question
For each bottle of wine that Italy produces, it gives up the opportunity to make 10 pounds of
cheese. France can produce 1 bottle of wine for every 25 pounds of cheese it produces. Which
of the following is true about the comparative advantage between the two countries?
A) France has the comparative advantage in wine and cheese.
B) Italy has the comparative advantage in wine.
C) Italy has the comparative advantage in cheese.
D) France has the comparative advantage in wine.
cheese. France can produce 1 bottle of wine for every 25 pounds of cheese it produces. Which
of the following is true about the comparative advantage between the two countries?
A) France has the comparative advantage in wine and cheese.
B) Italy has the comparative advantage in wine.
C) Italy has the comparative advantage in cheese.
D) France has the comparative advantage in wine.
answer
B
question
Ranchers can raise either cattle or sheep on their land. Which of the following would cause the
supply curve of sheep to shift to the right?
A) a decrease in the price of cattle
B) an increase in the demand for cattle
C) an increase in the price of sheep feed
D) an increase in the price of sheep
supply curve of sheep to shift to the right?
A) a decrease in the price of cattle
B) an increase in the demand for cattle
C) an increase in the price of sheep feed
D) an increase in the price of sheep
answer
A
question
If an increase in income leads to a decrease in the demand for popcorn, then popcorn is
A) a necessity.
B) an inferior good.
C) a neutral good.
D) a normal good.
A) a necessity.
B) an inferior good.
C) a neutral good.
D) a normal good.
answer
B
question
Which of the following would cause a decrease in the equilibrium price and an increase in the
equilibrium quantity of salmon?
A) an increase in supply
B) an increase in supply and an increase in demand greater than the increase in supply
C) a decrease in demand and a decrease in supply
D) a decrease in demand and an increase in supply
equilibrium quantity of salmon?
A) an increase in supply
B) an increase in supply and an increase in demand greater than the increase in supply
C) a decrease in demand and a decrease in supply
D) a decrease in demand and an increase in supply
answer
A
question
The law of demand implies, holding everything else constant, that
A) as the price of bagels increases, the quantity of bagels demanded will increase.
B) as the price of bagels increases, the demand curve for bagels will shift to the left.
C) as the price of bagels increases, the quantity of bagels demanded will decrease.
D) as the price of bagels increases, the demand for bagels will increase.
A) as the price of bagels increases, the quantity of bagels demanded will increase.
B) as the price of bagels increases, the demand curve for bagels will shift to the left.
C) as the price of bagels increases, the quantity of bagels demanded will decrease.
D) as the price of bagels increases, the demand for bagels will increase.
answer
C
question
If the Apple iPad and the Samsung Galaxy Tab are considered substitutes, then, other things
equal, an increase in the price of the iPad will
A) increase the quantity demanded for the iPad.
B) decrease the demand for the iPad.
C) increase the quantity demanded for the Galaxy Tab.
D) increase the demand for the Galaxy Tab.
equal, an increase in the price of the iPad will
A) increase the quantity demanded for the iPad.
B) decrease the demand for the iPad.
C) increase the quantity demanded for the Galaxy Tab.
D) increase the demand for the Galaxy Tab.
answer
D
question
An advantage of imposing a tax on the producer that generates pollution is that
A) it forces the polluting producer to internalize the external cost of the pollution.
B) the government can keep tabs on exactly what is produced in an industry.
C) a producer can pass the cost of the pollution to consumers.
D) it will eliminate pollution.
A) it forces the polluting producer to internalize the external cost of the pollution.
B) the government can keep tabs on exactly what is produced in an industry.
C) a producer can pass the cost of the pollution to consumers.
D) it will eliminate pollution.
answer
A
question
Which of the following displays these two characteristics: rivalry and nonexcludability?
A) a public good
B) a private good
C) a common resource
D) a quasi-public good
A) a public good
B) a private good
C) a common resource
D) a quasi-public good
answer
C
question
When a negative externality exists, the private market produces
A) more than the economically efficient output level.
B) products at a high opportunity cost.
C) products at a low opportunity cost.
D) less than the economically efficient output level.
A) more than the economically efficient output level.
B) products at a high opportunity cost.
C) products at a low opportunity cost.
D) less than the economically efficient output level.
answer
A
question
Which of the following activities create a negative externality?
A) cleaning up the sidewalk on your block
B) repainting the house you live in to improve its appearance
C) graduating from college
D) keeping a junked car parked on your front lawn
A) cleaning up the sidewalk on your block
B) repainting the house you live in to improve its appearance
C) graduating from college
D) keeping a junked car parked on your front lawn
answer
D
question
Which of the following exemplifies the tragedy of the commons?
A) Residents on the northern coast of California receive only one public broadcasting signal
which may be eliminated altogether if government funding is cut.
B) The Malaysian tapir, distinguished for its unusual coloration, is a target for poachers who
hunt it for its tough and leathery hide.
C) Canadian citizens receive free universal health care administered by provincial
governments.
D) The Pleasant Hill community is growing so fast that the cityʹs only post office is not able
to keep pace with the population growth in the community.
A) Residents on the northern coast of California receive only one public broadcasting signal
which may be eliminated altogether if government funding is cut.
B) The Malaysian tapir, distinguished for its unusual coloration, is a target for poachers who
hunt it for its tough and leathery hide.
C) Canadian citizens receive free universal health care administered by provincial
governments.
D) The Pleasant Hill community is growing so fast that the cityʹs only post office is not able
to keep pace with the population growth in the community.
answer
B
question
For people who live near a bus route, a subway station, or a commuter rail line, public
transportation provides a substitute to driving their own cars. So, for these people, the
cross-price elasticity of demand between gasoline and public transportation is
A) negative.
B) zero.
C) infinity.
D) positive.
transportation provides a substitute to driving their own cars. So, for these people, the
cross-price elasticity of demand between gasoline and public transportation is
A) negative.
B) zero.
C) infinity.
D) positive.
answer
D
question
Suppose the value of the price elasticity of supply is 4. What does this mean?
A) A 1 percent increase in the price of the good causes the supply curve to shift upward by 4
percent.
B) For every $1 increase in price, quantity supplied increases by 4 units.
C) A 1 percent increase in the price of the good causes quantity supplied to increase by 4
percent.
D) A 4 percent increase in the price of the good causes quantity supplied to increase by 1
percent
A) A 1 percent increase in the price of the good causes the supply curve to shift upward by 4
percent.
B) For every $1 increase in price, quantity supplied increases by 4 units.
C) A 1 percent increase in the price of the good causes quantity supplied to increase by 4
percent.
D) A 4 percent increase in the price of the good causes quantity supplied to increase by 1
percent
answer
C
question
With the increased usage of cell phone services, what has happened to the price elasticity of
demand for land-line telephone services?
A) It has become more income elastic.
B) The absolute value of the price elasticity coefficient has probably gone down.
C) It has become more price elastic.
D) It has become more price inelastic.
demand for land-line telephone services?
A) It has become more income elastic.
B) The absolute value of the price elasticity coefficient has probably gone down.
C) It has become more price elastic.
D) It has become more price inelastic.
answer
C
question
Which of the following statements is true about the price elasticity of demand along a
downward sloping linear demand curve?
A) It is unit-elastic throughout the demand curve.
B) It is inelastic at high prices and elastic at low prices.
C) It is elastic at high prices and inelastic at low prices.
D) It is perfectly elastic at very high prices and perfectly inelastic at very low prices.
downward sloping linear demand curve?
A) It is unit-elastic throughout the demand curve.
B) It is inelastic at high prices and elastic at low prices.
C) It is elastic at high prices and inelastic at low prices.
D) It is perfectly elastic at very high prices and perfectly inelastic at very low prices.
answer
C
question
Consider a demand curve that has a constant elasticity value of 0. What happens to quantity
demanded and total revenue when price increases?
A) The quantity demanded does not change but total revenue decreases.
B) The quantity demanded does not change but total revenue increases.
C) The quantity demanded and total revenue fall to zero.
D) The quantity demanded and total revenue remain the same.
demanded and total revenue when price increases?
A) The quantity demanded does not change but total revenue decreases.
B) The quantity demanded does not change but total revenue increases.
C) The quantity demanded and total revenue fall to zero.
D) The quantity demanded and total revenue remain the same.
answer
B
question
Price elasticity of demand measures
A) how responsive sales are to a change in buyersʹ incomes.
B) how responsive sales are to changes in the price of a related good.
C) how responsive quantity demanded is to a change in price.
D) how responsive suppliers are to price changes.
A) how responsive sales are to a change in buyersʹ incomes.
B) how responsive sales are to changes in the price of a related good.
C) how responsive quantity demanded is to a change in price.
D) how responsive suppliers are to price changes.
answer
C
question
Which of the following products comes closest to having a perfectly inelastic demand?
A) iPhones
B) bus rides
C) gasoline
D) cholesterol medication in general
A) iPhones
B) bus rides
C) gasoline
D) cholesterol medication in general
answer
D
question
At a price of $100, Beachside Canoe Rentals rented 11 canoes. When it increased its rental price
to $125, 9 canoes were rented. Calculate the absolute value of the price elasticity of demand
for canoe rentals, using the midpoint formula.
A) 2
B) 1.25
C) 0.9
D) 0.75
to $125, 9 canoes were rented. Calculate the absolute value of the price elasticity of demand
for canoe rentals, using the midpoint formula.
A) 2
B) 1.25
C) 0.9
D) 0.75
answer
C
question
Jonah lives in a small town where there is only one Mexican restaurant. Which of the following
is likely to be true about the price elasticity of demand for meals at the Mexican restaurant?
A) Demand is likely to be relatively inelastic.
B) Demand is likely to be perfectly elastic.
C) Demand is likely to be relatively elastic.
D) Demand is likely to be perfectly inelastic.
is likely to be true about the price elasticity of demand for meals at the Mexican restaurant?
A) Demand is likely to be relatively inelastic.
B) Demand is likely to be perfectly elastic.
C) Demand is likely to be relatively elastic.
D) Demand is likely to be perfectly inelastic.
answer
A
question
Countries that engage in trade will tend to specialize in the production of goods and services
in which they have ________ and will ________ these goods and services
A) an absolute advantage; export
B) a comparative advantage; export
C) a comparative advantage; import
D) an absolute advantage; import
in which they have ________ and will ________ these goods and services
A) an absolute advantage; export
B) a comparative advantage; export
C) a comparative advantage; import
D) an absolute advantage; import
answer
B
question
Vipsanaʹs Gyros House sells gyros. The cost of ingredients (pita, meat, spices, etc.) to make a
gyro is $2.00. Vipsana pays her employees $60 per day. She also incurs a fixed cost of $120 per
day. Calculate Vipsanaʹs total cost per day when she produces 50 gyros using two workers?
A) $100
B) $124.40
C) $220
D) $340
gyro is $2.00. Vipsana pays her employees $60 per day. She also incurs a fixed cost of $120 per
day. Calculate Vipsanaʹs total cost per day when she produces 50 gyros using two workers?
A) $100
B) $124.40
C) $220
D) $340
answer
D
question
The minimum efficient scale is
A) the level of output where diminishing returns have not set in yet.
B) level of operation where long-run average costs are lowest.
C) the plant size that yields the most profit.
D) the smallest output level where the firm finally reaches productive efficiency.
A) the level of output where diminishing returns have not set in yet.
B) level of operation where long-run average costs are lowest.
C) the plant size that yields the most profit.
D) the smallest output level where the firm finally reaches productive efficiency.
answer
B
question
Long-run cost curves are U-shaped because
A) of the law of supply.
B) of the law of demand.
C) of the law of diminishing returns.
D) of economies and diseconomies of scale
A) of the law of supply.
B) of the law of demand.
C) of the law of diminishing returns.
D) of economies and diseconomies of scale
answer
D
question
Adam spent $10,000 on new equipment for his small business, ʺAdamʹs Fitness Studio.ʺ
Membership at his fitness center is very low and at this rate, Adam needs an additional
$12,000 per year to keep his studio open. Which of the following is true?
A) The $10,000 Adam spent on equipment is the total cost of starting the business and the
$12,000 heʹll need to continue operations is a marginal cost.
B) The fixed cost of running the studio is $22,000.
C) The variable cost of running the studio is $22,000.
D) The $10,000 Adam spent on equipment is a fixed cost of business and the $12,000 heʹll
need to continue operations is a variable cost.
Membership at his fitness center is very low and at this rate, Adam needs an additional
$12,000 per year to keep his studio open. Which of the following is true?
A) The $10,000 Adam spent on equipment is the total cost of starting the business and the
$12,000 heʹll need to continue operations is a marginal cost.
B) The fixed cost of running the studio is $22,000.
C) The variable cost of running the studio is $22,000.
D) The $10,000 Adam spent on equipment is a fixed cost of business and the $12,000 heʹll
need to continue operations is a variable cost.
answer
D
question
Average variable cost can be calculated using any of the formulas below except
A) (TC - FC)/Q.
B) (TC/Q) - AFC.
C) TVC/Q.
D) Δ(TC - FC)/ΔQ.
A) (TC - FC)/Q.
B) (TC/Q) - AFC.
C) TVC/Q.
D) Δ(TC - FC)/ΔQ.
answer
D
question
Both individual buyers and sellers in perfect competition
A) have to take the market price as a given.
B) have the market price dictated to them by government.
C) can influence the market price by joining with a few of their competitors.
D) can influence the market price by their own individual actions.
A) have to take the market price as a given.
B) have the market price dictated to them by government.
C) can influence the market price by joining with a few of their competitors.
D) can influence the market price by their own individual actions.
answer
A
question
If a typical firm in a perfectly competitive industry is incurring losses, then
A) some firms will exit in the long run, causing market supply to decrease and market price
to rise increasing profits for the remaining firms.
B) some firms will enter in the long run, causing market supply to increase and market price
to rise increasing profit for all firms.
C) all firms will continue to lose money.
D) some firms will exit in the long run, causing market supply to decrease and market price
to fall increasing losses for the remaining firms.
A) some firms will exit in the long run, causing market supply to decrease and market price
to rise increasing profits for the remaining firms.
B) some firms will enter in the long run, causing market supply to increase and market price
to rise increasing profit for all firms.
C) all firms will continue to lose money.
D) some firms will exit in the long run, causing market supply to decrease and market price
to fall increasing losses for the remaining firms.
answer
A
question
In perfect competition
A) the market demand curve is downward sloping while demand for an individual sellerʹs
product is perfectly elastic.
B) the market demand curve is perfectly elastic while demand for an individual sellerʹs
product is perfectly inelastic.
C) the market demand curve is perfectly inelastic while demand for an individual sellerʹs
product is perfectly elastic.
D) the market demand curve and the individualʹs demand are identical.
A) the market demand curve is downward sloping while demand for an individual sellerʹs
product is perfectly elastic.
B) the market demand curve is perfectly elastic while demand for an individual sellerʹs
product is perfectly inelastic.
C) the market demand curve is perfectly inelastic while demand for an individual sellerʹs
product is perfectly elastic.
D) the market demand curve and the individualʹs demand are identical.
answer
A
question
A perfectly competitive firm produces 3,000 units of a good at a total cost of $36,000. The fixed
cost of production is $20,000. The price of each good is $10. Should the firm continue to
produce in the short run?
A) Yes, it should continue to produce because its price exceeds its average fixed cost.
B) No, it should shut down because it is making a loss.
C) Yes, it should continue to produce because it is minimizing its loss.
D) There is insufficient information to answer the question.
cost of production is $20,000. The price of each good is $10. Should the firm continue to
produce in the short run?
A) Yes, it should continue to produce because its price exceeds its average fixed cost.
B) No, it should shut down because it is making a loss.
C) Yes, it should continue to produce because it is minimizing its loss.
D) There is insufficient information to answer the question.
answer
C
question
A monopolistically competitive firm will
A) always produce at the minimum efficient scale of production.
B) produce an output level that is productively and allocatively efficient.
C) have some control over its price because its product is differentiated.
D) charge the same price as its competitors do.
A) always produce at the minimum efficient scale of production.
B) produce an output level that is productively and allocatively efficient.
C) have some control over its price because its product is differentiated.
D) charge the same price as its competitors do.
answer
C
question
How does the long run equilibrium of a monopolistically competitive industry differ from that
of a perfectly competitive industry?
A) A firm in monopolistic competition will earn economic profits but a firm in perfect
competition earns zero profit.
B) A firm in monopolistic competition produces an allocatively efficient output level while a
firm in perfect competition produces a productively efficient output level.
C) A firm in monopolistic competition will charge a price higher than the average cost of
production but a firm in perfect competition charges a price equal to the average cost of
production.
D) A firm in monopolistic competition does not take full advantage of its economies of scale
but a firm in perfect competition produces at the lowest average cost possible.
of a perfectly competitive industry?
A) A firm in monopolistic competition will earn economic profits but a firm in perfect
competition earns zero profit.
B) A firm in monopolistic competition produces an allocatively efficient output level while a
firm in perfect competition produces a productively efficient output level.
C) A firm in monopolistic competition will charge a price higher than the average cost of
production but a firm in perfect competition charges a price equal to the average cost of
production.
D) A firm in monopolistic competition does not take full advantage of its economies of scale
but a firm in perfect competition produces at the lowest average cost possible.
answer
D
question
Long-run equilibrium under monopolistic competition is similar to that under perfect
competition in that
A) firms produce at the minimum point of their average cost curves.
B) firms earn normal profits.
C) price equals marginal cost.
D) price equals marginal revenue.
competition in that
A) firms produce at the minimum point of their average cost curves.
B) firms earn normal profits.
C) price equals marginal cost.
D) price equals marginal revenue.
answer
B
question
Oligopolies are difficult to analyze because
A) the firms are so large.
B) how firms respond to a price change by a rival is uncertain.
C) oligopolies are a recent development so economists have not had time to develop models.
D) demand and cost curves do not exist for these types of industries.
A) the firms are so large.
B) how firms respond to a price change by a rival is uncertain.
C) oligopolies are a recent development so economists have not had time to develop models.
D) demand and cost curves do not exist for these types of industries.
answer
B
question
Economies of scale can lead to an oligopolistic market structure because
A) if economies of scale are insignificant, only a few firms are able to produce at the low
costs achieved by the big established firms.
B) a few firms can force rivals to produce at low levels of output.
C) if larger firms have lower costs, new small entrants will not be able to produce at the low
costs achieved by the big established firms.
D) a few firms can use high profits to keep out new entrants.
A) if economies of scale are insignificant, only a few firms are able to produce at the low
costs achieved by the big established firms.
B) a few firms can force rivals to produce at low levels of output.
C) if larger firms have lower costs, new small entrants will not be able to produce at the low
costs achieved by the big established firms.
D) a few firms can use high profits to keep out new entrants.
answer
C
question
A profit maximizing monopolyʹs price is
A) less than the price that would prevail if the industry was perfectly competitive.
B) greater than the price that would prevail if the industry was perfectly competitive.
C) not consistently related to price that would prevail if the market was perfectly
competitive.
D) the same as the price that would prevail if the industry was perfectly competitive.
A) less than the price that would prevail if the industry was perfectly competitive.
B) greater than the price that would prevail if the industry was perfectly competitive.
C) not consistently related to price that would prevail if the market was perfectly
competitive.
D) the same as the price that would prevail if the industry was perfectly competitive.
answer
B
question
A monopoly is characterized by all of the following except
A) there are no close substitutes to the firmʹs product.
B) the firm has market power.
C) there are only a few sellers each selling a unique product.
D) entry barriers are high.
A) there are no close substitutes to the firmʹs product.
B) the firm has market power.
C) there are only a few sellers each selling a unique product.
D) entry barriers are high.
answer
C
question
Which of the following statements applies to a monopolist but not to a perfectly competitive
firm at their profit maximizing outputs?
A) Marginal revenue is less than price.
B) Price equals marginal cost.
C) Average revenue equals average cost.
D) Marginal revenue equals marginal cost.
firm at their profit maximizing outputs?
A) Marginal revenue is less than price.
B) Price equals marginal cost.
C) Average revenue equals average cost.
D) Marginal revenue equals marginal cost.
answer
A
question
In economics, the term ʺfree riderʺ refers to
A) one who waits for others to produce a good and then enjoys its benefits without paying
for it.
B) a person who evades taxes.
C) a supervisor who delegates menial time-consuming activities to others.
D) one who volunteers her services.
A) one who waits for others to produce a good and then enjoys its benefits without paying
for it.
B) a person who evades taxes.
C) a supervisor who delegates menial time-consuming activities to others.
D) one who volunteers her services.
answer
A
question
Let D= demand, S = supply, P = equilibrium price, Q= equilibrium quantity. What happens in
the market for tropical hardwood trees if the governments restrict the amount of forest lands
that can be logged?
A) D and S decrease, P and Q increase
B) S decreases, D no change, P increases, Q decreases
C) D no change, S decreases, P increases, Q increases
D) D decreases, S no change, P and Q decrease
the market for tropical hardwood trees if the governments restrict the amount of forest lands
that can be logged?
A) D and S decrease, P and Q increase
B) S decreases, D no change, P increases, Q decreases
C) D no change, S decreases, P increases, Q increases
D) D decreases, S no change, P and Q decrease
answer
B
question
In an oligopoly market
A) the pricing decisions of all other firms have no effect on an individual firm.
B) advertising of one firm has no effect on all other firms.
C) individual firms pay no attention to the behavior of other firms.
D) one firmʹs pricing decision affects all the other firms
A) the pricing decisions of all other firms have no effect on an individual firm.
B) advertising of one firm has no effect on all other firms.
C) individual firms pay no attention to the behavior of other firms.
D) one firmʹs pricing decision affects all the other firms
answer
D
question
Economists argue that the level of pollution should be
A) reduced to the point where the marginal benefit of pollution reduction is equal to the
marginal cost of pollution reduction to society.
B) ignored because it has always been present since the beginning of history.
C) best determined by elected officials who can speak on behalf of the public.
D) reduced completely to zero because by definition, it is a negative external effect.
A) reduced to the point where the marginal benefit of pollution reduction is equal to the
marginal cost of pollution reduction to society.
B) ignored because it has always been present since the beginning of history.
C) best determined by elected officials who can speak on behalf of the public.
D) reduced completely to zero because by definition, it is a negative external effect.
answer
A
question
A positive externality results when
A) someone pays for a good or service even though she is not directly affected by the production
or consumption of it.
B) people who are not directly involved in producing or paying for a good or service benefit
from it.
C) when people who live in one country benefit from the production of a good or service that
occurs in another country.
D) economists are sure that a good or service provides benefits to consumers
A) someone pays for a good or service even though she is not directly affected by the production
or consumption of it.
B) people who are not directly involved in producing or paying for a good or service benefit
from it.
C) when people who live in one country benefit from the production of a good or service that
occurs in another country.
D) economists are sure that a good or service provides benefits to consumers
answer
B
question
When there is a positive externality
A) the social benefit received by consumers is greater than the private benefit.
B) the private benefit received by consumers is greater than the social benefit.
C) the private benefit received by consumers is greater than the external benefit.
D) the private benefit received by consumers is greater than the private cost.
A) the social benefit received by consumers is greater than the private benefit.
B) the private benefit received by consumers is greater than the social benefit.
C) the private benefit received by consumers is greater than the external benefit.
D) the private benefit received by consumers is greater than the private cost.
answer
A
question
In the long run, if the demand curve of a monopolistically competitive firm is tangent to its
average total cost curve then
A) the firm would earn an economic profit.
B) the firm would break even.
C) the firm would earn enough revenue to cover its variable costs, but not its fixed costs.
D) the firm would shut down temporarily.
average total cost curve then
A) the firm would earn an economic profit.
B) the firm would break even.
C) the firm would earn enough revenue to cover its variable costs, but not its fixed costs.
D) the firm would shut down temporarily.
answer
B
question
If a monopolistʹs price is $50 per unit and its marginal cost is $25, then
A) to maximize profit the firm should decrease output.
B) to maximize profit the firm should increase output.
C) to maximize profit the firm should continue to produce the output it is producing.
D) Not enough information is given to say what the firm should do to maximize profit.
A) to maximize profit the firm should decrease output.
B) to maximize profit the firm should increase output.
C) to maximize profit the firm should continue to produce the output it is producing.
D) Not enough information is given to say what the firm should do to maximize profit.
answer
D
question
Some markets have many buyers and sellers but fall into the category of monopolistic competition
rather than perfect competition. The most common reason for this is
A) firms in these markets sell identical products.
B) firms in these markets do not sell identical products.
C) there are high barriers to entering these markets.
D) firms in these markets make high profits.
rather than perfect competition. The most common reason for this is
A) firms in these markets sell identical products.
B) firms in these markets do not sell identical products.
C) there are high barriers to entering these markets.
D) firms in these markets make high profits.
answer
B
question
The cross-price elasticity between Gillette razors and a related good is -3.4. What happens to the
demand for the related good if the price of Gillette razors falls by 10 percent?
A) The quantity demanded of the related good rises by 34 percent.
B) The quantity demanded of the related good rises by 3.4 percent.
C) The quantity demanded of the related good falls by 34 percent.
D) The quantity demanded of the related good falls by 3.4 percent.
demand for the related good if the price of Gillette razors falls by 10 percent?
A) The quantity demanded of the related good rises by 34 percent.
B) The quantity demanded of the related good rises by 3.4 percent.
C) The quantity demanded of the related good falls by 34 percent.
D) The quantity demanded of the related good falls by 3.4 percent.
answer
A
question
Why do most firms in monopolistic competition typically make zero profit in the long run?
A) because the lack of entry barriers would compete away profits
B) because the total market is not large enough to accommodate so many firms
C) because firms produce differentiated products
D) because firms do not produce at their minimum efficient scale
A) because the lack of entry barriers would compete away profits
B) because the total market is not large enough to accommodate so many firms
C) because firms produce differentiated products
D) because firms do not produce at their minimum efficient scale
answer
A
question
A monopolistically competitive firm that is earning profits will, in the long run, experience all of
the following except
A) a decrease in demand for its product.
B) a decrease in the number of rival products.
C) demand for the firm's product becomes more elastic.
D) new rivals entering the market.
the following except
A) a decrease in demand for its product.
B) a decrease in the number of rival products.
C) demand for the firm's product becomes more elastic.
D) new rivals entering the market.
answer
B
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