Economics Final 2100
Suppose a tax of $4 per unit is imposed on a good, and the tax causes the equilibrium quantity of the good to decrease from 2,000 units to 1,700 units. The tax decreases consumer surplus by $3,000 and decreases producer surplus by $4,400. The deadweight loss of the tax is A. $200. B. $600. C. $1,200. D. $400.
$600
Which of the following markets impose deadweight losses on society? (i) perfect competition (ii) monopolistic competition (iii) monopoly a. (i) and (ii) only b. (i) only c. (ii) and (iii) only d. (i) and (iii) only
(ii) and (iii) only
When the local used bookstore prices economics books at $15 each, it generally sells 70 books per month. If it lowers the price to $7, sales increase to 90 books per month. Given this information, we know that the price elasticity of demand for economics books is a) 0.34, and an increase in price from $7 to $15 results in an increase in total revenue b) 0.34, and an increase in price from $7 to $15 results in a decrease in total revenue c) 2.91, and an increase in price from $7 to $15 results in a decrease in total revenue d) 2.91, and an increase in price from $7 to $15 results in an increase in total revenue
0.34, and an increase in price from $7 to $15 results in an increase in total revenue
As price rises from $5 to $6, the price elasticity of demand using the midpoint method is approximately a) 0.07 b) 2.45 c) 0.18 d) 0.41
0.41
Last year, Carolyn bought 6 pairs of earrings when her income was $40,000. This year, her income is $52,000, and she purchased 7 pairs of earrings. Holding other factors constant, it follows that Carolyn's income elasticity of demand is about a) 0.59, and Carolyn regards earrings as an inferior good b) 1.7, and Carolyn regards earrings as an inferior good c) 0.59, and Carolyn regards earrings as a normal good d) 1.7, and Carolyn regard earrings as a normal good
0.59, and Carolyn regards earrings as a normal good
If the price elasticity of supply is 1.5, and a price increase led to a 1.8% increase in quantity supplied, then the price increase is about A. 2.70%. B. 0.83%. C. 1.20%. D. 0.67%.
1.20%.
Charles purchases 20 basketball tickets per year when his annual income is $50,000 and 25 basketball tickets when his annual income is $60,000. Charles's income elasticity of demand for basketball ticket is a) 1.22, and basketball tickets are a normal good b) 0.82, and basketball tickets are an inferior good c) 0.82, and basketball tickets are an inferior good d) 1.22 and basketball tickets are a normal good
1.22 and basketball tickets are a normal good
Melvin's Magnets earned $200 in total revenue last month when it sold 100 souvenir magnets. This month it earned $300 in total revenue when it sold 60 souvenir magnets. The price elasticity of demand for Marvin's magnets is a) 1.71 b) 1.25 c) 0.27 d) 0.58
1.25
At a price of $1.00, a local coffee shop is willing to supply 100 cinnamon rolls per day. At a price of $1.20, the coffee shop would be willing o supply 150 cinnamon rolls per day. Using the midpoint method, the price elasticity of supply is about a) 0.45 b) 2.20 c) 1.11 d) 0.90
2.20
If the price elasticity of demand for a good is 0.25, then a 20 percent decrease in price results in a a) 80 percent increase in the quantity demanded b) 4 percent increase in the quantity demanded c) 5 percent increase in the quantity demanded d) 0.0125 percent increase in the quantity demanded
5 percent increase in the quantity demanded
Suppose that quantity demand falls 30% as a result of 5% increase in price. The price elasticity of demand for this good is a) Elastic and equal to 0.17 b) Elastic and equal to 6 c) Inelastic and equal to 6 d) Inelastic and equal to 0.17
Elastic and equal to 6
Suppose the income of buyers in a market for an inferior good decreases and a technological advancement occurs also. What would we expect to happen in the market a) Equilibrium price would decrease, but the impact on equilibrium quantity would be ambiguous b) Equilibrium quantity would decrease, but the impact on equilibrium price would be ambiguous c) Equilibrium quantity would increase, but the impact on equilibrium price would be ambiguous d) none of the above is correct
Equilibrium quantity would decrease, but the impact on equilibrium price would be ambiguous
Suppose the income of buyers in a market for an inferior good decreases and a technological advancement occurs also. What would we expect to happen in the market? A. Equilibrium quantity would increase, but the impact on equilibrium price would be ambiguous. B. Equilibrium quantity would decrease, but the impact on equilibrium price would be ambiguous. C. Equilibrium price would decrease, but the impact on equilibrium quantity would be ambiguous. D. None of the above is correct.
Equilibrium quantity would increase, but the impact on equilibrium price would be ambiguous
Implicit Cost or Explicit Cost? The wages and utility bills that Bob pays
Explicit Cost
Implicit Cost or Explicit Cost? The wholesale cost for the guitars that Bob pays the manufacturer
Explicit Cost
Economists make use of assumptions, some of which are unrealistic, for the purpose of a) Teaching economics to people who have never before studied economics b) Advancing their political agendas c) Developing models when the scientific method cannot be used d) Focusing their thinking on what actually matters
Focusing heir thinking on what actually matters
Implicit Cost or Explicit Cost? The rental income Bob could receive if he chose to rent out his showroom
Implicit Cost
Implicit Cost or Explicit Cost? The salary Bob could earn if he worked as a paralegal
Implicit Cost
Economic models A) Are people who act out the behavior of firms and households so that economists can study the behavior be. B) Are useful to researchers but not to teachers because economic models omit many details of the real world economy. C) Are usually details replications of reality. D) Incorporate simplifying assumptions that often contradict reality, but also help at home economist better understand reality
Incorporate simplifying assumptions that often contradict reality, but also help at home economist better understand reality
Which of the following is a positive statement a) The tax on carried interest should be equal to the tax on ordinary income b) Affordability ought to be the primary concern with regards to food, health care, shelter, and education c) Americans ought to be allowed to work for whatever wages they want to d) Increasing taxes on cigarettes harms low-income Americans the most
Increasing taxes on cigarettes harms low-income Americans the most
Which of the following pairs of goods would be an example of substitutes a) Computers and printers b) Petrol and cars c) Cooking Oil and gold balls d) Lamb and beef
Lamb and beef
Microeconomics or Macroeconomics? The effect of a large government budget deficit on the economy's price level
Macroeconomics
Microeconomics or Macroeconomics? The optimal interest rate for the Federal Reserve to target
Macroeconomics
Microeconomics or Macroeconomics? The effect of government regulation on a monopolist's production decisions
Microeconomics
Movement along the demand curve for wine or a shift of the demand curve for wine? An increase in the price of wine
Movement Along
Movement along the supply curve for peanut butter or a shift of the supply curve for peanut butter? An increase in the price of peanut butter
Movement Along
Total surplus in a market will increase when the government A. imposes a tax on that market. B. imposes a binding price floor or a binding price ceiling on that market. C. Both a and b are correct. D. Neither a nor b is correct.
Neither a nor b is correct.
Which of the following would increase in response to an increase in the price of ironing boards? A. the equilibrium price of irons B. the equilibrium quantity of irons C. the quantity of irons demanded at each possible price of irons D. None of the above is correct.
None of the above is correct.
Positive or Normative? Killing people is bad.
Normative
Positive or Normative? The government should not execute anyone, even murderers.
Normative
Used cars are inferior goods. What will happen to the price of used cars if the price of new cars fell and consumer income increased? a) Price will rise b) Price will fall c) Price will stay the same d) The price change will be ambiguous
Price will fall
What would happen to the price of soy nut butter if the price of soy went up, the price of jelly fell, fewer firms decided to produce soy nut butter, and health officials announced that soy nut butter was good for you? Kids with peanut allergies and their classmates eat soy nut butter and jelly sandwiched for lunch at school. a) Price will fall, and the effect on quantity is ambiguous b) Price will rise, and the effect on quantity is ambiguous c) Quantity will fall, and the effect on quantity is ambiguous d) Quantity will rise, and the effect on quantity is ambiguous
Price will rise, and the effect on quantity is ambiguous
Which of the following events could shift the demand curve for gasoline to the left? A. The income of gasoline buyers rises, and gasoline is a normal good B. The price of gasoline rises. C. The income of gasoline buyers falls, and gasoline is an inferior good D. Public service announcements run on television and courage people to walk or ride bicycles instead of driving cars
Public service announcements run on television and courage people to walk or ride bicycles instead of driving cars
Which of the following statements is an example of a positive, as opposed to a normative, statement? a) Americans deserve a cleaner environment b) Economic policies should focus on improving equality c) Reducing emissions reduces days missed from school due to asthma d) All Americans are titled to quality health care
Reducing emissions reduces days missed from school due to asthma
Movement along the demand curve for wine or a shift of the demand curve for wine? A change in tastes of consumers that makes them desire more wine
Shift
Movement along the demand curve for wine or a shift of the demand curve for wine? An increase in the price of beer (a substitute for wine)
Shift
Movement along the supply curve for peanut butter or a shift of the supply curve for peanut butter? A decrease in the number of producers
Shift
Movement along the supply curve for peanut butter or a shift of the supply curve for peanut butter? An increase in the price of labor (used in the production of peanut butter)
Shift
The market for diamond rings is closely linked to the market for high-quality diamonds. If a large quantity of high-quality diamonds and turns the market, then the A. Supply curve for diamond rings will shift right, which will create a shortage of the current price. Price will increase, which will decrease quantity demanded and increase quantity supplied. The new market equilibrium will be at a higher price and higher quantity B. Demand curve for diamond rings will shift right, which will create a surplus at the current price. Price will decrease, which will increase quantity demanded and decrease quantity supplied. The new market equilibrium will be at a lower price and higher quantity C. Supply curve for diamond rings will shift right, which will create a surplus at the current price. Price will decrease which will increase quantity demanded and decrease quantity supplied. Then you market equilibrium will be at a lower price and higher quantity D. Demand curve for diamond rings with shift right, which will create a shortage at the current price. Price will increase, which will decrease quantity demanded and increase quantity supplied. The new market equilibrium will be at a higher price and higher quantity
Supply curve for diamond rings will shift right, which will create a surplus at the current price. Price will decrease which will increase quantity demanded and decrease quantity supplied. Then you market equilibrium will be at a lower price and higher quantity
What will happen in the gasoline market now if buyers expect higher gasoline prices in the near future? A) The demand for gasoline will increase be. B) The supply of gasoline will increase. C) The demand for gasoline will decrease. D) The demand for gasoline will be unaffected
The demand for gasoline will increase be
What would happen to the equilibrium price and quantity of lattes if coffee shops began using a machine that reduced the amount of Labor necessary to produce steamed milk, which is used to make lattes, and scientists discovered that coffee prevents heart attacks? A. Both the equilibrium price and quantity would increase B. The equilibrium quantity would increase, and the effect on equilibrium price would be ambiguous. C) Both the equilibrium price and quantity would decrease. D) The equilibrium price would increase, and the effect on equilibrium quantity would be ambiguous
The equilibrium quantity would increase, and the effect on equilibrium price would
Which of the following statements is tr!e for a perfectly competitive firm? a. The marginal revenue and the average revenue are equal to the price b. the marginal revenue is greater than the average revenue c. the marginal revenue is greater than the total revenue d. the total revenue is greater than the average revenue
The marginal revenue and the average revenue are equal to the price
A Production possibilities frontier can shift outward if a) Government increases its spending b) There is a technological improvement c) Resources are shifted from the production of one good to the production of another d) The economy abandons inefficient production methods in favor of efficient production methods
There is a technological improvement
An increase in the demand for bananas will NOT be caused by a) a rise in the price of apples b) buyers switching to a more healthy diet c) a drop in the market price of bananas d) news the bananas help relieve stress in people
a drop in the market price of bananas
Suppose that a regulation is in place that does not allow the price of a good to exceed $5. If this price is below the equilibrium point in the market, this would be an example of a a) binding price ceiling b) non-binding price ceiling c) binding price floor d) non-binding price floor
binding price ceiling
Suppose that a regulation is in place that does not allow the price of a good to fall below $10. If this price is above the equilibrium point in the market, this would be an example of a a) binding price ceiling b) non-binding price ceiling c) binding price floor d) non-binding price floor
binding price floor
Which of the following statements is not correct? a. both monopolistically competitive and perfectly competitive firms can earn economic profits in the short run b. only competitive firms produce the welfare-maximizing level of output c. both monopolies and monopolistically competitive firms can earn economic profits in the short run d. firms in perfect competition, monopolistic competition, and monopoly maximize profits by producing where marginal revenue equals marginal cost
both monopolies and monopolistically competitive firms can earn economic profits in the short run
The demand for salt is inelastic, and the supply of salt is elastic. The demand for caviar is elastic, and the supply of caviar is inelastic. Suppose that a tax of $1 per pound is levied on the seller of salt, and a tax of $1 per pound is levied on the buys of caviar. We would expect that most of the budren of these axes will fall on a) sellers of salt and the buyers of caviar b) buyers of salt and the buyers of caviar c) sellers of salt and the sellers of caviar d) buyers of salt and the sellers of caviar
buyers of salt and the sellers of caviar
Which of the following pairs of goods would be an example of substitutes a) Computers and printers b) Petrol and cars c) Cooking Oil and gold balls d) Lamb and beef
c.Lamb and beef
Firm in a monopolistically competitive market a. are price takers b. cannot earn economic profits in the long run c. produce an output level that minimizes average total cost d. maximize profits by producing where price equals marginal cost
cannot earn economic profits in the long run
Which of the following is likely to have the most price inelastic demand a) chocolate b) Hershey's chocolate c) Godiva chocolate d) all three would have the same elasticity of demand because they are all related
chocolate
When something is fashionable, economists would say that demand would increase because a) the price of the product has increased b) consumer tastes and preferences have turned favourably towards that product c) expectations of the future price has increased d) consumer incomes have increased
consumer tastes and preferences have turned favourably towards that product
Josh mows lawns. If the demand for lawn-mowing service is elastic and Josh wants to increase his total revenue, he should a) increase the price of his lawn-mowing service b) reduce the costs of operating his lawn-mowing service c) decrease the price of his lawn-mowing service d) more than one of the above is correct
decrease the price of his lawn-mowing service
If the government removes a tax on a good, then the price paid by buyers will a) increase, and the price received by sellers will increase b) decrease, and the price received by sellers will decrease c) increase, and the price received by sellers will decrease d) decrease, and the price received by sellers will increase
decrease, and the price received by sellers will increase
Oil is used to produce gasoline. If the price of oil increases, consumer surplus in the gasoline market a) decreases b) may increase, decrease, or remain unchanged c) is unchanged d) increases
decreases
When the supply of a good decreases and the demand for the good remains unchanged, consumer surplus A. decreases. B. increases. C. is unchanged. D. may increase, decrease, or remain unchanged.
decreases
If a competitive firm is currently producing a level of output at which marginal cost exceeds marginal revenue, the a. average revenue exceeds marginal cost b. decreasing output would increase the firm's profit c. the firm is earning a positive profit d. all of the above are correct
decreasing output would increase the firm's profit
The discovery of a new hybrid wheat would increase the supply of wheat. As a result, wheat farmers would realize an increase in total revenue if the A. demand for wheat is inelastic. B. supply of wheat is elastic. C. demand for wheat is elastic. D. supply of wheat is inelastic.
demand for wheat is elastic
If a tax is imposed on a good and the incidence of the tax ends up falling more heavily on the buyers than on the sellers, we can tell that a) demand is more elastic than supply for that good b) demand is less elastic than supply for that good c) the tax was imposed on the buyers of the good d) the tax was imposed on the sellers of the good
demand is less elastic than supply for that good
If a tax is imposed on a good and the incidence of the tax ends up falling more heavily on the sellers than on the buyers, we can tell that a) demand is more elastic than supply for that good b) demand is less elastic than supply for that good c) the tax was imposed on the buyers of the good d) the tax was imposed on the sellers of the good
demand is more elastic than supply for that good
If a tax is imposed on buyers of a good, the __________ curve of the good will shift __________ by the amount of the tax. a) demand, up b) demand, down c) supply, up d) supply, down
demand, down
Eleanor: I think it's safe to say that, in general, the savings rate of households in today's economy is much lower than it really needs to be to sustain the improvement of living standards. Darnell: I think a switch from the income tax to a consumption tax would bring growth in living standards. Eleanor: You really think households would change their saving behavior enough in response to this to make a difference? Because I don't. The disagreement between these economists is most likely due to a) differences in scientific judgments b) differences in values c) differences in perception versus reality Despite their differences, with which proposition are two economists chosen at random most likely to agree? a) Minimum wage laws do more to harm low-skilled workers than help them. b) Tariffs and import quotas generally reduce economic welfare. c) Lawyers make up an excessive percentage of elected officials.
differences in scientific judgments
Juanita: Thanks to recent financial crises, the concept of bailouts is a hot topic for debate among everyone these days. Gilberto: Indeed, it's gotten crazy! A government bailout of severely distressed financial firms is unnecessary because free markets will properly price assets. Juanita: I don't know about that. Without a bailout of severely distressed financial firms, the economy will experience a deep recession. The disagreement between these economists is most likely due to a) differences in scientific judgments b) differences in values c) differences in perception versus reality Despite their differences, with which proposition are two economists chosen at random most likely to agree? a) Business managers can raise profit more easily by reducing costs than by raising revenue. b) Employers should not be restricted from outsourcing work to foreign nations. c) Central banks should focus more on maintaining low unemployment than on maintaining low inflation.
differences in scientific judgments
Eleanor: A popular topic for debate among politicians as well as economists is the idea of providing government assistance for health benefits. Darnell: I think it is oppressive for the government to tax people who take care of themselves in order to pay for health insurance for those who are obese. Eleanor: I disagree. I think government funding of health insurance is useful to ensure basic fairness. The disagreement between these economists is most likely due to a) differences in scientific judgments b) differences in values c) differences in perception versus reality Despite their differences, with which proposition are two economists chosen at random most likely to agree? a) Having a single income tax rate would improve economic performance. b) Immigrants receive more in government benefits than they contribute in taxes. c) Rent ceilings reduce the quantity and quality of available housing.
differences in values
A tax imposed on the sellers of a good will lower the A. price paid by buyers and raise the equilibrium quantity. B. effective price received by sellers and lower the equilibrium quantity. C. effective price received by sellers and raise the equilibrium quantity. D. price paid by buyers and lower the equilibrium quantity.
effective price received by sellers and lower the equilibrium quantity
If a price ceiling is in place and it is binding, the market will a) remain in equilibrium, unaffected b( the price floor b) experience a shortage c) experience a surplus d) adjust the equilibrium price until it is equal to the price floor
experience a shortage
If a price floor is in place and it is binding, the market will a) remain in equilibrium, unaffected b( the price floor b) experience a shortage c) experience a surplus d) adjust the equilibrium price until it is equal to the price floor
experience a surplus
Suppose the cross-price elasticity of demand between hot dogs and mustard is -2.00. This implies that a 20 percent increase in the price of hot dogs will cause the quantity of mustard purchased to a) fall by 200 percent b) rise by 40 percent c) fall by 40 percent d) rise by 200 percent
fall by 40 percent
the monopolist is a price taker
false
Joe and Fred are economists. Joe thinks that the wealthiest 10% of the US population should be taxed a rate higher than the rest of society because they can better afford it. Fred thinks that everyone should be taxed at the same rate because that is the fairest scenario and the wealthy should not be penalized for their success. In this example, Joe and Fred A. have different normative views about tax policy B. must both be incorrect because tax policy is never that simple. C. disagree about the validity of a positive theory D. None of the above is correct
have different normative views about tax policy
A minimum wage that is set below a market's equilibrium wage will a) result in an excess demand for labor, that is, unemployment b) result in an excess supply of labor, that is, unemployment c) result in an excess demand for labor, that is, a shortage of workers d) have no impact on employment
have no impact on employment
If a surplus exists in the pizza market, then the current price must be __________ than the equilibrium price. For the market to reach equilibrium, you would expect __________. Higher or lower? Sellers to offer lower prices, persistent excess demand, buyers to offer higher prices
higher
If the government removes a tax on a good, then the quantity of the good sold will a) increase b) not change c) decrease d) all of the above are possible
increase
Tomato sauce and spaghetti noodles are complementary goods. A decrease in the price of tomatoes will a) increase consumer surplus in the market for tomato sauce and decrease producer surplus in the market for spaghetti noodles b) decrease consumer surplus in the market for tomato sauce and decrease producer surplus in the market for spaghetti noodles c) increase consumer surplus in the market for tomato sauce and increase producer surplus in the market for spaghetti noodles d) decrease consumer surplus in the market for tomato sauce and increase producer surplus in the market for spaghetti noodles
increase consumer surplus in the market for tomato sauce and increase producer surplus in the market for spaghetti noodles
If the demand for donuts is elastic, then a decrease in the price of donuts will a) increase total revenue of donut sellers b) there is not enough information to answer this question c) decrease total revenue of donut sellers d) not change total revenue of donut sellers
increase total revenue of donut sellers
The Surgeon General announces that eating apples promotes healthy teeth. As a result, the equilibrium price of apples A. increases, and producer surplus increases. B. increases, and producer surplus decreases. C. decreases, and producer surplus decreases. D. decreases, and producer surplus increases.
increases, and producer surplus increases
A monopolist produces a. more than the socially efficient quantity of output but at a higher price than in a competitive market b. possibly more or possibly less than the socially efficient quantity of output, but definitely at a higher price than in a competitive market c. less than the socially efficient quantity of output but at a higher price than in a competitive market d. the socially efficient quantity of output but at a higher price than in a competitive market
less than the socially efficient quantity of output but at a higher price than in a competitive market
Economies of scale occur when __________ as the quantity of output increases. a. short-run average total cost falls b. short-run average total cost rises c. long-run average total cost falls d. long-run average total cost rises
long-run average total cost falls
If a shortage exists in the car market, then the current price must be __________ than the equilibrium price. For the market to reach equilibrium, you would expect __________. Higher or lower? Sellers to offer lower prices, persistent excess demand, buyers to offer higher prices
lower
If firms are competitive and profit maximizing, the price of a good equals the a. marginal cost b. average total cost of production c. fixed cost of production d. total cost of production
marginal cost
A firm will maximize profits when its a. total revenue is equal to its total cost b. marginal revenue is equal to its marginal cost c. difference between marginal revenue and marginal cost is the greatest d. total cost is greater than total revenue
marginal revenue is equal to its marginal cost
Consider monopoly, monopolistic competition, and perfect competition. In which of these three market structures does a profit-maximizing firm charge a price that exceeds marginal cost? a. monopoly only b. monopoly, monopolistic competition, and perfect competition c. monopoly and monopolistic competition d. the answer cannot be determined without knowing whether the market is in the long run or short run
monopoly and monopolistic competition
Assume the demand for cigarettes is relatively inelastic, and the supply of cigarettes is relatively elastic. When cigarettes are taxed, we would expect A. most of the burden of the tax to fall on buyers of cigarettes, regardless of whether buyers or sellers of cigarettes are required to pay the tax to the government. B. the distribution of the tax burden between buyers and sellers of cigarettes to depend on whether buyers or sellers of cigarettes are required to pay the tax to the government. C. most of the burden of the tax to fall on sellers of cigarettes, regardless of whether buyers or sellers of cigarettes are required to pay the tax to the government. D. a large percentage of smokers to quit smoking in response to the tax.
most of the burden of the tax to fall on buyers of cigarettes, regardless of whether buyers or sellers of cigarettes are required to pay the tax to the government
As a result of a decrease in price, A. new buyers enter the market, decreasing consumer surplus. B. new buyers enter the market, increasing consumer surplus. C. existing buyers exit the market, increasing consumer surplus. D. existing buyers exit the market, decreasing consumer surplus.
new buyers enter the market, increasing consumer surplus.
Suppose that a regulation is in place that does not allow the price of a good to exceed $5. If this price is above the equilibrium point in the market, this would be an example of a a) binding price ceiling b) non-binding price ceiling c) binding price floor d) non-binding price floor
non-binding price ceiling
In a competitive market free of government regulation, A. price adjusts until quantity demanded equals quantity supplied. B. price adjusts until quantity demanded is less than quantity supplied. C. supply adjusts to meet demand at every price. D. price adjusts until quantity demanded is greater than quantity supplied.
price adjusts until quantity demanded equals quantity supplied
When a country that imported a particular good abandons a free-trade policy and adopts a no-trade policy a. a producer surplus increases and total surplus increases in the market for that good b. producer surplus increases and total surplus decreases in the market for that good c. producer surplus increases and total surplus decreases in the market for that good d. producer surplus decreases and total surplus increases in the market for that good
producer surplus increases and total surplus decreases in the market for that good
When the price of a good increases, the a) quantity demanded of the good will increase b) quanity demanded of the good will decrease c) demand for the good will decrease d) demand for the good will increase
quantity demanded of the good will decrease
If a price floor is in place and it is not binding, the market will a) remain in equilibrium, unaffected b( the price floor b) experience a shortage c) experience a surplus d) adjust the equilibrium price until it is equal to the price floor
remain in equilibrium, unaffected b( the price floor
Total revenue a) always increases as price increases b) remains unchanged as price increases when demand is unit elastic c) increases as price increases, as long as demand is elastic d) decreases as price increases, as long as demand is inelastic
remains unchanged as price increases when demand is unit elastic
In monopolistically competitive markets, economic losses a. suggest that some existing firms will exit the market b. are never possible c. suggest that new firms will enter the market d. are minimized through government-imposed barriers to entry
suggest that some existing firms will exit the market
If sellers do not adjust their quantities supplied at all in response to a change in price, a) supply is perfectly inelastic b) advances in technology must be prevalent c) the time period under consideration must be prevalent d) supply is perfectly elastic
supply is perfectly inelastic
If a tax is imposed on sellers of a good, the __________ curve of the good will shift __________ by the amount of the tax. a) demand, up b) demand, down c) supply, up d) supply, down
supply, up
Consider monopoly, monopolistic competition, and perfect competition. In which of these three market structures does a profit-maximizing firm experience zero economic profit? a. monopoly only b. monopoly, monopolistic competition, and perfect competition c. monopoly and monopolistic competition d. the answer cannot be determined without knowing whether the market is in the long run or short run
the answer cannot be determined without knowing whether the market is in the long run or short run
Today's supply curve for iPods could shift in response to a change in A. the number of buyers of iPods. B. today's price of iPods. C. the expected future price of iPods. D. All of the above are correct.
the expected future price of iPods.
Shortly after the price of beef increases, the price of chicken increases also because a) the goods are substitutes and the higher price of beef increases demand for chicken b) the goods are complements and the higher price of beef increases demand for chicken c) buyers are irrational d) sellers are taking advantage of consumers
the goods are substitutes and the higher price of beef increases demand for chicken
The demand for big screen TVs would fall if big screen TVs are normals goods and a) there is a larger output of big screen TVs b) the market price of big screen television sets increases c) the market price of DVDs falls d) the incomes of buyers of big screen TVs fall because of a recession
the incomes of buyers of big screen TVs fall because of a recession
Suppose the gasoline prices increase dramatically this month. Lola commutes 100 miles to work each weekday. Over the next few months less on the weekends to try to save money. Within the year, she sells her home and purchases one only 10 miles from her place of employment. These examples illustrate the importance of a) the availability of substitutes in determining the price elasticity of demand b) a necessity versus a luxury in determining the price elasticity of demand c) the time horizon in determining the price elasticity of demand d) The definition of a market in determining the price elasticity of demand
the time horizon in determining the price elasticity of demand
The law of demand states that holding everything else constant a) buyers decrease the amount of a good bought when there is more in the market b) there is an inverse or downward sloping relationship between price and quantity c) there is a positive or upward sloping relationship between price and quantity d) buyers increase the quantities they buy when their incomes increase
there is an inverse or downward sloping relationship between price and quantity