-fixed-cost curve. c) it is intersected by the total-variable-cost curve. d) it is intersected by the total-cost curve. e) it is intersected by the marginal-cost curve.

e) it is intersected by the marginal-cost curve.

The short-run supply curve for a monopoly firm is a) the marginal-cost curve. b) the average-variable-cost curve. c) the marginal-cost curve for prices equal to or greater than average total cost. If price is less than average total cost, the quantity supplied is zero. d) the marginal-cost curve for prices equal to or greater than average variable cost. If price is less than average variable cost, the quantity supplied is zero. e) none of the above. The monopoly firm does not have a unique, well-defined supply curve.

e) none of the above. The monopoly firm does not have a unique, well-defined supply curve.

The demand curve for the output of an individual perfectly competitive firm is a) perfectly inelastic. b) inelastic, but not perfectly inelastic. c) unit elastic. d) elastic, but not perfectly elastic. e) perfectly elastic.

e) perfectly elastic.