Economics Midterm
In the fall of 1999, Ivy College began charging for the right to park on campus. As a result, many parking spaces went unused. The decline in parking on campus suggests that: A. Campus parking spaces are an inferior good B. The demand curve for parking spaces shifted to the left C. The supply of parking spaces decreased D. The quantity demanded of campus parking spaces decreased
D
A monopolistically competitive firm faces a downward-sloping demand curve. This circumstance occurs because: A. If it raises its prices, some (but not all) of its customers will go to its competitors B. It can produce goods at a lower average cost than a perfectly competitive firm C. It is the only producer in the marketplace D. It buys its inputs in perfectly competitive markets
A
A natural monopoly is NOT usually associated with which of the following characteristics? A. Production of the efficient quantity of output B. The lowest cost of production for a given quantity of output C. Economies of scale D. A single firm E. Large fixed costs
A
A perfectly competitive firm's demand curve is horizontal, while a monopolist's demand curve is downward sloping. What is the reason for this difference? A. Competitive firms are price takers, whereas monopoly firms must accept a lower price if they want to sell more output. B. Monopoly firms are run by more entrepreneurial people who refuse to take the market price as given. C. If consumers think a good is being sold by a monopoly firm, they demand less of that good. D. Monopoly firms tend to sell products that people want more than those sold by competitive firms.
A
All of the following are true about advertising except that it A. is used to reduce product differentiation B. is used to increase a firm's market share C. is used to make a firm's demand curve more inelastic D. plays a more effective role in monopolistically competitive markets than in perfectly competitive markets E. is used to reduce consumer sensitivity to price changes
A
Consider two goods that each cost about $30,000: a sports car and a medical procedure for diabetes sufferers. We would expect the demand for the car to be ______ the demand for the medical procedure. A. More elastic than B. Equal in elasticity to C. Less elastic than
A
Demand for goods in the short run is ____ demand for the same goods in the long run. A. Less elastic than B. Equal in elasticity to C. More elastic than
A
Economists use models because: A. it would be impossible for them to consider all economic factors B. there are a limited number of theories that all economists support C. models have proven to be correct at least 80 percent of the time D. it would take too long for them to consider all economic factors
A
Farmer Perk is one of thousands of farmers in Washington who sells baby tomatoes to retail grocery stores. A. Perfect competition B. Oligopoly C. Monopoly D. Monopolistic competition
A
A Banana Republic store in a shopping mall sells casual apparel for men and women. A. Oligopoly B. Monopoly C. Monopolistic competition D. Perfect competition
C
A firm's influence over the price of the good produced in monopoly, oligopoly, monopolistic competition, and perfect competition is, respectively, A. considerable, none, little, complete B. none, little, considerable, complete C. complete, considerable, little, none D. little, none, complete, considerable
C
One important difference between a monopoly and a perfectly competitive firm is: A. A monopoly has lower costs than a competitive firm B. A monopoly is accountable only to its owner, while a competitive firm is accountable to shareholders C. A monopoly always earns a profit D. A monopoly has market power, whereas a competitive firm is a price taker
D
In Boston, Massachusetts, a few companies offer "duck tours" in amphibious vehicles for tourists who want to sightsee. A. Perfect competition B. Monopoly C. Monopolistic competition D. Oligopoly
D
Four students from your economics class are sitting in a local restaurant discussing the market for coffee. Below are quotes from each of the four students. All of the following quotes are logically correct except one. Which quote indicates incorrect economic analysis? A. Sergei: "If the demand for coffee were to increase, then I would expect the price to rise, which would then cause the demand to fall back down to its original position." B. Kendra: "If the price of caffeinated soft drinks such as Mountain Dew went down, then consumer demand for coffee would go down since they're substitutes for each other." C. Nicholas: "If Brazil is hit hard by such a severe freeze that half of its crop is wiped out, then the price of coffee will probably rise." D. Tasha: "If coffee drinkers expect the price of coffee to rise next month, then current demand will go up and lead to a price increase this month."
A
If a decrease in price results in no change in quantity demanded, then the demand curve is A. perfectly inelastic B. elastic C. unit elastic D. inelastic E. perfectly elastic
A
If the demand for coffee is relatively inelastic, then an increase in the supply of coffee will: A. Decrease the total revenue of coffee growers. B. Increase the total revenue of coffee growers. C. Increase the price elasticity of coffee demand. D. Not change the total revenue of coffee growers.
A
If two goods are in the same relevant market, then the cross elasticities between these goods are A. positive and relatively high B. negative C. less than one D. zero
A
It is Thursday afternoon and Carolina has an economics exam at 7:00 PM this evening. She wants to go out to dinner with her boyfriend and study for her exam, but there isn't enough time to do both. These are the only two activities she is considering for the afternoon. What is the opportunity cost of going out to dinner with her boyfriend? A. Studying for her economics exam B. Getting an A in economics C. Spending time with her boyfriend D. Sleeping
A
Luxury goods, like Dom Perignon champagne, tend to have ______ demand curves. A. Elastic B. Inelastic C. Unit-elastic
A
Microsoft, IBM, and Red Hat (Linux) are the major manufacturers of operating system software for personal computers. A. Oligopoly B. Monopoly C. Monopolistic competition D. Perfect competition
A
Not having enough spaces for all the students who wanted to enroll in this online course is an example of: A. scarcity B. poor technology C. lazy instructor (labor) D. insatiable wants
A
Recently, tickets for a popular Broadway show were sold out many weeks in advance. Theater owners complained about the profits made by ticket scalpers (people who bought tickets at the theater as soon as they went on sale, held them until just before the performance, and resold them to people who wanted to see the show on short notice). Some of these last-minute theatergoers, who were not able to buy tickets from the theater, agreed to pay the high prices charged by the scalpers. This account suggests that the price that the theater owners were charging was: A. Below the equilibrium price B. At the equilibrium price, because the number of tickets purchased always matches the number of seats in the theater C. Not a major factor in determining the quantity demanded for tickets to the play D. Above the equilibrium price
A
SquishySoft, the first company to produce sugar-free gummy bears, recently received from the government the exclusive right to sell its product for twenty years so it can further research and develop better-tasting low-carb candy. A. Patents B. Acquisition C. High fixed costs
A
Suppose that the government decides to tax potato chip producers for every bag of chips sold. Before the tax, 100 million bags of potato chips are sold every year at a price of $3 per bag. After the tax is imposed, 50 million bags are sold yearly; consumers pay $4 per bag and producers receive $.50 per bag. Use this information to answer the following questions. On whom does the burden of the tax fall more heavily? A. Consumers B. Both consumers and producers C. Neither consumers nor producers D. Producers
A
The most important factor which determines market structure is the A. number of firms in the market B. how they price their products C. size of the business D. how complementary their goods are
A
The quantity supplied of a good is: A. The amount of a good that sellers are willing and able to sell B. The amount of a good that a seller with average cost structure is willing and able to sell C. A table showing the relationship between the price of a good and the amount of that good which sellers are willing and able to sell D. A graph showing the relationship between the price of a good and the amount of that good which sellers are willing and able to sell
A
The student manager for the local college theater recently lowered ticket prices. Ticket sales increased by 15%. The student manager was quoted in the local campus newspaper saying, "The 20% decrease in ticket prices generated an increase in ticket revenues." Which of the following statements best describes your reaction to the student manager's claim? A. The implied price elasticity of demand is 0.75 and the increased revenue claim can't possibly be correct. B. The implied price elasticity of demand is 0.75 and the increased revenue claim is quite possibly true. C. The implied price elasticity of demand is 1.33 and the increased revenue claim is quite possibly true. D. The implied price elasticity of demand is 1.33 and the increased revenue claim can't possibly be correct.
A
When government adopts a price floor to support an agricultural crop: A. The result is a surplus if the price floor is set above the market price. B. A shortage is likely unless farmers increase production. C. Consumers benefit through lower prices. D. The result is a surplus if the price floor is set below the market price. E. A shortage is likely unless farmers decrease production.
A
Which of the following actions is most likely to result in a shortage of gasoline? A. The U.S. government imposes a price ceiling that is below the market price for gasoline. B. The Organization of the Petroleum Exporting Countries (OPEC) reduces the amount of crude oil it supplies to world markets. C. In response to higher crude oil prices, U.S. gasoline producers raise the price of the gasoline they sell. D. The demand for gasoline rises.
A
A good with many close substitutes is likely to have a ______ elastic demand than a good that has few close substitutes. A. Less B. More
B
Which of the following is NOT necessarily true in a market characterized by perfect competition? A. Firms can freely exit the market in the short run. B. Consumers know all prices charged by all firms. C. Firms can freely enter the market in the long run. D. There are a large number of firms that all take the market price as given. E. All firms produce an identical product.
A
Which of the following scenarios best illustrates the idea of perfect competition? A. New companies freely enter the ice cream industry; they all sell vanilla-flavored ice cream, and they do not affect the market price regardless of how much they sell. B. The market price for sweaters is $20. A store decides to raise its price to $30, and some consumers will buy those sweaters at $30. C. The ticket prices for a theater are as follows: $4 for children under the age of 12, $6 for seniors, and $9 for adults. D. The only grocery store in town can vary its prices freely without worrying about affecting demand from shoppers.
A
Which one of the following businesses has the most market power? A. Ego is the only dance club in Oakland that caters to teenagers. There are 10 other dance clubs in Oakland, but they all require patrons to be over 21 years old. B. Maury's is a small Irish pub in Oakland. Maury's charges the same price for drinks as the other 50 pubs in the city. C. Dragon's Diner is the largest Chinese restaurant in Oakland. There are 200 other restaurants in the city, many of which serve the same quality food as Dragon's Diner.
A
A good with many close substitutes is likely to have elastic demand because ______. A. Consumers with brand loyalty won't change their buying habits, even if the price changes B. If the price rises, consumers can choose to purchase one of the close substitutes instead C. The laws of supply and demand will drive the equilibrium price down
B
A parking lot outside of a shopping mall is a good example of which factor of production from an economist's point of view? A. labor B. capital C. entrepreneurship D. land
B
All of the following are characteristics of a monopoly except that A. its demand curve is the same as the industry demand curve B. the monopoly's size, that is, its scale of production, is always very large C. its demand curve is downward sloping D. it is the only firm in the industry E. as long as it's a monopoly, there is absolutely no entry into its industry
B
Alpha is a famous but eccentric musician who plays only four concerts a year, each to an audience of 5,000 people. She allows no recordings of her music. The price of a concert ticket increases by $10 each year, but Alpha doesn't change the number of concerts she gives, the number of seats per concert, or her recording policy. Alpha is behaving like a: A. Unit-elastic supplier B. Perfectly inelastic supplier C. Perfectly elastic supplier
B
As of last semester, there were 500 parking spaces available on the campus of Ivy College. The price of a campus parking permit was $40, and the quantity demanded equaled the quantity supplied at this price. This semester, however, the number of parking spaces has increased by 10%. The college administration estimates that the price elasticity of demand for parking spaces is 0.50. By how much should the price change to clear the market? A. The price for a parking permit must fall by 10%. B. The price for a parking permit must fall by 20%. C. The price for a parking permit must fall by 50%. D. The price for a parking permit must rise by 5%
B
Brand loyalty permits a firm in monopolistic competition to A. maintain a monopoly B. make the demand for its product more inelastic C. prevent entry D. expand market share
B
Exclusive access to resources, acquisition, and patents are ways that a monopoly A. maximizes the price of the firm's stock B. maintains barriers to entry C. enters more competitive markets D. guarantees a profit
B
If the demand curve is horizontal or perfectly elastic and a tax is imposed, who pays the tax? A. the consumer B. the producer C. both the consumer and the producer D. neither the consumer nor the producer
B
In oligopoly A. the firm is the industry B. the fewness of firms creates mutual interdependence in pricing among the firms C. firms compete with each other only by raising and lowering quantity because prices are fixed D. firms have no difficulty entering and leaving the market E. the firm having a natural monopoly sets price for the others
B
In perfect competition, the market share for the firm is A. dependent on brand loyalty B. insignificant C. usually very large D. dependent on the elasticity of demand for the firm's product
B
In which type of market do individual firms have no incentive to advertise? A. Monopolistic competition B. Perfect competition C. Monopoly D. Oligopoly
B
LOCTV, the only local cable television company in a small country, experiences decreasing long-run average total costs as it provides more households with its services. It is very expensive to run cable wire all over the city. A. Patents B. High fixed costs C. Exclusive access to resources
B
Monopoly and perfect competition represent A. market structures that exist in theory only B. the two extremes on the spectrum of market structures C. the only two market structures that are identifiable D. market structures where product differentiation is practiced
B
Panda Express is the only restaurant that serves Chinese food in the food court of a shopping mall. There are many restaurants at the food court that serve non-Chinese food. A. Monopoly B. Monopolistic competition C. Oligopoly D. Perfect competition
B
Product differentiation refers to A. different prices for the same good B. differences among goods in a market that make them close, but not perfect substitutes for each other C. the firm's ability to create different goods while using the same technology and resources D. markets that differ from industries because their goods are essentially different E. different goods that have identical prices
B
Scarcity forces people to: A. spend their money wisely B. choose C. save D. give up the products they want most
B
Scholastic is the exclusive publisher of the Harry Potter series in the United States because it owns the copyright, or the exclusive right to sell written or recorded material, to the books. A. High fixed costs B. Patents C. Exclusive access to resources
B
Suppose a 1% change in the price of electric shavers causes a 20% change in the quantity of electric toothbrushes demanded, a 15% change in the quantity of nose-hair trimmers demanded, and a 0.001% change in the quantity of X-ray machines demanded. The relevant market for electric shavers is likely _____. A. Medical electronics B. Household electronics C. Electricity D. Electronics
B
Suppose that Ivy College administrators propose to increase revenue for the college by raising tuition for all students. The college administrators are assuming that the (absolute value of the) price elasticity of demand for education is: A. Greater than 1.0 B. Less than 1.0 C. Equal to 1.0
B
Suppose the demand for parking spaces at Ivy College increases, but there is no increase in the quantity supplied. Then, we may definitely conclude that: A. The demand for parking spaces is an inferior good B. The supply of parking spaces is perfectly inelastic C. The supply of parking spaces is perfectly elastic D. The supply of parking spaces is unit elastic
B
The Aluminum Company of America (Alcoa), the sole producer of aluminum in the United States until the 1940s, controlled almost all sources of bauxite in the United States. A. Acquisitions B. Exclusive access to resources C. High fixed costs
B
The demand for gasoline is less elastic in the short run than in the long run. Which of the following are reasons for this? I. If the price of gasoline is relatively high for a long time, consumers are more likely to buy more fuel-efficient cars. II. In the short run, the number of cars driven is fixed, whereas in the long run, people might switch to alternatives like public transportation. III. If the price of gasoline is relatively low for a long time, consumers are more likely to buy large, feature-heavy SUVs without much concern for gas mileage. A. I and II only B. I, II, and III C. II only D. I and III only E. II and III only F. I only G. III only
B
The elasticity of demand is a measure of: A. The speed at which a particular market reaches equilibrium B. The percent change in quantity demanded associated with the percent change in price C. The change in supply associated with higher prices D. The effect of an increase in the temperature on a particular market
B
Which of the following are characteristics of monopolistic competition? I. Many firms II. Similar products III. Entry by new firms is possible, but less open than in perfect competition IV. Economic profits are never possible in the long run A. I and II only B. I, II, III only C. II, III, and IV only D. I and III only E. I, II, III, and IV F. I, II, and IV only
B
Which of the following are descriptions of an oligopoly market structure? I. Few sellers; identical products; barriers to entry II. Few sellers; differentiated products; barriers to entry III. Many sellers; differentiated products; easy entry IV. Many sellers; identical products; easy entry V. One seller; barriers to entry A. I and III only B. I and II only C. I and IV only D. II, IV, and V only
B
Which of the following is a characteristic used to categorize market structures? I. The number of firms in the market II. The ease with which firms can enter III. The degree of product differentiation IV. The amount of resources firms use A. I and III only B. I, II, and III only C. I, III, and IV only D. I, II, III, and IV
B
Which of the following is a major threat to a monopoly market structure? A. stiff barriers to entry B. technological innovation C. the patent system D. mergers
B
Which of the following markets is most likely to be characterized by monopolistic competition? A. The market for electricity B. The market for gourmet coffee C. The market for wheat D. The market for airplanes
B
Which of the following statements in not a normative statement? A. Unemployment and inflation should be minimized B. The unemployment rate is 10 percent C. The government should cut the budget deficit D. Low-income individuals ought to be exempt from income taxes E. The money supply should grow at a constant rate
B
According to studies by economists Frank Chaloupka and Michael Grossman, the price elasticity of demand for cigarettes for teenagers is 1.3 and for adults is 0.4 ("Price, Tobacco Control Policies and Smoking Among Young Adults," JHE, Vol. 16, no. 3 (June 1997): 359-373). Which of the following explanations can help explain the difference in the size of the elasticities? A. The adult elasticity is likely to be a long-run estimate, whereas the teenage elasticity is likely to be a short-run estimate of the elasticity of demand. B. Teenagers are more likely than adults to be addicted to smoking; hence, teens have fewer alternatives to smoking. C. Spending on cigarettes represents a larger portion of the budget of teenagers than of adults. D. None of these explanations is satisfactory.
C
All the following are reasons why it is difficult for new firms to compete in an existing monopoly market except that the existing monopoly A. acquires potential new entrants B. has exclusive access to resources C. is a big firm D. has a patent
C
As new firms continue to enter a market once dominated by a monopoly, the market structure changes from monopoly to A. perfect competition, to oligopoly, to monopolistic competition B. monopolistic competition, to perfect competition, to monopolistic competition C. oligopoly, to monopolistic competition, to perfect competition D. monopolistic competition, to oligopoly, to perfect competition E. oligopoly, to perfect competition, to monopolistic competition
C
If a 5% increase in consumer income leads to a 4% decrease in the sales of Macaroni & Blue Cheese, then we know that: A. The supply of Macaroni & Blue Cheese is price inelastic B. The demand for Macaroni & Blue Cheese is price inelastic C. Macaroni & Blue Cheese is an inferior good D. Macaroni & Blue Cheese is a normal good
C
Most markets have an upward-sloping supply curve, but some markets have a market-day supply curve that is vertical at a fixed quantity supplied. Which of the following markets would most likely face a market-day supply curve? A. Bottled water B. Preserved prunes C. Fresh squid D. Granola bars
C
Scarcity is the result of: A. the government taxing our income so we have less to spend B. the limited amount of money we have to spend C. our limited ability to produce goods and services D. workers who often do not put in an honest day's work
C
Suppose that you are a staff economist with an economic consulting firm. The operator of a local harbor has commissioned your firm to do a market analysis of the demand for berths (or parking spaces) for boats. Your firm finds that the income elasticity of demand for berths is 1.5. You've just completed your study of elasticities and are able to make a recommendation based on this information. If incomes in the area increase by 5% with no change in the price of a berth, how will the quantity of berths that people demand change? A. The number of berths demanded will increase by 1.5%. B. The number of berths demanded will increase by 5%. C. The number of berths demanded will increase by 7.5%. D. The number of berths demanded will decrease by 5%.
C
The best definition for economics is "Economics is the study of how: A. government regulates the production of goods and services" B. people earn income so they can afford to buy goods and services to satisfy their wants" C. limited resources are used to produce goods and services to satisfy our insatiable wants" D. businesses earn profits by producing goods and services that satisfy consumers' wants"
C
The maximum price for a good set by the govermnent below the equilibrium price is called a A. price floor B. parity price ratio C. price ceiling D. deficiency price E. market-generated price
C
The quantity demanded of a good is: A. A graph showing the relationship between the price of a good and the amount that buyers are willing and able to purchase B. A table showing the relationship between the price of a good and the amount that buyers are willing and able to purchase C. The amount of a good that buyers are willing and able to purchase D. The amount of a good that a buyer with average income is willing and able to purchase
C
Thousands of farmers produce bushels of wheat and sell them to manufacturers. A. Monopoly B. Oligopoly C. Perfect competition D. Monopolistic competition
C
When the price of ice cream rose 25%, the quantity of ice cream sold fell 10%, and the sale of chocolate syrup also fell 15%. This set of facts indicates that: A. The demand for chocolate syrup is price elastic B. The cross-price elasticity between ice cream and chocolate syrup is positive, so the two are substitutes C. The cross-price elasticity between ice cream and chocolate syrup is negative, so the two are complements D. The demand for ice cream is price elastic
C
Which of the following is not a characteristic of perfect competition? A. insignificant market share B. free entry C. product differentiation D. inability to influence price
C
Which of the following is the biggest difference between monopolistic competition and perfect competition? A. The number of firms in the industry B. The degree of difficulty in entry and exit C. The degree of product differentiation
C
Which of the following scenarios best illustrates the idea of perfect competition? A. A cable television company has gained a large market share because of its low monthly fees and great range of channels. B. A software company sells its products at a reduced price to students and teachers. C. There are many Italian restaurant owners in town. They order pasta from many different firms. It does not matter to them what brand the pasta is, as long as the deliveries are on time. D. There is one theater in town. Moviegoers have no other choices.
C
Which one of the following businesses is considered a monopoly in San Francisco? A. Hallomen is a small bakery in San Francisco. It faces heavy competition from 100 other bakeries in the city. B. Mitchton is a car repair shop in San Francisco. It faces some competition from 20 other car repair shops in the city. C. Arrow is the only supplier of fresh water in San Francisco. It faces no other competition in the city.
C
Which type of firm faces the most elastic demand curve? A. A monopolistically competitive firm B. A monopolist C. A perfectly competitive firm D. An oligopolist
C
Entry into an oligopoly is A. impossible B. relatively easy C. time consuming D. relatively difficult
D
Farmers can plant either corn or soybeans in their fields. Suppose that a new technology for converting corn into liquid fuel increases the demand for corn. Which of the following will be most likely to happen? A. The supply of soybeans will increase, shifting the supply curve to the right. B. The price of soybeans will decrease, shifting the supply curve to the left. C. The supply of corn will increase, shifting the supply curve to the right. D. The supply of soybeans will decrease, shifting the supply curve to the left.
D
If Microsoft wanted to prove to the Justice Department that its Windows software has many substitutes that personal computer owners can use, Microsoft would hope to find: A. That the demand for Windows is unit elastic B. That the demand for Windows is inelastic C. A large negative value for the cross-elasticity of Windows and many pieces of software offered by other companies D. A large positive value for the cross-elasticity of Windows and many pieces of software offered by other companies
D
If society faces scarcity, then individuals in the society must make choices. If individuals must make choices, then every individual must consider the __________ of every choice. A. Demand B. Monetary cost C. Explicit cost D. Opportunity cost E. Supply
D
If the price of ink-jet printers increases by 10% and the quantity demanded of ink-jet cartridges decreases by 15%, the cross-price elasticity between printers and cartridges is _____, and the two goods are _______. A. -1.50; substitutes B. -0.67; substitutes C. -0.67; complements D. -1.50; complements
D
Several students are discussing the concept of price elasticity while standing in line at the campus bookstore. Which of the following quotations describes an inelastic demand for a product? A. "Since business at my job has slowed down, my income is a lot lower than it used to be. Consequently, I won't be able to buy as much even if prices don't rise." B. "An increase in price will cause me to buy fewer school supplies, but I don't expect to see any change in my overall spending, one way or the other." C. "I think the higher prices are really going to cut my overall spending on school supplies." D. "A price increase really scares me. It wouldn't reduce my purchases of school supplies very much, but I know for sure that I'll end up spending a lot more than I was before."
D
Suppose a 1% change in the price of strawberries causes a 20% change in the quantity of apples demanded, a 15% change in the quantity of kiwis demanded, and a 0.001% change in the quantity of carrots demanded. The relevant market for strawberries is likely _____. A. Fruits and vegetables B. Agriculture C. Vegetables D. Fruits
D
Taxicab fares in Cleveland are subject to maximum price regulations set by the city government. Suppose that the local taxi companies petition the city council to raise the fares to generate higher revenues. A local citizen action group opposed to the fare increase claims that any increase in fares will actually lead to lower taxi revenues. Based on these views: A. The taxi companies believe the demand is perfectly elastic, while the citizen action group believes the demand is unit elastic B. The taxi companies believe the demand is unit elastic, while the citizen action group believes the demand is perfectly inelastic C. The taxi companies believe the demand for taxi rides is price elastic, while the citizen action group believes the demand is price inelastic D. The taxi companies believe the demand for taxi rides is price inelastic, while the citizen action group believes the demand is price elastic
D
The essence of an oligopoly market structure is A. difficult entry B. similar products C. high start up costs D. a few firms
D
The law of demand is captured in which of the following sentences? A. "As the price of milk increases, the demand curve for cookies shifts to the left." B. "As the price of cookies increases, the quantity of cookies demanded increases." C. "If cookies are a normal good, then an increase in income causes the quantity of cookies demanded to increase." D. "As the price of cookies increases, the quantity of cookies demanded decreases."
D
The local government grants Pacific Gas and Electric (PG&E) an exclusive franchise for providing natural gas and electricity services in the area. A. Oligopoly B. Monopolistic competition C. Perfect competition D. Monopoly
D
The long-run supply of apples is more elastic than the short-run supply of apples. This is because: A. The long-run demand for apples is more elastic than the short-run demand for apples. B. In the long run, the price of land is likely to decrease. C. Over time, apples are likely to become more popular. D. In the short run, apple producers are constrained by the number of apple trees already planted, but in the long run, they can plant more trees.
D
The production facility rented by the businesswoman would be classified as: A. None of these B. Land C. Labor D. Capital E. Entrepreneurship
D
The supply curve of a good is: A. The amount of a good that sellers are willing and able to sell B. A table showing the relationship between the price of a good and the amount that sellers are willing and able to sell C. The amount of a good that a seller with average cost structure is willing and able to sell D. A graph showing the relationship between the price of a good and the amount that sellers are willing and able to sell
D
The willingness of the businesswoman to take risks in order to make a profit would be classified as: A. Labor B. Land C. None of these D. Entrepreneurship E. Capital
D
Which of the following is an example of a positive statement? A. the price of milk is too high B. the governemnt should set the price of milk at $1.00 per quart C. the price of milk does not provide farmers with enough profit D. the price of milk is $2.00 per quart
D
Which of the following pairs of goods is likely to have a negative cross-price elasticity of demand? A. Hot dogs and hamburgers B. Pizza and gasoline C. Hamburgers and pizza D. Hamburgers and ketchup
D
Which of the following situations allows you to calculate the price elasticity of supply? A. A price cut from $20 to $18 causes the sales of music CDs to rise from 105,000 to 128,000 weekly. B. Music CD sales rise 5% when consumer income grows 5%. C. Dell Computer's production increases when an increase in Gateway's prices causes its sales to fall. D. Computer manufacturers decrease PC production by 20% when the price decreases 10%.
D
Which of the following statements in not a positive statement? A. Payments for resources are made in factor markets B. People's wants are insatiable C. The inflation rate last year was 3% D. Prices of healthcare services should be set by the government E. The moon is made of green cheese
D
Which of the following statements regarding the price elasticity of demand for self-adhesive envelopes is correct? A. The demand for self-adhesive envelopes is likely to be more elastic in the short run because people have very little time to search for less expensive alternatives. B. The demand for self-adhesive envelopes is likely to be more elastic because there are very few good alternatives to them. C. The demand for self-adhesive envelopes is likely to be less elastic because their price is so high. D. The demand for self-adhesive envelopes is likely to be less elastic because envelopes are only a small part of most consumers' budgets.
D
Which of the following will increase the demand for gasoline? A. An increase in the supply of gasoline B. A decrease in consumer income C. A decrease in the price of gasoline D. A decrease in the price of automobiles
D
Ordering market structures according to the ease of entry for new firms from easy entry to more difficult entry, we have A. perfect competition, oligopoly, monopoly, monopolistic competition B. perfect competition, oligopoly, monopolistic competition, monopoly C. monopoly, oligopoly, monopolistic competition, perfect competition D. perfect competition, oligopoly, monopolistic competition, natural monopoly E. perfect competition, monopolistic competition, oligopoly, monopoly
E
The check for $1,000,000 given by the venture capital firm to the businesswoman would be classified as: A. Entrepreneurship B. Labor C. Land D. Capital E. None of these
E
The computer programmer who writes computer code three days a week for the businesswoman would be classified as: A. None of these B. Capital C. Land D. Entrepreneurship E. Labor
E
