Micro

If a rightward shift of the supply curve leads to a 6 percent decrease in the price and a 5 percent increase in the quantity demanded, the price elasticity of demand is

.83

The price elasticity of demand is 5.0. If there is a 10 percent increase in the price, by how much will quantity demanded decrease?

50%

If the cross elasticity of demand between goods A and B is positive,

A and B are substitutes

An efficient market will produce the quantity where

Marginal benefit equals marginal cost

A monopolist can make an economic profit in the long run because of

barriers to entry

When firms in monopolistic competition incur an economic loss, some firms will

exit the industry, and demand will increase for the firms that remain.

The more substitutes available for a product,

the larger its price elasticity of demand

. If demand is price elastic

a 1% decrease in the price leads to an increase in the quantity demanded that exceeds 1%

For a firm in monopolistic competition, the marginal cost curve intersects the average total cost curve

at the minimum average total cost

One difference between perfect competition and monopolistic competition is that

firms in monopolistic competition face a downward-sloping demand curve.

The price elasticity of demand measures

how responsive quantity demanded is to a change in price.

A firm encountering economies of scale over some range of output will have a

Falling long-run average cost curve

Demand is perfectly inelastic when

the quantity demanded does not respond at all to changes in the price. When demand is perfectly inelastic, the demand curve is a vertical

What should a monopolist do to maintain barriers to entry?

Appeal to governments

George goes to a jeweler to purchase a diamond ring. He doesn't know anything about how diamonds are evaluated. Because the jeweler has more knowledge, George is worried he won't get a quality diamond at a fair price. What do economists call this problem?

Asymmetric information

What is an assumption in the perfectly competitive model

Buyers have complete information about product and price

The supply of treadmills has a positive slope. Which two factors can cause the supply curve to shift? Choose 2 answers.

Change in cost of labor change in cost of motors

The marginal product of labor curve shows the change in total product resulting from a

Change in cost of variable resources

A firm will find it difficult to price discriminate if

If there are close substitutes

Consumer surplus is best defined as

The additional benefit consumers get when the price they are prepared to pay is greater than the price they actually pay.

What is a characteristic of a monopoly market?

There are no close substitutes for the good or service produced.

When production of a good has an external cost, which of the following is true about the market outcome?

There will be overproduction relative to the efficient level.

In monopolistic competition, each firm has a demand curve with

a negative slope, and there are no barriers to entry into the market.

The law of diminishing returns states that

adding more of a variable input to the same amount of a fixed input will eventually cause the marginal product of the firm to decrease

A cartel is a group of firms that

agree to restrict output to boost their profit.

In a competitive market, the quantity of a product produced and the price of the product are determined by

both buyers and sellers

Any point on a country's production possibilities frontier represents a combination of two goods that an economy

can produce using all available resources and technology

Firms in monopolistic competition make products that are

close but not perfect substitutes

Variable costs are

defined as the change in total cost resulting from the production of an additional unit of output.

The law of demand states that, other things equal, when the price of a good

falls, the quantity demanded of the good rises

The difference between a supply schedule and a supply curve is that a supply schedule

is a table, and a supply curve is drawn on a graph

To say that turnips are inferior goods means that the income elasticity

is negative

In the long run, a monopolistically competitive firm can earn

no economic profit, but a monopoly might.

In a perfectly competitive market, the demand curve faced by an individual firm is

perfectly elastic

One important difference between monopoly and monopolistic competition is the

point there are no barriers to entry in monopolistic competition

Producers' total revenue will decrease if

price rises and demand is elastic

The elasticity of supply measures the responsiveness of

quantity supplied to changes in price

An increase in quantity demanded

results in a movement downward and to the right along a demand curve

A perfectly competitive firm can

sell all of its output at the prevailing market price

The simplest prisoners' dilemma is a game that, in part, requires

two players who are unable to communicate with each other.