ECON 201

If goods X and Y are complements, an increase in the price of Y will cause
a. an increase in the demand for X
b. a decrease in demand for X
c. an increase in th supply of X
d. a decrease in the supply of X

A technological advance will cause
a. an increase in demand and a decrease in equilibrium price
b. a decrease in demand and an increase in equailibrium price
c. an increase in supply and a decrease in equailibrium price
d. a decrease in supply and an increase in equailibrium price

An increase in supply will cause
a. an increase in equilibrium price and quantity
b. a decrease in equilibrium price and quantity
c. a decrease in equilibrium price and increase in equailibrium quantity
d. an increase in equilibrium price and decrease in equilibrium quantity

A tax on the proucers of a product will cause the suply curve to
a. shift left resulting in an increase in price
b. shift right resulting in a decrease in price
c. shift left resulting in an decrease in price
d. shift right resulting in an increase in price

A decrease in demand will cause
a. an increase in equilibrium price and quantity
b. a decrease in equilibrium price and quanitity
c. an increase in equilibrum price and decrease in equilibrium quanitity
d. a decrease in equilibruim price and increase in equilibrium quantity

A decrease in demand and decrease in supply will cause
a. equilibrium price to rise, but equilibrium quantitiy could rise, fall, or remain unchanged
b. equilibrium price to fall, but equilibrium quantity could rise, fall, or remain unchanged
c. equilibrium quantity to rise, but equilibrium price could rise, fall, or remain unchanged
d. equilibrium quanitity to fall, but equailibrium price could rise, fall, or remain unchanged

If a good is a normal good and consumer' incomes increase, then
a. the price of the good will increase and quantity will decrease
b. the price of the good will decrease and quantity will increase
c. the price of the good will decrease and quantity will decrease
d. the price of the good will increase and quantity will increase

If goods X and Y are substitutes
a. income elasticity is positive
b. income elasticity is negative
c. cross price elasticity is positive
d. cross price elasticity is negative

If the income elasticity for goods X and Y is positive
a. they are complements
b. they are substitutes
c. they are inferior goods
d. they are normal goods

If the demand for good X is elastic, a 10%increase in the price of X will cause the quantity demanded for good X to
a. remain unchanged
b. decrease by 10%
c. decrease by less than 10%
d. decrease by more than 10%

If the elasticity of demand for good X is .5 a decrease in the price of good X by 20% will cause the quantity demanded of good X to
a. increase by 20%
b. increase by 2.5%
c. increase by 10%
d. increase by 50%

If demand is elastic, an increase in price will cause
a. total revenue to increase
b. total revenue to decrease
c. quantity demanded to increase by a smaller percent
d. marginal utility to decrease

If the price of a product increases and total revenue stays the same
a. demand is elastic
b. demand is inelastic
c. demand is unitary elastic
d. the good is an inferior good

A perfectly elastic demand curve
a. has an elasticity of zero
b. has an elasticity of one
c. is horizontal
d. is vertical

If the price of a product is held below its equilibrium level the result will be
a. a shortage
b. a surplus
c. economics of scale
d. diseconomics of scale

Consumer surplus is the
a. area under the demand curve above the price paid
b. area under the price paud above the demand cuve
c. area under the supply curve above the price paid
d. area above the supply curve below the price paid

Total product
a. first increases and then decreases
b. first decreases and then increases
c. first increases at an increasing rate and then increases at a decreasing rate
d. first increases at a decreasing rate and then increases at an increasing rate

Average product is
a. the amount by which total product increases when one additional unit of a resource is employed
b. total product per unit of input employed
c. the amount by which total cost increases when one additional unit of output is produced
d. total cost per unit of output produced

When marginal product is greater than average product
a. average product is increasing
b. average product is decreasing
c. average product is at its maximum
d. average product is at its minimum

Short run total variable cost
a. at first increases at a decreasing rate and then increases at an increasing rate
b. at first increses at an increasaing rate and then increases at a decreasing rate
c. decreases constantly as more output is produced
d. at forst increases and then decreases as more output is produced

Marginal product decreases because of
a. economes of scale
b. diseconomies of scale
c. the law of diminishing returns
d. decreasing marginal utility

When marginal cost is above average cost
a. average cost is increasing
b. average cost is decreasing
c. total cost is decreasing
d. average fixed cost is increasing

Short run marginal costs are U-shaped because of
a. diminising marginal utility
b. economies and dieconomies of scale
c. the law of diminishing returns
d. external costs and benefits

For a competitive firm
a. price is equal to marginal revenue
b. price is greater than marginal revenue
c. price is less than marginal revenue
d. price is first less than marginal revenue and then greater than marginal revenue

If a firm shuts down in the short run
a. it will loose an amount greater than its total fixed costs
b. it will loose an amount less than its total fixed costs
c. it will loose an amount equal to its total fixed costs
d. it will loose an amount equal to its total variable costs

A firm will make economic losses in the short run if
a. price is below marginal revenue
b. price is below average total cost
c. price is below total fixed cost
d. price is below total variable cost

To maximise profits or minimize losses a firm will produce the level of output for which
a. marginal revenue equals marginal cost
b. average revenue equals average variable sosy
c. marginal reveneu equals average variable cost
d. average revenue equals marginal revenue

A firm making losses in the short run will stay open if
a. those losses are greater than total fixed costs
b. price is greater than average variabele cost
c. price is less than average variable cost
d. price is less than marginal revenue

Long run average costs may decrease because of
a. economies of sclae
b. diminishing marginal utility
c. the law of diminishing returns
d. external costs

In a constant cost industry
a. the long run supply curve is horizontal
b. the long run supply curve is upward sloping
c. the long run supply curve is downward sloping
d. cost increase because of externalities

In long run equilibrium in a competitive market firms will operate where
a. average total cost is minimum
b. average variable cost is minimum
c. average fixed cost is minimum
d. marginal cost is minimum

Resources are efficiently allocated among alternative uses when
a. price equals marginal revenue
b. price equals average revenue
c. price equals average variable cost
d. price equals marginal cost

A competitive firm's short run supply curve is
a. that portion of its average total costs cive which lies above marginal cost
b. that portion of its marginal cost curve which lies above average variable cost
c. that portion of its marginal cost cuve which lies above average total cost
d. that portion of its average variable cost cive which lies above marginal cost

Short run average fixed costs
a. decrease as more output is produced
b. increase as more output is produced
c. at first increase then decrease as more output is produced
d. at first decrease and the increase as more output is produced

If the firms in a competitive industry are making economic losses, in the long run
a. new firms will enter the market causing the losses to increase
b. new firms will enter the market causing the losses to decrease
c. first will leave the market causing the losses to increase
d. first will leave the market causing the losses to decrease

In the short run as more of a variable resource is employed with a fixed resouce
a. at first total output increases at an increasing rate and then increases at a decreasing rate
b. at first total output increases at a decreasing rate and then increases at an increasing rate
c. total output at first increases and then decreases
d. total output at first decreases and then increases

As more of a product is consumed
a. Total utility increases and marginal utility increases
b. Total utility increases and marginal utility decrease
c. Total utility decreases and marginal utility increases
d. Total utility decreases and marginal utility decreases

To maximixe utility consumers will choose the amount of goods X and Y for which
a. MUx = MUy
b. MUx = Px
c. MUx/Px = MUy/Py
d. Px = Py

The minimum point of the marginal cost cuve occurs at the same level of output as
a. the minimum point of the average fixed cost curve
b. the minimum point of the average variable cost curve
c. the minimum point of the average total cost curve
d. the maximum point of the marginal product curve

When the marginal product curve is rising, the
a. average product curve is falling
b. average fixed costs curve is rising
c. average total cost curve is rising
d. marginal cost curve is falling

An increasing cost industry is one in which
a. there are dieconomies of scale
b. the law of dminishing returns operates
c. marginal utility decreases
d. as new firms enter in the long run they create enough of an increased demand for resources used in that industry that costs of production increase

To maximize profits a monopoly will produce the level of output for which
a. marginal revenue equals marginal cost
b. marginal revenue equals price
c. marginal revenue equals average cost
d. marginal revenue equals average revenue

The economic objection to monopoly is that a monopoly will
a. engage in price discrimination
b. be guaranteed to make profits
c. charge the highest price it can get
d. charge a price greater than marginal cost

For a monopoly
a. price and marginal revenue are both decerasing as more output is produced
b. price and marginal revenue are both increasing as more output is produced
c. price is first less than marginal revenue and then greater than marginal revenue
d. price is first greater than marginal revenue and then less than marginal revenue

For a single-price monopoly
a. marginal cost is greater than average cost
b. marginal cost is less than average cost
c. price is greater than marginal revenue
d. price is less than marginal revenue

If a monopoly's demand and costs are the same as in a competitive market
a. the monopolist will produce a larger output and charge a higher price
b. the monopolist will produce a smaller output and charge a lower price
c. the monopolist will produce a smaller output and charge a higher price
d. the monopolist will produce a larger output and charge a lower price

Resourced are not efficiently allocated under monopoly because the monopolist produces a level of output for which
a. price is greater than marginal cost
b. price is less than marginal cost
c. price is greater than average revenue
d. price is less than average revenue

If there are such extensive economies of scale that only one firm can profitably exist in a market there will be
a. price discrimination
b. natural monopoly
c. monopolistic competition
d. oligopoly

If a monopolist engages in price discrmination it will
a. charge a higher price for each additional unit a customer buys
b. assume rivals match price devreases
c. charge a higher price to customers with a more elastic demand
d. charge a higher price to customers with a more inelastic demand

If a monopolist engages in perfect price discrimination it will
a. produce a level of output greater than a single-price monopolist
b. produce a level of output less than a single-price monopolist
c. produce a level of output equal to a single-price monopolist
d. produce a level of output less than would be produced under competition

In regulations to deal with natural monopoly
a. the socially optimal price is equal to marginal cost
b. the fair retun price is equal to marginal cost
c. the socially optimal price is equal to average cost
d. the fair retun price is equal to marginal revenue

In regulations to deal with a natural monopoly
a. the fair return price resuslts in osses which have to be subsidized
b. the socially optimal price results in losses which have to be subsidiced
c. the socialy optimal price leaves some amount of resource misallocation
d. the fair return price results in extra normal profits

Oligopoly is characterized by
a. price discrimination
b. only a few firms so that there is an interdependence among them
c. a large number of firms producing differentiated products
d. a large number of firms producing a standardized product

In monopolistic competition in long run equilibrium
a. price equals average total cost
b. price is greater than minimum average total cost
c. price is greater than marginal cost
d. all of the above

In the kinked demand curve theory of oligopoly firms assume that
a. rivals will match price decreases
b. rivals will ignore price decreases
c. the other firms in the collusoon are likely to cheat
d. their actions have no perceivable effect on their rivals

A market sharing agreement is
a. used to regulate a natural monopoly
b. frequently used in advertisiing in a monopolistic competitive markets
c. used by a monopoly when engaging in price discrimination
d. an effective policing arrangement to stabilize a collusion

The antitrust law which made monopoly illegal was the
a. Sherman Act section 1
b. Sherman Act section 2
c. Clayton Act
d. Federal Trade Commission Act

The antitrust law which deals with price discrimination is the
a. Wheeler Lea Act
b. Federal Trade Commission Act
c. Sherman Act
d. Robinson Patman Act

Tying arrangements are addressed by the
a. Sherman Act section 1
b. Sherman Act section 2
c. Clayton Act
d. Federal Trade Commission Act

A collusion among the firms in an oligopolistic market is likely to be unstable because
a. the firms will each assume that rivals will match price increases
b. the firms will each assume that rivals will ignore price increases
c. the firms will each have a tendency to cheat on the agreement
d. the firms will each operate at the minimum average cost

The dilemma of regulating a natural monopoly is due to the fact that
a. the point where price equals marginal cost is above average cost
b. the point where price equals marginal cost is below average cost
c. the point where price equals average cost is below marginal cost
d. the point where price equals marginal cost is also equal to average cost

The Standard Oil antitrust case is noteworthy because the company
a. was found guilty of collusion
b. was found guilty of monopoly for noncompetitive pricing practices wuch as predatory pricing
c. was found not guilty because it achieved its large market share through efficient operations

The Alcoa antitrust case is noteworthy because the company
a. was found guilty of collusion
b. was found guilty of monopoly for noncompetitive pricing practices such as predatory pricing
c. was found not guilty because it achieved its large market share through efficient operations
d. was found guilty despite the fact that it has achieved its large market share through efficient operations

The Coase Theorem has to do with
a. antitrust policy
b. price discrimination
c. externalities
d. natural monopoly

External benefits will cause the private market to produce a level of output
a. greater than the socially optimal level of output
b. less than the socially optimal level of output
c. equal to the socially optimal level of output
d. equal to the level of output produced under perfect price discrimination

An increase in costs of production will
a. increase demand
b. decrease demand
c. increase supply
d. decrease supply

If an decrease in consumer's incomes result in a increase in demand for a good, then the good is a
a. normal good
b. inferior good
c. substitute good
d. complementary good

If the demand for a product is inelastic, then
a. an increase in price results in no change in quantity demanded
b. an increase in price results in a decrease in quantity demanded by a greater percent
c. an increase in price results in a decrease in quantity demanded by a smaller percent
d. an increas ein price results in no change in total revenue

If a specific excise tax is placed on the sellers of a product
a. more of the tax will be passed on to consumers in the form of a higher price when the consumers' demand is more elastic
b. more of the tax will be passed on to consumers in the form of a higher price when the consumers' demand is more inelastic
c. all of the tax will be passed on to consumers in the form of a higher price when the consumers' demand perfectly elastic
d. none of the tax will be passed on to consumers in the form of a higher price when the consumers' demand perfectly inelastic

If Commonwealth Edison regularly asks the Illinois Commerce Commission to approve an increase in its electric utility rates, the demand for electricity must be
a. elastic
b. inelastic
c. unitary
d. decreasing

The demand for a product is likely to be more elastic
a. the more the good is considered a necessity
b. the less time the consumer has to adjust to changes in price
c. the fewer good substitutes there are for the product
d. the greater the proportion of income consumers spend on the good

The shortage which results from a price ceiling will be greater
a. when the demand is more elastic
b. when the demand is more inelastic
c. when the demand is unitaty elastic
d. when the supply is more inelastic

If demand decreases and supply increases, equilibrium quantity will
a. decrease if demand decreases more than supply increases
b. decrease if demand decreases less than supply increases
c. decrease if demand decreases the same amount as supply increases
d. all of the above

If demand decreases and supply increases, equilibrium price will
a. decrease if demand decreases more than supply increases
b. decrease if demand decreases less than supply increases
c. decrease if demand decreases there same amount as supply increases
d. all of the above