questions to work on

Which of the following statements best captures the concept of consumer surplus? Multiple Choice "I saw a sale for flowers, so I bought four bundles." "I was willing to pay $30 for a dozen roses, but I bought them for $20." "I was willing to pay $30 for roses, but they are selling for $35, so I did not buy." "I paid $35 for roses last week and just saw them for sale now at $25."

"I was willing to pay $30 for a dozen roses, but I bought them for $20."

An unregulated natural monopoly is most likely to Multiple Choice Earn an economic profit. Produce where marginal cost equals price. Charge a lower price than if the same product were produced in a competitive market because of the monopolist's greater technical efficiency. Take advantage of the concept of marginal cost pricing.

Earn an economic profit.

Vertical equity can be determined by comparing the Multiple Choice Effective tax rate of the taxpayer with the highest nominal income to the effective tax rates of taxpayers with lower nominal incomes. Marginal tax rate of the taxpayer with the highest nominal income to the marginal tax rates of taxpayers with lower nominal incomes. Marginal tax rates for two taxpayers with the same nominal incomes. Effective tax rates for two taxpayers with the same nominal incomes.

Effective tax rate of the taxpayer with the highest nominal income to the effective tax rates of taxpayers with lower nominal incomes.

Which of the following is an investment decision in a competitive market? Multiple Choice The shutdown decision. The rate of output to produce. Entry or exit. The price to charge.

Entry or exit.

Farm price support programs most often take the form of price Multiple Choice Ceilings, which cause shortages. Floors, which cause shortages. Ceilings, which cause surpluses. Floors, which cause surpluses.

Floors, which cause surpluses.

If profit regulation is used to control a natural monopolist, the monopolist is likely to Multiple Choice Attempt to reduce the costs of production. Inflate or pad the costs of production. Increase the quality of its product in an effort to increase sales. Reduce maintenance of plants and equipment.

Inflate or pad the costs of production.

A natural monopoly is a desirable market structure because Multiple Choice It allows the producer to earn greater profit than is possible under competition. It allows the producer to deliver a higher-quality product to the market. It allows the producer to deliver products to the market at the lowest possible cost. The jobs it creates pay higher wages than those in a competitive industry.

It allows the producer to deliver products to the market at the lowest possible cost.

Which of the following would definitely not be used by any unregulated monopolist? Multiple Choice Marginal cost pricing. The profit-maximizing rule. Price discrimination. Economies of scale.

Marginal cost pricing.

In monopoly and perfect competition, a firm should expand production when Multiple Choice Marginal revenue is below marginal cost. Price is below marginal cost. Marginal revenue is above marginal cost. Price is above marginal cost.

Marginal revenue is above marginal cost.

The demand curve will be kinked if rival oligopolists Multiple Choice Match price increases but not price reductions. Match price reductions but not price increases. Match both price increase and price reductions. Do not match price changes at all.

Match price reductions but not price increases.

In a perfectly competitive market, when price is equal to the Multiple Choice Minimum short-run average total cost, it has reached the shutdown point. Minimum average variable cost, economic profit is zero. Marginal cost, accounting profit is maximized. Minimum average total cost, economic profit is zero.

Minimum average total cost, economic profit is zero.

Ceteris paribus, the longer the time period, the Multiple Choice Smaller the income elasticity for the good. Less elastic the demand for the good. More unitary elastic the demand for the good. More elastic the demand for the good.

More elastic the demand for the good.

A monopolistically competitive industry is characterized by ________ concentration ratios and ________ entry barriers. Multiple Choice high; high high; low low; high low; low

low; low

If the price of Coke rises by 5 percent and the sales of Pepsi go up by 10 percent, we can conclude that Multiple Choice The sign on the cross-price elasticity will be negative. Both goods are normal goods. Both goods are substitute goods because the cross-price elasticity is +0.5. Both goods are substitute goods because the cross-price elasticity is +2.

Both goods are substitute goods because the cross-price elasticity is +2.

Because farm products have a low elasticity of demand, a small change in output will have Multiple Choice An indeterminate effect on price. No effect on price. A smaller effect on price. A larger effect on price.

A larger effect on price.

The most common form of non-price competition is Multiple Choice Collusion. Advertising. Patents. Predatory pricing.

Advertising

Which of the following industries was substantially deregulated over the last several decades? Multiple Choice Autos. Cinemas. Textiles. Airlines.

Airlines

Supply is very inelastic when Multiple Choice The quantity supplied changes little when the price increases. The quantity supplied changes a lot when price increases. The quantity supplied does not change at all when price increases. The quantity supplied changes only when demand changes.

The quantity supplied changes little when the price increases.

In the short run, when a firm produces zero output, variable cost equals Multiple Choice Zero. Total cost. Fixed cost. Marginal cost.

Zero.