quiz 4: econ 2106 practice questions

Each graph shows a firm in a different market structure. From left to right: Monopoly, Perfect Competition, Imperfect Competition. If each firm's goal is to maximize its profits, then the firm in Graph A should sell ____, the firm in Graph B should sell approximately____, and the firm in Graph C should sell ____. 3 units; 5.1 units; 4 units 4.9 units; 5.1 units ; 4.8 units 5.1 units; 5.1 units; 4 units. 5.5 units; 5.1 units; 4.9 units.

3 units; 5.1 units; 4 units

1. Table 1 shows the marginal benefit and marginal cost to Jisoo for each hour she studies for her upcoming Chemistry quiz. If Jisoo wants to use her limited time in the most optimal manner, how many hours does she study for? 1 hour 8 hours 5 hours 3 hours

5 hours

2. What of the following illustrates the concept of diminishing marginal benefit? A consumer experiences increasing satisfaction from consuming each additional unit of a good. A producer experiences decreasing profit from producing each additional unit of a good. A consumer experiences decreasing satisfaction from consuming each additional unit of a good. A producer experiences increasing profit from producing each additional unit of a good.

A consumer experiences decreasing satisfaction from consuming each additional unit of a good.

Quantity discounts are... A means of cementing customer loyalty. A form of bundling, where the product bundle consists of the same good. A form of hurdle pricing, where the hurdle that gets you a discount on additional units of a good is buying more of that good. A form of price discrimination, where a customer's willingness to purchase in bulk at a discount reveals the customer's reservation price.

A form of hurdle pricing, where the hurdle that gets you a discount on additional units of a good is buying more of that good.

Which of the following scenarios BEST describes price discrimination? A software company providing different versions of its product (basic, premium, and deluxe) at different price points. A company charges different prices for the same produce in different geographic locations due to variations in transportation costs. A theme park charges higher admission fees during peak seasons and lower fees during off-peak periods. A movie theater offering discounted tickets for student.

A movie theater offering discounted tickets for student.

What does the point of tangency between an indifference curve and a budget line represent? Select multiple. A point where the consumer's budget is exhausted. The point where the consumer's utility is maximized given their budget. The equilibrium price of the goods in the market. The point where the consumer's preference change from one good to another

A point where the consumer's budget is exhausted. The point where the consumer's utility is maximized given their budget.

Bob's Bakery has a total fixed cost of $600 per year. The bakery's average variable cost is $2.00 for 24 brownies. At this level of output, the bakery's total costs equal ______. A. $648 B. $27C. $14,448 D. $73

A. $648

Which of the following correctly describes the relationship between Average Cost (AC), Average Variable Cost (AVC), and Average Fixed Cost (AFC) for a firm operating in perfect competition? AVC is always falling. AFC is U-shaped. AC is always greater than AVC and AFC. AVC is always greater than AFC.

AC is always greater than AVC and AFC.

Opportunity cost is often represented in terms of: Money Time Resources All of the above

All of the above

Suppose the market for smartphones experiences a sudden increase in demand due to the release of a highly anticipated new model. Which of the following best describes the likely outcome in this scenario? A) Surplus: There will initially be an excess number of smartphones in the market as sellers struggle to adjust to the sudden change in demand. B) Surplus: Consumers will face shortages as suppliers raise prices to capitalize on the increased demand. C) Shortage: Some consumer will be unable to purchase smartphones at the prevailing market price due to insufficient quantity supplied. D) Shortage: Producers will lower prices to encourage more consumers to purchase smartphones to help rebalance the quantity demanded and the quantity supplied.

C) Shortage: Some consumer will be unable to purchase smartphones at the prevailing market price due to insufficient quantity supplied.

Tina's Tackle and Fishing Shop has a total fixed cost of $12,000 per year. The shop's average variable cost is $800 for 8 fishing rods. At this level of output, the shop's average total cost equals_______. A. $20,000 B. $12,800 C. $2,300 D. $12,100

C. $2,300

A luxury car manufacturer increases the price of its vehicles, and despite the increase, total revenue from care sales increased. What can be inferred about the elasticity of demand for luxury cars? Demand is elastic. Demand is inelastic. Demand is unitary elastic. Demand is perfectly elastic.

Demand is inelastic.

In a perfectly competitive market, what condition must hold true in the long run equilibrium? Marginal revenue exceeds marginal cost. Price is below average cost for all firms. Average total cost equals average variable cost for all firms. Economics profit equals zero for all firms.

Economics profit equals zero for all firms.

A decrease in consumer income leads to a reduction in the demand for luxury goods. How will this affect the equilibrium in the market for luxury watches? Equilibrium price and quantity both increase. Equilibrium price will increase, but quantity will decrease. Equilibrium price and quantity both decrease. Equilibrium price will decrease, but quantity will increase.

Equilibrium price and quantity both decrease.

A technological advancement in agriculture leads to a significant increase in the amount of wheat harvested. What effect will this likely have on the equilibrium price and quantity of wheat? Equilibrium price and quantity will both decrease. Equilibrium price will decrease, but quantity will increase. Equilibrium price will increase, but quantity will decrease. Equilibrium price and quantity will both increase.

Equilibrium price will decrease, but quantity will increase.

Upheaval in the oil supply chain due to political unrest in a major oil-producing country will likely do what to the market for gasoline? Equilibrium price and quantity will both increase. Equilibrium price will increase, but quantity will decrease. Equilibrium price will decrease, but quantity will increase. Equilibrium price and quantity will both decrease.

Equilibrium price will increase, but quantity will decrease.

How does a decrease in the price of one good affect the budget line? It shifts the budget line outward in a parallel manner. It shifts the budget line inward in a parallel manner. It causes the budget line to rotate inward, illustrating a reduction in the consumer's purchasing power. It causes the budget line to rotate outward, illustrating an increase in the consumer's purchasing power.

It causes the budget line to rotate outward, illustrating an increase in the consumer's purchasing power.

Which of the following statements about opportunity cost is TRUE? It is the same for every individual, regardless of preference. It is only applicable in situations involving monetary transactions. It can be zero in some situations. It helps evaluate trade-offs in the decision-making process.

It helps evaluate trade-offs in the decision-making process.

How does understanding opportunity cost influence decision-making? It encourages people to focus on monetary costs. It minimizes the importance of alternative options. It encourages people to choose the option with the highest opportunity cost. It helps individuals realize that every decision involves sacrificing something of value.

It helps individuals realize that every decision involves sacrificing something of value.

In the short run, if a compatitive firm is (1) producing its profit-maximizing level of output, (2) is experiencing positive economic profit, then which of the following must be TRUE? Select Multiple: Price > AC AVC<Price<AC Price = AC MR=MC

MR=MC

How would the implementation of an effective quota impact producer surplus? Producer surplus would increase. Producer surplus would decrease. Producer surplus would remain unchanged. Producer surplus would become negative.

Producer surplus would decrease.

What does the budget line represent in consumer theory? The combination of goods that maximizes utility. The consumer's income constraint in purchasing goods. The demand curve for a single product. The producer's cost structure for manufacturing goods.

The consumer's income constraint in purchasing goods.

3. What does marginal cost measure? The cost incurred by producing one additional unit of a good or service. The average cost per unit of production. The fixed cost of production. The change in the fixed costs of production resulting from producing one additional unit of the good or service.

The cost incurred by producing one additional unit of a good or service.

40. What is consumer surplus? The total amount of money consumers spend on a good. The total profit earned by consumers in the market. The additional utility gained by consumers when consuming a good. The difference between the price consumers are willing to pay and the price they actually pay.

The difference between the price consumers are willing to pay and the price they actually pay.

Car manufacturers expect the future prices of cars to fall next quarter. All else equal, which of the following is true? The equilibrium price of cars increases, and the equilibrium quantity increases. The equilibrium price of cars increases, and the equilibrium quantity decreases. The equilibrium price of cars decreases, and the equilibrium quantity increases. The equilibrium price of cars decreases, and the equilibrium quantity decreases.

The equilibrium price of cars decreases, and the equilibrium quantity increases.

At your bakery, brownies are a substitute in production for chocolate cupcakes. All else equal, if the price of brownies increases, which of the following is true? The equilibrium price of chocolate cupcakes increases, and the equilibrium quantity increases. The equilibrium price of chocolate cupcakes decreases, and the equilibrium quantity increases. The equilibrium price of chocolate cupcakes increases, and the equilibrium quantity decreases. The equilibrium price of chocolate cupcakes decreases, and the equilibrium quantity decreases.

The equilibrium price of chocolate cupcakes increases, and the equilibrium quantity decreases.

All else equal, if a firm decreases the price of its good by 7% and sells 7% more units, which of the following is true? The firm's product has an inelastic demand, and its revenue decreases. The firm's product has a unit elastic demand, and its revenue does not change. The firm's product has an elastic demand, and its revenue decreases. The firm's product has an inelastic demand, and its revenue increases.

The firm's product has a unit elastic demand, and its revenue does not change.

All else equal, if a firm increases the price of its good by 16% and sells 8% fewer units, which of the following is true? The firm's product has a unit elastic demand, and its revenue does not change. The firm's product has an elastic demand, and its revenue decreases. The firm's product has an inelastic demand, and its revenue decreases. The firm's product has an inelastic demand, and its revenue increases.

The firm's product has an inelastic demand, and its revenue increases.

If the cross-price elasticity between smartphones and phone cases is -1.2, then it means that: Phone cases are inferior goods. Phone cases are normal goods. The two goods are complements. The two goods are substitutes.

The two goods are complements.

What is the primary purpose of indifference curves in consumer theory? To illustrate the budget constrains faced by consumers. To depict the equilibrium points where the supply curve intersects the demand curve in the market. To show the preferences of consumers for different combinations of goods. To represent the production possibilities for a firm.

To show the preferences of consumers for different combinations of goods.

Emily is deciding between her two favorite restaurants. One makes Indian food and the other makes Chinese food. The Indian restaurant has just raised its prices. The opportunity cost of Chinese food has... increased. decreased. remains unchanged.

decreased

If there is a sudden increase in the popularity of electric vehicles, then the equilibrium price of gasoline-powered cars will... increases, and the equilibrium quantity increases. decreases, and the equilibrium quantity decreases. decreases, and the equilibrium quantity increases. increases, and the equilibrium quantity decreases.

decreases, and the equilibrium quantity decreases.

People love eating smores during the summer! You just need to buy three ingredients from the grocery store to make smores: marshmallow, graham cracker, and chocolate. If the price of marshmallows rises, then the equilibrium price of graham crackers will... decreases, and the equilibrium quantity increases. increases, and the equilibrium quantity decreases. increases, and the equilibrium quantity increases. decreases, and the equilibrium quantity decreases.

decreases, and the equilibrium quantity decreases.

Companies release alternative versions of the same product to... confuse competitors, making it difficult for them to anticipate the company's next move. generate hurdles and segment the market. comply with government regulations and avoid fines. increase competition in the market.

generate hurdles and segment the market.

Ki Juana has to take time off work to study. Since her wage has increased from $10 per hours to $15 per hours, the opportunity cost of studying has... increased. decreased. remains unchanged.

increased

If consumers expect gas prices to be higher next week, then the equilibrium price of gas... increases, and the equilibrium quantity decreases. decreases, and the equilibrium quantity increases. increases, and the equilibrium quantity increases. decreases, and the equilibrium quantity decreases.

increases, and the equilibrium quantity increases.

Any firm that wishes to maximize profits will produce the quantity at which... total costs are minimized (regardless of the corresponding total revenue). total revenue equals total cost. marginal revenue equals marginal cost. total revenue is maximized (regardless of the corresponding total costs).

marginal revenue equals marginal cost.

21. Consumers consider raspberries and blueberries to be substitutes. All else equal, if the price of blueberries falls, we... move down and to the right along the demand curve for blueberries. move up and to the left along the demand curve for blueberries. shift the demand curve for blueberries to the right. shift the demand curve for blueberries to the left.

move down and to the right along the demand curve for blueberries.

Suppose donuts and donut holes are complements in production for a baker. All else equal, if the price of donuts rise, we... shift the supply curve for donuts to the right. shift the supply curve for donuts to the left. move down and to the left along the supply curve for donuts. move up and to the right along the supply curve for donuts.

move up and to the right along the supply curve for donuts.

A shortage occurs when... quantity supplied exceeds quantity demanded at a given price. quantity demanded exceeds quantity supplied at a given price.

quantity demanded exceeds quantity supplied at a given price.

Cross-price elasticity of demand measures the responsiveness of... quantity demanded of one good to changes in the price of another good. quantity demanded to changes in income. quantity supplied to changes in price. the elasticity of supply for substitute goods.

quantity demanded of one good to changes in the price of another good.

Consumers consider blue and black ink pens to be substitutes. All else equal, if the price of blue ink pens rise, we... move up and to the left along the demand curve for black pens. move down and to the right along the demand curve for black pens. shift the demand curve for blank pens to the left. shift the demand curve for black pens to the right.

shift the demand curve for black pens to the right.

Suppose donuts and donut holes are complements in production for a baker. All else equal, if the price of donuts rise, we... shift the supply curve for donut holes to the left. move down and to the left along the supply curve for donut holes. shift the supply curve for donut holes to the right. move up and to the right along the supply curve for donut holes.

shift the supply curve for donut holes to the right.

If the price of airline tickets is below its equilibrium price, there will be a... surplus of airline tickets, and the price will rise. surplus of airline tickets, and the price will fall. shortage of airline tickets, and the price will fall. shortage of airline tickets, and the price will rise.

shortage of airline tickets, and the price will rise.

If the price of airline tickets is above its equilibrium price, there will be a... surplus of airline tickets, and the price will rise. surplus of airline tickets, and the price will fall. shortage of airline tickets, and the price will rise. shortage of airline tickets, and the price will fall.

surplus of airline tickets, and the price will fall.

Select multiple: Deadweight loss in a market occurs when... consumer surplus exceeds producer surplus. the quantity exchanged is below the socially efficient equilibrium quantity. producer surplus exceeds consumer surplus. the quantity exchanged is above the socially efficient equilibrium quantity.

the quantity exchanged is below the socially efficient equilibrium quantity.;the quantity exchanged is above the socially efficient equilibrium quantity.