Microeconomics

In which market structure do the actions of a rival have a significant impact on your operations? A. Monopolistic competition B. Monopoly C. Perfect competition D. Oligopoly

D. Oligopoly

On a market graph, producer surplus is the area that is: A. below the demand curve. B. above the demand curve and below the supply curve. C. above the demand curve. D. above the supply curve and below the price.

D. above the supply curve and below the price.

Figure: Market for Avocados) The figure shows the market for avocados. If the seller changes the price per avocado from $1.50 to $1.75, the change in total revenue is: A. $12,750 B. $150,000 C. $162,750 D. $312,750

A. $12,750

Use the table to answer the question. At what price does this market experience a shortage of 100 units? A. $30 B. $40 C. $60 D. $50

B. $40

(Figure: Market Power) Based on the demand curves for four sellers, which of the following sellers has the most market power? A. Firm B B. Firm C C. Firm A D. Firm D

B. Firm C

When a good is nonrival and nonexcludable, it suffers from the _____ problem. A. cap and trade B. free-rider C. Coase Theorem D. partial good

B. free-rider

(Figure: Output Level) According to the rational rule, what output and price should the firm in the following example choose? A. quantity = 8; price = $9.00 B. quantity = 4; price = $7.00 C. quantity = 4; price = $4.00 D. quantity = 6; price = $6.00

B. quantity = 4; price = $7.00

(Figure: Market for Tropicana Juices) Tropicana produces both orange juice and tropical juice blends. What will happen to the supply of Tropicana orange juice when the opportunity cost of producing tropical juice blends rises, and the opportunity cost of producing orange juice stays the same? (Hint: Opportunity costs are part of a producer's marginal cost.) A. Graph C B. Graph B C. Graph A D. Graph D

C. Graph A

(Figure: Market for Cars) Use the figure to answer the question. In 2011, Japan suffered a major earthquake and tsunami. Honda parts that were sourced from Japan could no longer be produced, which caused Honda to cut its production of cars. Which graph shows the effect of this shortfall? A. Graph D B. Graph A C. Graph C D. Graph B

C. Graph C

(Figure: Market for Engines) If there is no international trade in this market, the value of the consumer surplus is: A. $360,000. B. $1,080,000. C. $720,000. D. $540,000.

A. $360,000.

Junko's car dealership has been suffering from dust on the cars in its lot ever since Mak opened his bakery nearby. The bakery's flour deliveries send waves of dust down the block. Junko offers to cover half of the cost of Mak adding a shelter for his delivery area to reduce the blowing of flour dust toward the dealership. This is an example of reducing a negative externality through: A. private bargaining. B. rules and regulations. C. cap and trade. D. corrective taxes and subsidies.

A. private bargaining.

(Figure: Supply Curves) The figure shows four different supply curves for four products: A, B, C and D. Which of the products has a perfectly inelastic supply curve? A. product A B. product B C. product D D. product C

A. product A

An equilibrium price is a price where the: A. quantity supplied equals the quantity demanded. B. quantity demanded no longer changes. C. amount that buyers are willing to buy is equal to the amount that buyers are able to buy. D. demand curve is identical to the supply curve.

A. quantity supplied equals the quantity demanded.

If a firm produces a product that has easily available variable inputs, its supply curve will be: A. relatively flat. B. perfectly elastic. C. relatively steep. D. perfectly inelastic.

A. relatively flat.

Malia earns a yearly salary of $130,000 in her job and earns $1,000 per year in interest on her savings. After she quits her job to start a company, she uses all her savings to purchase manufacturing equipment for her company. Given the above information and the data summarizing her first year in business in the table, how much economic profit or loss does Malia earn? A. $171,000 B. $19,000 C. $21,000 D. $219,000

B. $19,000

Figure: Profit Margin) What is the profit margin for this firm if it produces a quantity of six? A. $5 - $4 = $1 B. $7 - $4 = $3 C. $7 - $2 = $5 D. $5 - $2 = $3

B. $7 - $4 = $3

(Figure: MSC and Supply Curves) Use the graph to answer the question. The graph shows the marginal social cost curve and supply curve for Sasha's candy shop. When four units are sold, what is the relevant marginal cost for the community where Sasha produces and sells her candy? A. $12 B. $8 C. $4 D. $20

B. $8

(Figure: Market for Reusable Jute Shopping Bags) Refer to the market for reusable jute shopping bags that is shown in the figure. The original equilibrium price is $7 per bag. After the subsidy is implemented, the amount that sellers receive is: A. $5. B. $8. C. $6. D. $7.

B. $8.

The price of cakes rises by 15%. In response, the quantity supplied of cakes rises by 30%. The price elasticity of supply for cakes is: A. 0.33. B. 2. C. -0.5. D. 0.5.

B. 2.

(Table: Four Persons) The table lists the minutes that it will take four persons to wash a car and to sort and fold a load of laundry. Use the data to answer the question. Who has a comparative advantage in sorting and folding a load of laundry? A. Junko B. Asad C. Jen D. Jason

B. Asad

Which of the following goods would be nonrival? A. toothpaste B. an online course C. gasoline D. a candy bar

B. an online course

(Figure: Market 3) Use the graph to answer the question. The graph sbows the marginal social cost, demand, and supply curves in the cinnamon roll market. A corrective tax of _____ per unit will move the cinnamon roll market to the socially optimal output of _____ units. A. $3; 12 B. $2; 12 C. $2; 8 D. $4; 8

C. $2; 8

(Figure: Jane's Demand for Medication) It is mandatory for Jane to take several pills of a certain medication each day in order to remain healthy. The medication has no substitutes and is produced by only one pharmaceutical company. Which of the following demand curves represents Jane's demand for the medication? A. D B. B C. A D. C

C. A

Which of the following is a positive externality? A. Researchers develop a new drug that effectively treats a devastating disease that previously had no cure. B. After the price of dental care decreases, more people can afford regular dental check-ups. C. After measles vaccinations increase by 20%, the number of cases of measles falls by 35%. D. After a large stadium is built in a neighborhood, homeowner property values in the neighborhood fall because of noise and traffic.

C. After measles vaccinations increase by 20%, the number of cases of measles falls by 35%.

When trade is voluntary, who gains from it? A. Neither the seller nor the buyer gains, but society in general gains. B. Both the seller and the buyer must gain equal amounts. C. Both the seller and the buyer gain, although not necessarily equally. D. Either the seller or the buyer gains but not both.

C. Both the seller and the buyer gain, although not necessarily equally.

Which of the following is NOT used in identifying who has a comparative advantage in a particular task when multiple people can perform that task and another one? (Note: The tasks are not necessarily listed in chronological order.) A. Identify who has the lowest opportunity cost in performing the task. B. Identify how long it takes each person to perform each task. C. For each person, calculate the total time it takes to perform both tasks consecutively. D. For each person, calculate how much of the alternative task could have been done in the time it takes to perform the desired task.

C. For each person, calculate the total time it takes to perform both tasks consecutively.

Sarah Sandoval is a coffee farmer trying to decide how many tons of coffee to produce. She can sell each ton of coffee for $3,000. The cost of producing her first ton of coffee is $600, and the second ton costs $1,200. Each additional ton of coffee costs $600 more to produce. How many tons of coffee should Sarah produce, and what is the total cost of her coffee production? A. She will produce three tons at a total cost of $3,600. B. She will produce six tons at a total cost of $12,600. C. She will produce five tons at a total cost of $9,000. D. She will produce four tons at a total cost of $6,000.

C. She will produce five tons at a total cost of $9,000.

What happens to the equilibrium price and equilibrium quantity when demand and supply increase simultaneously, but the relative size of the shifts are not known? A. The equilibrium price rises, and the change in the equilibrium quantity is ambiguous. B. The equilibrium price falls, and the change in the equilibrium quantity is ambiguous. C. The equilibrium quantity rises, and the change in the equilibrium price is ambiguous. D. The equilibrium quantity falls, and the change in the equilibrium price is ambiguous.

C. The equilibrium quantity rises, and the change in the equilibrium price is ambiguous.

Which of the following statements is based on normative analysis? A. The temperature in the office room is 22 degrees centigrade. B. Mario is 24 years old. C. We should protect the environment. D. When the burner beneath a pot of water on the stove is turned on, the water will heat up.

C. We should protect the environment.

The market power of a firm is its: A. ranking based on units sold compared to other firms selling the same product. B. market share based on the percentage of total market revenue. C. ability to raise its price without losing many of its customers to competing businesses. D. ability to cause other firms in its market to drop out of the market.

C. ability to raise its price without losing many of its customers to competing businesses.

When a player's best response is to take a different (but complementary) action to the other player, then both participants are playing _____ game. A. a Coase equilibrium B. a strategic dilemma C. an anti-coordination D. a coordination

C. an anti-coordination

If Bishan wants to capitalize on comparative advantage in his life, then he should: A. compare his preferences to those of others and trade with those who like things he does not like. B. produce either goods or services but not both. C. do more of what he is relatively good at and then trade for other things. D. do more of what he has an absolute advantage in and trade for other things.

C. do more of what he is relatively good at and then trade for other things.

Good M has an income elasticity of demand of 0.5. Which of the following items is good M most likely to be? A. frozen pizza B. a low-cost brand of noodle C. electricity D. steak dinner at a relatively expensive restaurant

C. electricity

Countries benefit from trade by importing goods in which their opportunity costs are relatively _____ and exporting goods in which their opportunity costs are relatively _____. A. low; low B. low; high C. high; low D. high; high

C. high; low

(Figure: Market for Engines) Suppose that the world price of an engine is $800. According to the figure, the domestic total surplus _____ by _____ in the free-trade equilibrium relative to the no international trade equilibrium. A. decreases; $30,000 B. decreases; $60,000 C. increases; $30,000 D. increases; $60,000

C. increases; $30,000

(Figure: Demand Curves) The figure shows four different demand curves for four products: A, B, C and D. Which of the products has a perfectly elastic demand curve? A. product C B. product D C. product B D. product A

C. product B

(Figure: Demand Curve 3) Use the graph of a demand curve for jars of laundry detergent to answer the question. What is the total consumer surplus if 50 jars are sold at a price of $6? A. $750 B. $14 C. $700 D. $350

D. $350

(Figure: Market for Pants) According to the figure, if there is no international trade in this market, the value of the consumer surplus is: A. $1,600,000. B. $2,500,000. C. $1,250,000. D. $800,000.

D. $800,000.

You are given data on four products — toothpaste, shampoo, soap, and laundry detergent. The absolute value of the price elasticity of demand for toothpaste is 4. The absolute value of the price elasticity of demand for shampoo is 0.2. The absolute value of the price elasticity of demand for soap is 0.5. The absolute value of the price elasticity of demand for laundry detergent is 2. Which product has the most inelastic demand? A. soap B. toothpaste C. laundry detergent D. shampoo

D. shampoo

It is a rainy day, and you are considering taking an Uber one mile to meet some friends. You have decided you are willing to pay $20 to avoid getting wet from the rain. The trip would normally cost you $8, but due to the weather the surcharge is triple the regular cost. You should _____ because the benefit to you of taking the Uber is _____ than the cost. A. take an Uber; more B. walk; more C. take an Uber; less D. walk; less

D. walk; less

When there is free entry and exit of sellers in an industry, in the long run, sellers will have: A. enhanced market power. B. positive economic profits. C. economic losses. D. zero economic profits.

D. zero economic profits.

Fish farmers find that a form of bacteria is negatively affecting the reproductive capability of the fish in the fish farms. Which graph depicts what will happen in the market for farmed fish? Graph D Graph C Graph B Graph A

Graph C

These days people prefer electric vehicles over gasoline-powered vehicles. Which graph shows what will happen in the gasoline-powered vehicle market as a result of this? Graph B Graph D Graph C Graph A

Graph D

Use the table to answer the question.At what price does this market experience a shortage of 140 units? A. $5 B. $15 C. $13 D. $3

A. $5

(Table: Fazio and Gabriella's opportunity cost) The table provides data on how long it takes Fazio and Gabriella each to learn to play a particular new song on the piano and to complete a given person's tax return. Use the data to answer the question. Fazio's opportunity cost of completing tax returns is _____, and Gabriella's opportunity cost is _____. A. .5 of a new song learned; .8 of a new song learned B. nine hours; two hours C. two new songs learned; 1.25 new songs learned D. .8 of an hour; .5 of an hour

A. .5 of a new song learned; .8 of a new song learned

Which of the following is a FALSE statement about assigning work based on comparative advantage? A. Assign the person who is fastest or best at a task to do that task. B. The person who has absolute advantage in the task will sometimes be assigned to do it. C. Workers will be specialists and not generalists. D. The person with the lowest opportunity cost at a task should perform it.

A. Assign the person who is fastest or best at a task to do that task.

(Figure: Market for Roses) Which graph illustrates what will happen in the market for roses if the price of roses falls? A. Graph B B. Graph D C. Graph A D. Graph C

A. Graph B

Look at the chart which shows data for five different oatmeal cookie producers. Which sellers are NOT following the law of supply? A. Ken and Ben B. Len, Ren, and Jen C. Len, Ken, Ren, and Ben D. Ren only

A. Ken and Ben

Consider your decision to attend class each day or skip it. Which of the four core principles of economics applies to the notion that by attending class you are not doing the next best activity you would prefer to do, such as napping or going to the gym? A. Opportunity cost principle B. Cost-benefit principle C. Interdependence principle D. Marginal principle

A. Opportunity cost principle

San Francisco decides to remove a binding price ceiling on rail fares. Which of the following is likely to happen in the market? A. Overcrowding on trains will go down. B. The number of available trains will go down. C. The demand for train tickets will increase. D. Train tickets will become cheaper.

A. Overcrowding on trains will go down.

What happens to the equilibrium price and quantity when demand increases and simultaneously supply decreases, and the relative size of the shifts is not known? A. The equilibrium price rises, and the change in the equilibrium quantity is ambiguous. B. The equilibrium quantity rises, and the change in the equilibrium price is ambiguous. C. The equilibrium quantity falls, and the change in the equilibrium price is ambiguous. D. The equilibrium price falls, and the change in the equilibrium quantity is ambiguous.

A. The equilibrium price rises, and the change in the equilibrium quantity is ambiguous.

Lyft cuts the price of a ride in New York City by 10%. Thereafter, the quantity of rides demanded rises by 25%. What is the absolute value of the price elasticity of demand for Lyft rides? A. -0.4 B. 0.4 C. 2.5 D. -2.5

C. 2.5

Which of the following conditions is NOT present in perfect competition? A. The product price varies across the companies in the market. B. All companies in the market sell a small share of the total market output. C. There are many buyers and sellers in the market. D. All companies in the market sell identical goods.

A. The product price varies across the companies in the market.

Price is functioning as an incentive when a price change A. causes buyers and sellers to change their behavior. B. provides information about the state of the market. C. causes people to have higher incomes. D. communicates that the market is changing.

A. causes buyers and sellers to change their behavior.

As consumers consume more units of an item, the marginal benefit of each additional unit decreases at an increasing rate. This can be seen through: A. demand curves that are flatter at lower quantities and steeper at higher quantities. B. demand curves that are positively sloped. C. demand curves that are steeper at lower quantities and flatter at higher quantities. D. demand curves that are vertical.

A. demand curves that are flatter at lower quantities and steeper at higher quantities.

When people focus on their comparative advantage and then trade for other things, they: A. improve their standard of living or increase their leisure time. B. increase the time they spend working and reduce the variety in their consumption. C. focus their consumption on just a few things. D. have a lower standard of living than if they focused on their absolute advantage.

A. improve their standard of living or increase their leisure time.

Figure: Market) Refer to the graph. Suppose that a binding price floor of $35 is removed. The number of consumers who are able to purchase the product will: A. increase from 25 to 50. B. increase from 30 to 50. C. decrease from 40 to 35. D. decrease from 50 to 25.

A. increase from 25 to 50.

When the price elasticity of demand is _____ relative to the price elasticity of supply, then buyers bear _____ of the economic burden of a tax. A. large; a smaller share B .small; all C. small; none D. large; a bigger share

A. large; a smaller share

How do rice farmers in rural Indonesian villages figure out that they need to produce more rice when the demand for it has risen in other parts of the world? A. An increase in sales communicates to them that inventories are rising. B. An increase in the price of rice gives them a signal that rice is more valuable. C. A decrease in sales communicates to them that they need to advertise more. D. A decrease in the price of rice gives them a signal that there is insufficient quantity.

B. An increase in the price of rice gives them a signal that rice is more valuable.

(Figure: Market for Train Rides) Use the figure below to answer the question. A major technological advancement occurs in transportation technology, which leads to faster and more efficient train systems. Which graph depicts the effect on the supply of train rides? A. Graph B B. Graph D C. Graph C D. Graph A

B. Graph D

Which of the following describes when a first-mover advantage can happen? A. It occurs when a player makes the move that the other player had announced intentions to make. B. It occurs when a player preemptively commits to an aggressive position, and the other player's best response will be less aggressive. C. It occurs when a player chooses their best response before the other player chooses, regardless of how this impacts the other player's options. D. It occurs when a player chooses an option that the other player would not expect, taking the second player by surprise.

B. It occurs when a player preemptively commits to an aggressive position, and the other player's best response will be less aggressive.

Why is a "Nash equilibrium" called an equilibrium? A. Costs are minimized, and profits are maximized. B. No players can do better by changing his or her own choice alone, so the situation is relatively stable. C. It overcomes market failure to provide the optimum social welfare outcome. D. The market is at maximum profits, with quantity demanded equal to supply.

B. No players can do better by changing his or her own choice alone, so the situation is relatively stable.

How are people affected when economic efficiency increases? A. Dissatisfaction is a risk because the higher output will be spread across a larger number of people. B. Overall gains exceed any change in costs, but some people may be worse off. C. Efficiency squeezes people, so they end up worse off. D. Everyone will be better off and happier.

B. Overall gains exceed any change in costs, but some people may be worse off.

Which of the following will NOT happen if a country increases trade based on comparative advantage? A. Production in the country will become more specialized. B. Some countries involved in the trade will have a loss in welfare. C. Some industries will grow, and others will shrink. D. Overall, the country will have an increase in welfare.

B. Some countries involved in the trade will have a loss in welfare.

Which of the following is an example of a quota? A. The United States sets a limit on how many firms can operate in the market for cell phones. B. The United States limits the number of immigrants allowed to enter the country. C. The United States sets a minimum or maximum price that can be charged for baked goods. D. The United States imposes a regulation requiring consumers to be licensed before buying pens.

B. The United States limits the number of immigrants allowed to enter the country.

Joshua Murphy is planning on studying late into the night for his economics exam. How many cups of coffee should he buy tonight? Joshua should keep buying coffee throughout the evening until the marginal: A. cost of purchasing one more coffee is positive. B. benefit of purchasing one more coffee equals the marginal cost. C. benefit of purchasing one more coffee is less than the marginal cost. D. benefit of purchasing one more coffee is positive.

B. benefit of purchasing one more coffee equals the marginal cost.

According to the interdependence principle, when faced with a decision, you should ask what A. else might my decision affect? B. else might my decision affect and what else might affect my decision? C. past decisions might my decision affect? D. else might affect my decision?

B. else might my decision affect and what else might

When government regulations are influenced by lobbyists for the producers in a market, the regulations often: A. reduce costs of production, increasing competitive pressures. B. make it more difficult for new producers to enter the market. C. are biased in favor of consumer safety. D. raise market demand.

B. make it more difficult for new producers to enter the market.

A second-mover advantage is the: A. change in options that occurs after one player has made a choice. B. strategic advantage that can follow from taking an action that adapts to your rival's choice. C. second player's offsetting of any gains to the first mover by pruning. D. reduced set of options that must be considered in making a choice.

B. strategic advantage that can follow from taking an action that adapts to your rival's choice.

(Figure: Market for TVs 2) Suppose that the world price of TVs is $400, and the government imposes a $100 tariff. According to the figure, the tariff causes total surplus to decrease by: A. $4,500,000. B. $6,000,000. C. $1,500,000. D. $3,000,000.

C. $1,500,000.

Use the table, with data for Bella and Martin, to answer the question. If Bella and Martin collude, then Bella's price will be _____, and Martin's price will be _____. A. $55; $35 B. $40; $50 C. $55; $50 D. $40; $35

C. $55; $50

The United Kingdom plans to end the use of gas-powered and diesel-powered cars by the year 2040. At the same time, car manufacturers, such as General Motors and Nissan, are increasing the number of electric car models they produce. Based on this information, which of the following statements is/are correct? (i) If the supply of new electric cars is greater than the demand for new electric cars, then the price of electric cars will fall in the future. (ii) The demand for gasoline will fall in the future. (iii) The demand for electricity will rise in the future.(iv) The demand for diesel will rise in the future. A. only (i) B. (ii) and (iv) C. (i), (ii), and (iii) D. (i) and (ii)

C. (i), (ii), and (iii)

Amal gives up a salary of $80,000 per year to start his company. He invests $50,000 of his savings in his company, savings that had been earning him $4,000 per year in interest. During Amal's first year in business, total revenue is $300,000, and his explicit financial costs are $225,000. What is Amal's economic profit from his first year in business? A. $71,000 B. $75,000 C. -$9,000 D. -$59.000

C. -$9,000

The price of milk at the local grocery store is cut by 10%. The quantity of milk demanded increases by 5% in response to this price cut. What is the absolute value of the price elasticity of demand for milk? A. -2 B. 2 C. 0.5 D. -0.5

C. 0.5

(Figure: Labor Market) Refer to the labor market shown here. Suppose a minimum wage of $18 per hour is introduced. After the implementation of the minimum wage, _____ workers are hired. A. 30,000 B. 20,000 C. 24,000 D. 18,000

C. 24,000

(Figure: Market for TVs 2) The world price of TVs is $500, and the government imposes a $100 tariff. According to the figure, domestic consumers purchase _____ units from domestic producers and _____ units from foreign producers after the tariff. A. 40,000; 0 B. 60,000; 40,000 C. 60,000; 0 D. 40,000; 40,000

C. 60,000; 0

(Figure: Market for TVs 2) According to the figure, if there is international trade in this market, and the world price of televisions is $500, the quantity demanded is _____, and the quantity supplied is _____ at the world price. A. 40,000; 70,000 B. 80,000; 20,000 C. 70,000; 40,000 D. 20,000; 80,000

C. 70,000; 40,000

_____ is estimated by asking: "What is the _____ I am willing to pay to get this benefit (or avoid that cost)?" A. Opportunity cost; least B. Opportunity cost; most C. Willingness to pay; most D. Willingness to pay; least

C. Willingness to pay; most

The cross-price elasticity of demand measures how responsive the: A. supply of one good is to a change in the price of another good. B. demand for one good is to a change in the demand for another good. C. demand for one good is to a change in the price of another good. D. price of a good is to a change in the price of another good.

C. demand for one good is to a change in the price of another good.

The graph show the marginal social benefit, demand, and supply curves in the milkshake market. Market forces would yield a quantity of _____ and a price of _____ in the milkshake market. A. 16; $4 B. 12; $3 C. eight; $2 D. 12; $1

C. eight; $2

When a seller raises the switching costs of its customers: A. the seller's costs of production switch between custom production and mass production as the number of customer changes. B. it attracts customers by having a low initial price, but then customers must pay extra when they actually switch the product on to use it. C. its customers find it difficult or costly to switch to a different seller of the product. D. customers are discouraged from using the company's product because the company keeps creating new versions of the product.

C. its customers find it difficult or costly to switch to a different seller of the product.

Which of the following is an argument for limiting international trade? An increase in international trade may: A. reduce specialization, which has national security benefits. B. lead to economic growth, stemming from specialization. C. lead to anticompetitive practices, such as dumping. D. reduce the amount of outsourcing by domestic firms.

C. lead to anticompetitive practices, such as dumping.

The strong incentive of sellers to deter the entry of new sellers is a major reason that: A. average costs are higher than necessary in the long run. B. deterrence strategies are rarely used. C. most markets are imperfectly competitive. D. product differentiation is rare.

C. most markets are imperfectly competitive.

What happens to the equilibrium price and quantity when demand decreases and at the same time supply increases, and the demand shift is relatively smaller than the supply shift? A. The equilibrium price rises, and the equilibrium quantity falls. B. Both the equilibrium price and quantity will rise. C. Both the equilibrium price and quantity will fall. D. The equilibrium price falls, and the equilibrium quantity rises.

D. The equilibrium price falls, and the equilibrium quantity rises.

According to the Profit maximizing Rule for Sellers, this company should produce ____ of output and charge a price of _____. A. one unit; $300 B. four units; $150 C. two units; $200 D. three units; $200

C. three units; $200

Two products have a cross-price elasticity of demand of 1.5. Based on this value of cross-price elasticity, which of the following products are they most likely to be? A. a brand of hot dog and a brand of hot dog bun B. a brand of tea and a brand of sugar C. two competing brands of soft drinks D. a brand of juice and a brand of computer

C. two competing brands of soft drinks

A nonrival good is a good: A. where the market has only one producer, so the producer does not face any rival suppliers. B. in which only one version is available, so consumers do not have choices, although there are many sellers. C. where one person's use of the good does not reduce another person's ability to use the same unit of the good. D. that someone cannot be easily excluded from using.

C. where one person's use of the good does not reduce another person's ability to use the same unit of the good.

Jonathan's income falls by 15%. He decides to cut down his purchases of high-end restaurant meals by 20%. His income elasticity of demand for high-end restaurant meals is: A. 0.75. B. -1.33. C. -0.75. D. 1.33.

D. 1.33.

(Market 6) Use the graph to answer the question. The graph shows the marginal social benefit, marginal private benefit, and marginal private curves in the taco market. If market forces prevail, output will be _____, and the price will be _____. A. 6; $4 B. 6; $9 C. 9; $6 D. 4; $6

D. 4; $6

(Figure: Market for Engines) According to the figure, if there is international trade in this market, and the world price of an engine is $800, the quantity demanded is _____, and domestic suppliers will sell _____ units to domestic consumers. A. 800; 500 B. 800; 800 C. 500; 800 D. 500; 500

D. 500; 500

(Figure: Demand and Average Cost Curves) Which of the following diagrams represents the demand and average cost curves of a firm in the long run, given free entry and exit? A. Firm B B. Firm A C. Firm C D. Firm D

D. Firm D

Which of the following scenarios does not illustrate the law of demand? A. When Kit-Kats are cheaper, Mary opts to buy more Kit-Kats. B. Layla buys less tea when the price of tea rises. C. Darren buys two pairs of jeans when they are $40 each, but only one pair when it is $60. D. Freya buys more doughnuts when the price of doughnuts is higher.

D. Freya buys more doughnuts when the price of doughnuts is higher.

(Figure: Butter and Jam) Some people like to eat jam and butter sandwiches, and for them, these two foods are complementary goods. For these people, which of the graphs illustrates the impact of a fall in the price of butter on the jam market? A. Graph C B. Graph A C. Graph D D. Graph B

D. Graph B

Jane is one of 10 chiropractors in her city. Demand for chiropractic services is low enough that all chiropractors in the city are suffering losses. After three chiropractors close their practices, which of the following changes does Jane's practice NOT experience? A. It sells more chiropractic services. B. Its demand curve shifts to the right. C. Its price falls. D. It loses market power.

D. It loses market power.

Ari owns a hair salon in a small city. Which of the following is NOT an effect that the opening of new hair salons in her city will have on her salon? A. Its profit will decrease. B. The quantity it sells will decrease. C. It will have less market power. D. Its cost curves will shift upward.

D. Its cost curves will shift upward.

Use the table, with data for Gizelle and Devin, to answer the question Use the check mark method to determine which cell, if any, has a Nash equilibrium, and then choose the correct description. A. The Nash equilibrium is Gizelle earning profit of $1,000 and Devin earning profit of $5,000. B. The Nash equilibrium is Gizelle earning profit of $6,000 and Devin earning profit of $1,000. C. The Nash equilibrium is Gizelle earning profit of $5,000 and Devin earning profit of $4,000. D. The Nash equilibrium is Gizelle earning profit of $3,000 and Devin earning profit of $2,500.

D. The Nash equilibrium is Gizelle earning profit of $3,000 and Devin earning profit of $2,500.

Suppose that you have a pumpkin stall at a farmer's market, and the Halloween season arrives. You know that your customers will want to buy many pumpkins to decorate their houses and make pumpkin pies. Which of the following is a likely result of this scenario? A. You will wind up with many unsold pumpkins. B. You will take fewer pumpkins to the market to sell. C. You will be able to sell only the highest-quality pumpkins. D. You can charge a higher price per pumpkin.

D. You can charge a higher price per pumpkin.

Use the table, with data for Rocky and Tina, to answer the question. Both Tina and Rocky are ready to buy new phones. The accessories are things like cables. What is the term for the type of game Tina and Rocky are playing? A. an anti-coordination game B. a one-shot game C. a single equilibrium game D. a coordination game

D. a coordination game

Demand is more elastic when you are shopping in Walmart than when you shop at a small convenience store because: A. necessities have less elastic demand. B. specific brands tend to have more elastic demand than categories of goods. C. consumer search makes demand more elastic. D. more competing products means greater elasticity.

D. more competing products means greater elasticity.

If an item is a necessity rather than a luxury, its demand curve will be: A. perfectly inelastic. B. relatively flat. C. perfectly elastic. D. relatively steep.

D. relatively steep.