question
Which of the following is true for all types of firms we have studied?
A. Mr=AR
B. MR<P
C. MR=P
D. AR=P
A. Mr=AR
B. MR<P
C. MR=P
D. AR=P
answer
D. AR=P
question
The demand curve for a monopoly is more _______ than the demand curve for a perfectly competitive firm?
A. Inelastic
B. Elastic
C. Unit Elastic
A. Inelastic
B. Elastic
C. Unit Elastic
answer
A. Inelastic
question
Economics are concerned with monopolies because?
A. They may create a deadweight loss.
B. They are not fair.
C. They charge too little for their good.
D. They make too much of their good.
A. They may create a deadweight loss.
B. They are not fair.
C. They charge too little for their good.
D. They make too much of their good.
answer
A. They may create a deadweight loss.
question
The demand curve for a monopoly is?
A. Downward sloping
B. Vertical
C. Upward sloping
D. Horizontal
A. Downward sloping
B. Vertical
C. Upward sloping
D. Horizontal
answer
A. Downward sloping
question
For a monopoly, the following relationship is true?
A. MR>P
B. MR<P
C. AR<P
D. AR>P
A. MR>P
B. MR<P
C. AR<P
D. AR>P
answer
B. MR<P
question
If a monopoly sells 5 units for $4 and then lowers their price to $3.90 and sells 6 units, their marginal revenue for the 6th unit is?
A. $3.90
B. $3.40
C. -$.10
D. $4
A. $3.90
B. $3.40
C. -$.10
D. $4
answer
B. $3.40
question
As compared to a perfectly competitive market, we would expect a monopoly to result in a _______ quantity and a ______ price.
A. lower:higher
B. higher:lower
C. lower:lower
D. higher:higher
A. lower:higher
B. higher:lower
C. lower:lower
D. higher:higher
answer
A. lower:higher
question
Monopolies differ from perfectly competitive firms because?
A. Perfectly competitive firms can make profits in the short run while monopolies cannot.
B. Monopolies can make profits in the short run while perfectly competitive can not.
C. Monopolies can make profits in the long run while perfectly competitive can not.
D. Perfectly competitive firms can make profits in the long run while monopolies cannot.
A. Perfectly competitive firms can make profits in the short run while monopolies cannot.
B. Monopolies can make profits in the short run while perfectly competitive can not.
C. Monopolies can make profits in the long run while perfectly competitive can not.
D. Perfectly competitive firms can make profits in the long run while monopolies cannot.
answer
C. Monopolies can make profits in the long run while perfectly competitive can not.
question
Which of the following will create the largest deadweight loss?
A. A price discriminating (non-perfect) monopolists
B. A single price monopolist
C. A perfectly competitive firm
D. A perfect price discriminating monopolist
A. A price discriminating (non-perfect) monopolists
B. A single price monopolist
C. A perfectly competitive firm
D. A perfect price discriminating monopolist
answer
B. A single price monopolist
question
If marginal revenue is negative, this means demand is?
A. Unit Elastic
B. Upward sloping
C. Inelastic
D. Elastic
A. Unit Elastic
B. Upward sloping
C. Inelastic
D. Elastic
answer
C. Inelastic
question
For a perfectly competitive firm, which of the following relationships is true?
A. MR<P
B. P=MR
C. AR>P
D. MR>P
E. AR<P
A. MR<P
B. P=MR
C. AR>P
D. MR>P
E. AR<P
answer
B. P=MR
question
The demand curve for a single firm in a perfectly competitive industry is?
A. U shaped
B. flat
C. downward sloping
D. upward sloping
A. U shaped
B. flat
C. downward sloping
D. upward sloping
answer
B. flat
question
For a perfectly competitive firm, if MR<MC, the firm should?
A. raise their prices
B. produce less
C. produce more
D. produce the same amount they are currently producing
A. raise their prices
B. produce less
C. produce more
D. produce the same amount they are currently producing
answer
B. produce less
question
In long run equilibrium for perfect competition, price will equal?
A. the minimum of average total costs
B. the minimum of marginal costs
C. the minimum of average fixed costs
D. the minimum of total costs
A. the minimum of average total costs
B. the minimum of marginal costs
C. the minimum of average fixed costs
D. the minimum of total costs
answer
A. the minimum of average total costs
question
If economic profit is zero?
A. The market will no longer exist
B. No new firms will enter or leave the market
C.Firms will enter the market
D. Firms will exit the market
A. The market will no longer exist
B. No new firms will enter or leave the market
C.Firms will enter the market
D. Firms will exit the market
answer
B. No new firms will enter or leave the market
question
For a perfectly competitive firm, in the long run, all of the following conditions hold EXCEPT?
A. P=AFC
B. P=MC
C. MC=minimum ATC
D. P=minimum ATC
A. P=AFC
B. P=MC
C. MC=minimum ATC
D. P=minimum ATC
answer
A. P=AFC
question
In the long run, economists assume?
A. Capital is fixed and Labor is fixed
B. Capital is fixed and Labor is variable
C. Capital is variable and Labor is fixed
D. Capital is variable and Labor is variable
A. Capital is fixed and Labor is fixed
B. Capital is fixed and Labor is variable
C. Capital is variable and Labor is fixed
D. Capital is variable and Labor is variable
answer
D. Capital is variable and Labor is variable
question
The way that a firm combines inputs and factors of production in order to determine how much they can produce is represented by the firm's?
A. revenue function
B. production function
C. profit function
D. cost function
A. revenue function
B. production function
C. profit function
D. cost function
answer
B. production function
question
Diminishing marginal returns implies?
A. Output increases at a decreasing rate as inputs are increased
B. Output never changes as inputs are increased.
C. Output always increases as inputs are increased..
D. Output always decreases as inputs are increased.
A. Output increases at a decreasing rate as inputs are increased
B. Output never changes as inputs are increased.
C. Output always increases as inputs are increased..
D. Output always decreases as inputs are increased.
answer
A. Output increases at a decreasing rate as inputs are increased
question
Accounting profit is?
A. lower than economic profit because economic cost includes only implicit costs.
B. lower than economic profit because economic cost includes explicit and implicit costs.
C. higher than economic profit because economic cost includes only implicit costs.
D. higher than economic profit because economic cost includes implicit and explicit costs.
A. lower than economic profit because economic cost includes only implicit costs.
B. lower than economic profit because economic cost includes explicit and implicit costs.
C. higher than economic profit because economic cost includes only implicit costs.
D. higher than economic profit because economic cost includes implicit and explicit costs.
answer
D. higher than economic profit because economic cost includes implicit and explicit costs.
question
When someone acts in a riskier way because of information they receive this is called a?
A. Principal agent problem
B. Symmetric Information Problem
C. Moral Hazard Problem
D. Adverse Selection Problem
A. Principal agent problem
B. Symmetric Information Problem
C. Moral Hazard Problem
D. Adverse Selection Problem
answer
C. Moral Hazard Problem
question
According to the Coase Theorem?
A. Negative externalities must always be solved by the government.
B. Negative externalities can always be privately solved.
C. Negative externalities can be solved by the government under certain conditions.
D. Negative externalities can be privately solved under certain conditions.
A. Negative externalities must always be solved by the government.
B. Negative externalities can always be privately solved.
C. Negative externalities can be solved by the government under certain conditions.
D. Negative externalities can be privately solved under certain conditions.
answer
D. Negative externalities can be privately solved under certain conditions.
question
Economists assume that as you consume more of a good?
A. Utility increases at a decreasing rate.
B. Utility increases at an increasing rate.
C. Utility increases at a constant rate.
D. Utility stays the same.
A. Utility increases at a decreasing rate.
B. Utility increases at an increasing rate.
C. Utility increases at a constant rate.
D. Utility stays the same.
answer
A. Utility increases at a decreasing rate.
question
Total utility derived from a good is maximized when?
A. Marginal utility is maximized.
B. Marginal utility is decreasing.
C. Marginal utility is increasing.
D. Marginal utility is zero.
A. Marginal utility is maximized.
B. Marginal utility is decreasing.
C. Marginal utility is increasing.
D. Marginal utility is zero.
answer
D. Marginal utility is zero.
question
If the Marginal Utility of Yams/Price of Yams is greater than the Marginal Utility of Zucchinis/Price of Zucchinis, ceteris paribus, we would expect consumers to?
A. Consume more Yams
B. Not change their consumption behavior at all.
C. You Answered Consume more Zucchinis
A. Consume more Yams
B. Not change their consumption behavior at all.
C. You Answered Consume more Zucchinis
answer
A. Consume more Yams
question
Assume a consumer consumed only Carrots and Daikon Radishes and the price of Carrots decreases. If this price change causes an income effect that is stronger than the substitution effect?
A. Consumers buying behavior of Daikon radishes will change in an uncertain way.
B. Consumers will buy fewer Daikon Radishes.
C. Consumers will buy more Daikon Radishes.
D. Consumers will buy the exact same amount of Daikon Radishes
A. Consumers buying behavior of Daikon radishes will change in an uncertain way.
B. Consumers will buy fewer Daikon Radishes.
C. Consumers will buy more Daikon Radishes.
D. Consumers will buy the exact same amount of Daikon Radishes
answer
C. Consumers will buy more Daikon Radishes.
question
The marginal social cost curve is?
A. Marginal private benefits minus Marginal external costs
B. Marginal private costs minus Marginal external costs
C. Marginal private benefits plus Marginal external costs
D. Marginal private costs plus Marginal external costs
A. Marginal private benefits minus Marginal external costs
B. Marginal private costs minus Marginal external costs
C. Marginal private benefits plus Marginal external costs
D. Marginal private costs plus Marginal external costs
answer
D. Marginal private costs plus Marginal external costs
question
Without any government intervention, if a good has a negative externality the market will tend to produce?
A. Too much of that good at too low a price.
B. Not enough of that good at too low a price.
C. Too much of that good at too high a price.
D. Not enough of that good at too high a price.
A. Too much of that good at too low a price.
B. Not enough of that good at too low a price.
C. Too much of that good at too high a price.
D. Not enough of that good at too high a price.
answer
A. Too much of that good at too low a price.
question
A positive externality tends to?
A. Produce a deadweight loss because it is underproduced at too low a price.
B. Produce a deadweight loss because it is underproduced at too high a price.
C. Produce a deadweight loss because it is overproduced at too high a price.
D. Produce a deadweight loss because it is overproduced at too low a price.
E. Not produce a deadweight loss because a positive externality benefits society.
A. Produce a deadweight loss because it is underproduced at too low a price.
B. Produce a deadweight loss because it is underproduced at too high a price.
C. Produce a deadweight loss because it is overproduced at too high a price.
D. Produce a deadweight loss because it is overproduced at too low a price.
E. Not produce a deadweight loss because a positive externality benefits society.
answer
A. Produce a deadweight loss because it is underproduced at too low a price.
question
If demand is relatively elastic and supply is relatively inelastic, who would we expect to bare most of the cost of a tax?
A. Producers
B. Consumers
C. No one
D. The government
A. Producers
B. Consumers
C. No one
D. The government
answer
A. Producers
question
In our efficiency analysis a subsidy will cause?
A. Overproduction which will create a deadweight loss.
B. Overproduction which will increase total surplus.
C. Underproduction which will create a deadweight loss.
D. Underproduction which will not affect total surplus
A. Overproduction which will create a deadweight loss.
B. Overproduction which will increase total surplus.
C. Underproduction which will create a deadweight loss.
D. Underproduction which will not affect total surplus
answer
A. Overproduction which will create a deadweight loss.
question
In our model price allocation and equilibrium mechanisms?
A. result in equity but do not guarantee efficiency
B. result in efficiency but do not guarantee equity
C. guarantee both efficiency and equity
D. do not result in efficiency or equity
A. result in equity but do not guarantee efficiency
B. result in efficiency but do not guarantee equity
C. guarantee both efficiency and equity
D. do not result in efficiency or equity
answer
B. result in efficiency but do not guarantee equity
question
When the percentage change of quantity demanded for a good is less in magnitude (absolute value) than the percentage change of price the demand for that good or service is _________ and the elasticity of demand is ________?
A. unitary elastic: less than 1
B. unitary elastic: equal to 1
C. inelatistic: less than 1
D. elastic: greater than 1
A. unitary elastic: less than 1
B. unitary elastic: equal to 1
C. inelatistic: less than 1
D. elastic: greater than 1
answer
C. inelatistic: less than 1
question
According to the midpoint formula, what is the elasticity of demand for shoes if the price goes from $50 to $60 and the quantity demanded goes from 400 shoes to 300 shoes?
A. 1.57
B. 1.25
C. 10
D. .64
A. 1.57
B. 1.25
C. 10
D. .64
answer
A. 1.57
question
If a business increases its prices and this results in increased total revenue this means?
A. Supply is inelastic
B. Demand is elastic
C. Demand is inelastic
D. This is not possible, a business cannot raise prices and increase revenue.
A. Supply is inelastic
B. Demand is elastic
C. Demand is inelastic
D. This is not possible, a business cannot raise prices and increase revenue.
answer
C. Demand is inelastic
question
Using the standard percent change formula (not the midpoint method), if price goes from $200 to $220 and quantity supplied goes from 700 to 800, what is the elasticity of supply?
A. 1.59
B. 1.42
C. 0.142
D. 1.25
A. 1.59
B. 1.42
C. 0.142
D. 1.25
answer
B. 1.42
question
If a price increase for good A decreases quantity demanded for good B?
A. Cross-price elasticity is negative and the goods are compliments
B. Cross-price elasticity is positive and the goods are compliments
C. Cross-price elasticity is negative and the goods are substitutes
D. Cross-price elasticity is negative and the goods are compliments
A. Cross-price elasticity is negative and the goods are compliments
B. Cross-price elasticity is positive and the goods are compliments
C. Cross-price elasticity is negative and the goods are substitutes
D. Cross-price elasticity is negative and the goods are compliments
answer
D. Cross-price elasticity is negative and the goods are compliments
question
Assume the elasticity of supply is equal 2.5, this means that if the price of a good increased 25%, the quantity supplied would?
A. Decrease 62.5%
B. Increase 10%
C. Increase 62.5%
D. Decrease 10%
A. Decrease 62.5%
B. Increase 10%
C. Increase 62.5%
D. Decrease 10%
answer
C. Increase 62.5%
question
Ceteris Paribus, if the price of a good increases?
A. Neither supply nor demand change.
B. Demand increases.
C. Demand decreases.
D. Supply decreases.
A. Neither supply nor demand change.
B. Demand increases.
C. Demand decreases.
D. Supply decreases.
answer
A. Neither supply nor demand change.
question
For an inferior good if my income increases?
A. Supply will increase, equilibrium quantity will decrease, and equilibrium price will decrease.
B. Supply will decrease, equilibrium quantity will increase, and equilibrium price will increase.
C. Demand will decrease, equilibrium quantity will decrease, and equilibrium price will decrease.
D. Demand will increase, equilibrium quantity will increase, and equilibrium price will increase.
A. Supply will increase, equilibrium quantity will decrease, and equilibrium price will decrease.
B. Supply will decrease, equilibrium quantity will increase, and equilibrium price will increase.
C. Demand will decrease, equilibrium quantity will decrease, and equilibrium price will decrease.
D. Demand will increase, equilibrium quantity will increase, and equilibrium price will increase.
answer
C. Demand will decrease, equilibrium quantity will decrease, and equilibrium price will decrease.
question
Assume peanut butter and jelly are compliments, if the price of peanut butter decreases, for jelly?
A. Demand will decrease, equilibrium quantity will decrease, and equilibrium price will decease.
B. Supply will increase, equilibrium quantity will decrease, and equilibrium price will decease.
C. Demand will increase, equilibrium quantity will increase, and equilibrium price will increase.
D. Supply will decrease, equilibrium quantity will increase, and equilibrium price will increase.
A. Demand will decrease, equilibrium quantity will decrease, and equilibrium price will decease.
B. Supply will increase, equilibrium quantity will decrease, and equilibrium price will decease.
C. Demand will increase, equilibrium quantity will increase, and equilibrium price will increase.
D. Supply will decrease, equilibrium quantity will increase, and equilibrium price will increase.
answer
C. Demand will increase, equilibrium quantity will increase, and equilibrium price will increase.
question
Which of the following would most likely increase the supply of vegetables?
A. An increase in the price of fertilizer
B. A time period with especially good weather
C. An increase in the price of vegetables
D. A wildfire in a growing region
A. An increase in the price of fertilizer
B. A time period with especially good weather
C. An increase in the price of vegetables
D. A wildfire in a growing region
answer
B. A time period with especially good weather
question
If supply increases and demand decreases, we can say for certain that?
A. Equilibrium price will decrease
B. Equilibrium price will increase
C. Equilibrium quantity will decrease
D. Equilibrium quantity will increase
A. Equilibrium price will decrease
B. Equilibrium price will increase
C. Equilibrium quantity will decrease
D. Equilibrium quantity will increase
answer
A. Equilibrium price will decrease
question
Assume a nation has constant opportunity costs. If at most the nation can produce 300 cars or 500 dishwashers, what is the opportunity cost of producing a car?
A. 3/5
B. No values are given, so cost cannot be determined.
C. 5/3
D. 500
A. 3/5
B. No values are given, so cost cannot be determined.
C. 5/3
D. 500
answer
C. 5/3
question
Assume a country has a starting GDP of 200 which grows at 4% per year. Using the formula for compounding growth, what will GDP be after 20 years?
A. 438
B. 280
C. 360
D. 219
A. 438
B. 280
C. 360
D. 219
answer
D. 219
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