Mirco-Econ Final
If the absolute value of the price elasticity of demand for tickets to a football game is 2, then if the price increases by 1%, quantity demanded decreases by: a) 0.5% b) 1% c) 2% d) 4%
c) 2%
Suppose that a disease that affects people who consume beef has been discovered in the United States. One likely result is: a) an increase in buyers; reservation prices for beed b) a decrease in demand for chicken c) a decrease in demand for beef d) a decrease in the quantity demanded for beef
c) a decrease in demand for beef
A market equilibrium is only efficient if: a) the consumer surplus and the producer surplis associated with a given transaction are equal b) consumer surplus and producer surplus are both zero c) all relevant costs and benefits are reflected in the market supply and demand curves d) output is distributed equitably among consumers
c) all relevant costs and benefits are reflected in the market supply and demand curves
Larry was accepted at three different graduate schools, and must choose one. Elite U costs $50,000 per year and did not offer Larry any financial aid. Larry values attending Elite U at $60,000 per year. State College cost $30,000 per year, and offered Larry an annual $10,000 scholarship. Larry values attending State College at $40,000 per year. NoName U costs $20,000 per year, and offered Larry a full $20,000 annual scholarship. Larry values attending NoName at $15,000 per year. LArry's opportunity cost of attending State College is: a) $35,000 b) $30,000 c) $20,000 d) $15,000
a) $35,000
The role that price play in directing resources away from overcrowded markets and towards markets that are underserved is known as the _____ function of price. a) allocative b) market c) rationing d) transitive
a) allocative
What might cause a demand curve to shift to the right? a) an increase in the price of a substitute b) an increase in the product's own price c) an increase in the price of a compliment d) a decrease in the price of a substitute
a) an increase in the price of a subsititute
A movement along a demand curve from one price-quantity combination to another is called a: a) change in quanity demanded b) shift in the demand curve c) change in demand d) change in quantity supplied
a) change in quanity demanded
The marginal cost of an activity is the: a) change in the total cost of the activity that results from carrying out an additional unit of the activity b) the total cost of the activity divided by the change in the level of the activity c) the total cost of the activity divided by the level of the activity d) change in the level of the activity divided by the change in the cost of the activity
a) change in the total cost of the activity that results from carrying out an additional unit of the activity
Generally, _____ motivates firms to enter an industry, while _____ motivates firms to exit an industry. a) economic profit; economic loss b) accounting profit; accounting loss c) accounting profit; economic loss d) economic profit; accounting loss
a) economic profit; economic loss
If consumers can easily switch to a close substitute when the price of a good increases, demand for that good is likely to be: a) elastic b) inelastic c) unit elastic d) perfectly inelastic
a) elastic
Tony notes that an electronics store is offering a flat $20 off all prices in the store. Tony reasons that if he wants to buy something with a price of $50, then it is a good offer, but if he wants to buy something with a price of $500, then it is not a good offer. This is an example of: a) inconsistent reasoning; saving $20 is saving $20 b) the proper application of the Cost-Benefit Principle c) rational choice because saving 40% is better than saving 4% d) inconsistent reasoning because prices are sunk costs
a) inconsistent reasoning; saving $20 is saving $20
If the demand curve facing a monopolist shifts, then the monopolist's: a) marginal revenue curve and profit-maximizing level of output will change b) marginal revenue curve will not change, but its profit-maximizing level of output will c) total cost curve will change, but its variable cost curve will not d) marginal revenue curve will change, but its profit-maximizing level of output will not
a) marginal revenue curve and profit-maximizing level of output will change
In many cities in the United States, a single firm provides electricity. Those firms are: a) monopolists b) oligopolists c) monopilistic competitors d) perfect competitors
a) monopolists
If a firm functions in an oligopoly, it is: a) one of a small number of firms that produce goods that are either close or perfect substitutes b) the only firm that produces a good with no close substitutes c) one of a large number of firms that produce goods that are either close or perfect substitutes d) one of a large number of firms that produce a good with no close substitute
a) one of a small number of firms that produce goods that are either close or perfect substitutes
The price elasticity of demand is a measure of: a) the change in quantity demanded of a good that results from a change in its price b) the change in price of a good that results from a change in its quantity demanded c) the demand for a good d) how consumers respond to excess demand
a) the change in quantity demanded of a good that results from a change in its price
When Joe's Gas raises its price for regular unleaded gasoline, total revenue from regular unleaded gas falls to zero. It must be the case that: a) the demand for Joe's regular unleaded gasoline is perfectly elastic b) the demand for Joe's regular unleaded is inelastic c) there are not many good substitutes for Joe's regular unleaded gasoline d) consumers are switching to premium grades of gasoline
a) the demand for Joe's regular unleaded gasoline is perfectly elastic
Larry was accepted at three different graduate schools, and must choose one. Elite U costs $50,000 per year and did not offer Larry any financial aid. Larry values attending Elite U at $60,000 per year. State College cost $30,000 per year, and offered Larry an annual $10,000 scholarship. Larry values attending State College at $40,000 per year. NoName U costs $20,000 per year, and offered Larry a full $20,000 annual scholarship. Larry values attending NoName at $15,000 per year. Larry maximizes his economic surplus by attending: a) Elite U b) State College c) NoName U because he has a full scholarship there d) NoName U because the annual cost is only $20,000
b) State College
If the income elasticity for a particular good is positive, then: a) the good is an inferior good b) as income increases, consumers will tend to purchase more of the good c) as income increases, consumers will tend to purchase less of the good d) as its price increases, consumers will tend to purchase more of the good
b) as income increases, consumers will tend to purchase more of the good
The allocative function of price cannot operate unless there is: a) a significat barrier to entry b) both free entry and free exit c) either free entry or free exit d) neither free entry and no free exit
b) both free entry and free exit
If the cross-price elasticity of demand between lettuce and salad dressing is negative, then when the price of lettuce rises, the demand for salad dressing will _______. a) increase b) decrease c) remain the same d) become more inelastic
b) decrease
All else equal, a decrease in the demand for oranges will lead to a(n) ______ in equilibrium price and a(n) ______ in equilibrium quantity. a) increase; decrease b) decrease; decrease c) increase; decrease d) increase; increase
b) decrease; decrease
Suppose the cost to Tim of a third glass of soda is zero because he's at a restaurant that gives free refills. According to the Cost-Benefit Principle Tim should: a) drink a third glass of soda b) drink a third glass of soda if the benefit of doing so is positive. c) drink a third glass of soda if his benefit from drinking his second glass of soda was positive d) not drink a third glass of soda
b) drink a third glass of soda if the benefit of doing so is positive.
To increase total revenue, firms with _____ demand should lower price, and firms with ______ demand should increase price. a) elastic; unit b) elastic; inelastic c) inelastic; elastic d) unit; inelastic
b) elastic; inelastic
The demand for a good is elastic if the price elasticity of demand is: a) equal to one b) greater than one c) less than one d) equal to zero
b) greater than one
If your income elasticity of demand for hot dogs is negative, then: a) your demand curve for hot dogs is not downward sloping b) hot dogs are an inferior good for you c) hot dogs have no close substitutes for you d) you must not enjoy eating hot dogs
b) hot dogs are an inferior good for you
A rational seller will sell another unit of output: a) whenever the seller is earning a profit b) if the cost of making another unit is less than the revenue gained from selling another unit c) as long as the quantity demanded is greater than zero d) if the seller can charge more than the equilibrium price
b) if the cost of making another unit is less than the revenue gained from selling another unit
If it is possible to make a change that will help some people without harming others, then the situation is: a) efficient b) inefficient c) fair d) unfair
b) inefficient
Suppose two demand curves intersect and so have a point in common. At that point, demand shown by the steeper curve will be ________ the flatter curve. a) more elastic than b) less elastic than c) as elastic as d) more likely to be unit elastic than
b) less elastic than
The primary objective of most private firms is to: a) maximize revenue b) maximize profit c) minimize cost d) maximize output
b) maximize profit
Unlike economic profit, economic rent: a) can be less than zero b) may not be driven to zero by competition c) doesn't involve opportunity costs d) only applies to land
b) may not be driven to zero by competition
If a firm's production process exhibits increasing returns to scale, then doubling all the firm's inputs will lead output to ______. a) double b) more than double c) less than double d) fall by one-half
b) more than double
Your classmates are planning to go to Miami for spring break, and you are undecided about whether you should go with them. The round-trip airfares are $600, but you have a frequent-flyer coupon worth $500 that you could use to pay part of the airfare. All other costs for the vacation are exactly $900. The most you would be willing to pay for the trip is $1400. Your only alternative use for your frequent-flyer coupon is for your trip to Atlanta two weeks after the break to attend your sister's graduation, whcih your parents are forcing you to attend. The round-trip airfares for Atlanta are $450. You should use the frequent flyer coupon to go to Miami? a) yes, your benefit is more than your cost b) no, your benefit is less than your cost c) yes, your benefit is equal to your cost d) no, because there are no benefits in the trip
b) no, your benefit is less than your cost
If the demand for a good decreases as income decrases, then the good is a(n): a) complementary good b) normal good c) inferior good d) substitute doog
b) normal good
Curly told Larry about his new business venture: Curly pays Acme International $1,00 per month for supplies, works out of his apartment on his own computer and earns a monthly revenue of $1,500. Should Larry quit his job and do what Curly is doing? a) yes, as long as LArry has at least $1,000 is savings to get started b) not if Larry is earning more than $500 per month at his current job c) not unless Larry can borrow the $1,500 monthly payment at no interest d) yes, as long as Larry can work out of his apartment and owns a computer
b) not if Larry is earning more thant $500 per month at his current job
A monopolistically competitive firm is one: a) that behaves like a monopolist b) of many firms that sell products that are close but not perfect substitutes c) of many firms that all sell the exact same product d) of a small number of firms that sell products that are close but not perfect substitutes
b) of many firms that sell products that are close but not perfect substitutes
The Cost-Benefit Principle tells us that a firm should continue to expand production as long as: a) the firm's profit is positive b) price of the good is greater than its marginal cost c) it can sell another unit of the good d) the supply curve is upward sloping
b) price of the good is greater than its marginal cost
According to the Cost-Benefit Principle, you should spend an additional hour studying for an exam if, and only if: a) the benefit of studying for an additional hour are really high b) the benefits of studying for an additional hour exceeds the costs of studying for an additional hour c) the benefits of studying for an additional hour are higher for you than for anyone else in your class d) you have time to study for an addional hour
b) the benefits of studying for an additional hour exceeds the costs of studying for an additional hour
If one fails to account for implicit costs in decision making, then applying the Cost-Benefit rule will be flawed because: a) the benefits will be overstated b) the costs will be understated c) the benefits will be understated d) the costs will be overstated
b) the costs will be understated
Suppose a perfectly competitive firm and a monopolist are both charging $5 for their respective products. From this, one can infer that: a) the marginal benefit from sellfin an additional unit of output is $5 for both firms b) the marginal benefit from selling an additional unit of output is $5 for the competitive firm and less than $5 for the monopolist c) the marginal benefit from selling an additional unit of output is less than $5 for both firms d) the competitive firm is charging too much, and the monopolist is charging too little
b) the marginal benefit from selling an additional unit of output is $5 for the competitive firm and less than $5 for the monopolist
If the market supply curve does not capture all of the costs to society of producting an additional unit of good, then: a) the market equilibrium will be socially optimal b) the market equilibrium will not be efficient c) the allocation of resources will be efficient d) the market will not be in equilibrium
b) the market equilibrium will not be efficient
The opportunity cost of an activity includes the value of: a) all of the alternatives that must be forgone b) the next-best alternative that must be forgone c) the least-best alternative that must be forgone d) the chosen activity minus the value of the next-best alternative
b) the next-best alternative that must be forgone
Which of the following would not be included in the calculation of accounting profit? a) the wages paid to the company's workers b) the salary the owner could have earned working elsewhere c) the rent paid by the owner for the use of a building d) the medical insurance coverage for the company's workers
b) the salary the owner could have earned working elsewhere
Which of the following statements about implicit costs is true? a) they are always fixed b) they measure the forgone opportunities of the firm's owners c) they exceed explicit costs d) they do not enter into the calculation of economic profit
b) they measure the forgone opportunities of the firm's owners
Accounting profit is equal to: a) total revenue minus implicit costs b) total revenue minus explicit costs c) total revenue minus explicit and implicit costs d) economic profit minus implicit costs
b) total revenue minus explicit costs
Janie must choose to either mow the lawn or wash clothes. If she mows the lawn, she will earn $30, and if she washes clother, she will earn $45. She dislikes both tasks equally and they both take the same amount of time. Janie will therefore choose to ______ because it generates a ______ economic surplus. a) mow the lawn; bigger b) wash clothes; bigger c) mow the lawn; smaller d) wash clothes; smaller
b) wash clothes; bigger
Pat earns $25,000 per year (after taxes), and Pat's spouse, Chris, earns $35,000 (after taxes). They have two pre-school -aged children. Childcare for their children costs $12,000 per year. Given that Chris doesn't want to stay home with the kids, regardless of what Pat does, Pat should stay home with the kids if, and only if, the value of Pat spending more time with the kids is greater than: a) $37,000 b) $25,000 c) $13,000 d) $12,000
c) $13,000
For the Fall semester, you had to pay a nonrefundable fee of $600 for your meal plan, which gives you up to 150 meals. If you eat all of the meals, your average cost for a meal is: a) $6 b) $5 c) $4 d) $0.25
c) $4
Last year Christine worked as a consultant. She hired an administrative assistant for $15,000 per year and rented office space for $3,000 per month. Her total revenue for the year was $100,000. If Christine hadn't worked as a consultant, she would have worked at a real estate firm earning $40,000 a year. Last year, Christine's accounting profit was ______ and her economic profit was _____ a) $100,000; $64,000 b) $64,000; $49,000 c) $49,000; $9,000 d) $9,000; 0
c) $49,000; $9,000
Suppose that Tom bought a bile from Helen for $195. If Helen's reservation price was $175, and Tom's reservation price was $225, the total economic surplus from this transaction was: a) $30 b) $80 c) $50 d) $20
c) $50
John is trying to decide how to divide his time between his job as a stocker in the local grocery store, which pays $7 per hour for as many hours as he chooses to work, and cleaning windows for the businesses downtown. He makes $2 for every window he cleans. John is indifferent between the two tasks, and the number of windows he can clean depends on how many hours he spends cleaning in a day, as shown in the table below: What is john's opportunity cost of cleaning windows for an hour? a) $14 b) $8 c) $7 d) $2`
c) $7
Suppose the most you would be willing to pay for a plane ticket home is $250. If you buy for $175, then your economic surplus is: a) $250 b) $175 c) $75 d) $0
c) $75
If the quantity demanded of a good is Q when the price for the good is P, the price elasticity of demand for that good at that point is: a) (Q/P)(1/slope) b) (Q/P)(slope) c) (P/Q)(1/slope) d) (P/Q)(slope)
c) (P/Q)(1/slope)
When the price of a good changes, the amount of that good that buyers wish to buy changes: a) soley because of the substitution effect b) soley because fo the income effect c) because of both the substitution and the income effects d) only if the substitution effect and the income effect do not cancel out each other
c) because of both the substitution and the income effects
A perfectly price discriminating monopolist charges each buyer: a) exactly his or her marginal cost b) more than his or her reservation price c) exactly his or her reservation price d) the perfectly competitive equilibrium price
c) exactly his or her reservation price
The marginal benefit of an activity is the: a) same as the total benefit of an activty b) total benefit of an activity divided by the level of the activity c) extra benefit associated with an extra unit of the activity d) total benefit associated with an extra unit of the activity
c) extra benefit associated with an extra unit of the activity
Suppose that the market price for hot dogs sold by street vendors has just risen from $4.50 to $5.00, and that in response Curly has now begun operating a hot dog cart. We can assume that Curly's reservation price for hot dogs is: a) at least $5.00 b) $4.50 c) greater than $4.50 but no more than $5.00 d) $5.00
c) greater than $4.50 but no more than $5.00
Econimics is best defined as the study of a) inflation interest rates and the stock market b) supply and demand c) how people make choices in the faceof scarcity and the implications of those choices d) the financial concerns of businesses and individuals
c) how people make choices in the faceof scarcity and the implications of those choices
If a monopolist's marginal revenue exceeds its marginal cost at its current level of output, then to maximize its profit the monopolist should: a) do nothing b) decrease output in order to increase the gap between marginal revenue and marginal cost c) increase output until marginal revenue equals marginal cost d) increase output until price equals marginal cost
c) increase output until marginal revenue equals marginal cost
Suppose the production of cotton causes substantial environmental damage because the pesticides used by cotton farmers often make their way into nearby rivers and streams, and are very harmful to fish and other wildlife. If cotton farmers do not have to pay for the environmental damage caused by the pesticides used to grow cotton, then the market equilibrium price wil be ____ and the market equilibrium quantity will be _____. a) inefficiently high; inefficiently low b) inefficiently high; inefficiently high c) inefficiently low; inefficiently high d) inefficiently low; inefficiently low
c) inefficiently low; inefficiently high
According to the law of diminishing returns, when some factors of production are fixed, in order to increase production by a given amount, a firm will eventually need to add successively: a) smaller and smaller quantities of the variable factors of production b) constant quantities of the variable factors of production c) larger and larger quantities of the variable factors of production d) larger and larger quantities of the fixed factor of production
c) larger and larger quantities of the variable factors of production
When the price of insulin is $10, consumers demand 100 units; when the price is $15, consumers demand 100 units; and when the price is $20, consumers demand 100 units. Based on this information, the demand for insulin is: a) unit elastic b) perfectly elastic c) perfectly inelastic d) elastic
c) perfectly inelastic
The percentage change in quantity supplied that results from a 1 percent change in price is known as the: a) cross-price elasticity of supply b) slope of the supply curve c) price elasticity of supply d) cross-price elasticity of demand
c) price elasticity of supply
If the demand for olives falls when the price of cheese falls, then we know that cheese and olives are: a) normal goods b) compliments c) substitutes d) inferior goods
c) subsitutes
Economies of scale exist when: a) firms become larger b) input prices are falling c) the average cost of production falls as output rises d) doubling all the inputs leads to less than double the output
c) the average cost of production falls as output rises
The economic surplus of an action is: a) the benefit gained by taking an action b) the difference the explicit and implicit costs of taking an action c) the difference between the benefit and the cost of taking an action d) the money a person has left over after taking an action
c) the difference between the benefit and the cost of taking an action
Economic rent is: a) the amount people pay for an apartment in a perfectly competitive market b) the payment made to the owner of a factor of production, whcih is usually equal to the owner's reservation price c) the difference between the payment made to the owner of a factor of production and the owner's reservation price d) sometimes higher and sometimes lower than the owner's reservation price
c) the difference between the payment made to the owner of a factor of production and the owner's reservation price
Dean should play golf instead of preparing for tomorrow's exam in economics if: a) he is irrational b) the benefit of golfing is greater than the benefit of studying c) the economic surplus from playing golf is greater than the economic surplus from studying. d) dean can play golf for free
c) the economic surplus from playing golf is greater than the economic surplus from studying.
The entire group of buyers and sellers of a particular good or service makes up: a) the demand curve b) the supply curve c) the market d) the equilibrium price and quantity
c) the market
As coffee becomes more expensive, Joe starts drinking tea instead of coffee. This is called: a) the income effect of a price change b) a decrease in reservation price c) the substitution effect of a price change d) a decrease in demand
c) the substitution effect of a price change
Efficiency is an important goal because when markets are efficient: a) there is less income inequality b) the poor benefit more than the wealthy c) there are more resources available to achieve other goals d) there is no need for government intervention in the economy
c) there are more resources available to achieve other goals
Suppose you own a small business. Last month, your total revenue was $6,000. In addition, you paid: $1,000 in monthly rent for office space $200 in monthly rent for equipment $3,000 to your workers in wages for the month $1,000 for the supplies you used that month If you correctly determine that your economic profit last month was negative $200, then it must be true that: a) you do not have any implicit costs b) your implicit costs are $200 per month c) your implicit costs are $1,000 per month d) the rent you pay on your equipment is an implicit cost
c) your implicit costs are $1,000 per month
For the Fall semester, you had to pay a nonrefundable fee of $600 for your meal plan, which gives you up to 150 meals. If you eat 100 meals, your marginal cost of the 100th meal is: a) $6 b) $4 c) $0.25 d) $0
d) $0
LAst year Christine worked as a consultant. She hired an administrative assistant for $15,000 per year and rented office space for $3,000 per month. Her total revenue for the year was $100,000. If Christine hadn't worked as a consultant, she would have worked at a real estate firm earning $40,000 a year. Last year, Christine's explicit costs were _____, and her implicit costs were _______. a) $15,000; $43,000 b) $18,000; $40,000 c) $36,000; $140,000 d) $51,000; $40,000
d) $51,000; $40,000
If the price of cheese falls by 1 percent and the quantity demanded rises by 3 percent, then the price elasticity of demand for cheese is equal to: a) 30 b) .3 c) .03 d) 3
d) 3
The short run is best defined as: a) one year or less b) a period of time sufficiently short that all factors of production are variable c) the period of time between quarterly accounting reports d) a period of time sufficiently short that at least one factor of production is fixed
d) a period of time sufficiently short that at least one factor of production is fixed
The responsiveness for the quantity demanded of one good to a change in the price of a different good is measured by the: a) price elasticity of demand b) income elasticity of demand c) price elasticity of supply d) cross-price elasticity of demand
d) cross-price elasticity of demand
If two products are substitutes, then the: a) income elasticity of demand for both will be high b) price elasticity of demand for both will be positive c) cross-price elasticity of demand between them will be negative d) cross-price elasticity of demand between them will be positive
d) cross-price elasticity of demand between them will be positive
Price discrimination means charging: a) higher prices to women and minorities b) different prices for different products because production costs are different c) the same price to all buyers even if production costs are different d) different prices to different buyers for essentially the same good or service
d) different prices to different buyers for essentially the same good or service
In the long run, in a perfectly competitive industry: a) economic profit tends to persist b) the number of firms in the industry will increase c) economic loss tends to persist d) economic profit and loss are driven to zero by entry and exit
d) economic profit and loss are driven to zero by entry and exit
For perfectly competitive firms, marginal revenue _____ price; for monopolists marginal revenue ______ price. a) equals; equals b) equals; is greater than c) is less than; equals d) equals; is less than
d) equals; is less than
The essential feature that differentiates imperfectly competitive firms from perfectly competitive firms is that an imperfectly competitive firm: a) produces a good with no close substitutes b) faces high barriers to entry c) coordinates their output decisions with other firms d) faces a downward-sloping demand curve
d) faces a downward-sloping demand curve
If the local slaughterhouse gives off an unpleasant stench, then the equilibrium quantity of meat will be ______ the quantity that maximizes total economic surplus. a) more equitable b) equal to c) lower than d) higher than
d) higher than
Which of the following is NOT true of a demand curve? a) it has a negative slope b) it shows the amount consumers want to buy at various proces c) it relates the price of an item to the quantity demanded of that item d) it reflects sellers' reservation prices
d) it reflects sellers' reservation prices
The cost-benefit principle indicates that an action should be taken if, and only if: a) its benefits are positive b) its costs are small c) its benefits are a result of its costs d) its benefits exceed its costs
d) its benefits exceed its costs
Jenny sells lemonade in front of her house in the summer. Several other kids in Jenny's neighborhood also run lemonade stands in the summer. If the lemonade market is perfectly competitive and Jenny is charging the equilibrium price, then Jenny can increase her revenue if she: a) decreases the price of her lemonade and doesn't change her output b) increases the price of her lemonade and deccreases her output c) increases the price of her lemonade and doesn't change her output d) keeps the price of her lemonade the same and increases the output
d) keeps the price of her lemonade the same and increases the output
If individuals are rational, they should choose actions that yeild the: a) largets total benefits b) smallest total costs c) smallest economic surplus d) largest economic surplus
d) largest economic surplus
In general, perfectly competitive firms maximize their profit by producing the level of output at which a) marginal cost is minimized b) total cost is minimized c) total cost equals total revenue d) marginal cost equals price
d) marginal cost equals price
For all firms, the additional revenue collected from the sale of one additional unit of output is termed: a) price b) average revenue c) marginal profit d) marginal revenue
d) marginal revenue
The monopolist will maximize profits at the output level for which: a) price equals marginal cost b) price equals average total cost c) marginal revenue equals average total cost d) marginal revenue equals marginal cost
d) marginal revenue equals marginal cost
The monopolist will maximize profits at the output level for which: a) price equals marginal cost b) price equals average total cost c) margnal revenue equals average total cost d) marginal revenue equals marginal cost
d) marginal revenue equals marginal cost
If consumers completely cease purchasing a product when its price increases by any amount, then demand is: a) inelastic b) perfectly inelastic c) unit elastic d) perfectly elastic
d) perfectly elastic
If the supply curve and the demand curve both shift to the left, then the new equilibrium: a) quantity will be higher, but the diretion of the price change is uncertain b) price will be lower, but the direction of the change in quantity is uncertain c) price will be higher, but the direction of the change in quantity is uncertain d) quantity will be lower, but the direction of the price change is uncertain
d) quantity will be lower, but the direction of the price change is uncertain
The role that prices play in distributing scarce goods and services to those consumers who value them the most highly is known as the _____ function of price. a) allocative b) multiplicative c) equilibrium d) rationing
d) rationing
A decrease in the price a firm receives for its output will lead the firm to: a) expand output b) cut its payments to its factors of production c) leave output unchanged d) reduce output
d) reduce output
Adam Smith's theory of the invisible hand posits that the most efficient allocation of resources is often achieved by: a) reducing economic inequality b) government intervention in the market c) collective action d) the actions of independent, self-interested buyers and sellers
d) the actions of independent, self-interested buyers and sellers
When the supply curve shifts to the left and there is no change in demand: a) the market cannot reestablish an equilibrium b) the equilibrium price will fall c) the equilibrium quantity will rise d) the equilibrium price will rise
d) the equilibrium price will rise
When more firms enter an industry: a) the amount produced by each of the new firms will be greater than the amount produced by each of the original firms b) the industry supply curve will shift left c) the amount produced by each of the new firms will be less than the amount produced by each of the original firms d) the industry supply curve will shift right
d) the industry supply curve will shift right
In general, when the price of a variable factor of prodcution increases: a) total cost falls b) the profit maximizing level of output rises c) the profit-maximizing price falls d) the profit-maximizing level of output falls
d) the profit-maximizing level of output falls