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1. If cross-price elasticity between two goods is -2.20, then which of the following is correct?

A.The two goods are substitutes.

B.The two goods are complements.

C.Income elasticity lies between 0 and 1.

D.Both goods are normal goods.

E.Both goods are inferior goods.

QUESTION 2

1. When the price is above equilibrium _____.

A.there is a shortage and the price will rise

B.there is a shortage and the price will fall

C.there is a surplus and the price will fall

D.there is a surplus and the price will rise

QUESTION 3

1. The opportunity cost of any activity can be measured by _____.

A.price or other monetary costs of the activity

B.level of technology involved

C.time needed to select alternative

D.value of the best alternative that is given up

QUESTION 4

1. Ceteris paribus, when the price of a good falls, the quantity supplied also falls. This is the law of _____.

A.increasing costs

B.demand

C.supply

D.increasing opportunity costs

QUESTION 5

1. In which of the market models is the seller a price-taker?

A.Perfect competition

B.Pure monopoly

C.Oligopoly

D.Monopolistic competition

E.All of these

QUESTION 6

1. Karl is considering attending a concert with a ticket price of $45. Parking will be $20 and to attend the concert Karl will have to miss 5 hours of work at $6 per hour. Karl's opportunity cost of attending the concert is _____.

A.$45

B.$65

C.$40

D.$95

E.$75

QUESTION 7

1. Which of the following best defines what the long run for a business is?

A.more than one year

B.the time to make necessary business decisions

C.the period of time during which at least one input is fixed

D.the period of time during which all inputs are variable

QUESTION 8

1. The monopolistically competitive firm faces a perfectly elastic demand curve.

True

False

QUESTION 9

1. The law of demand tells us that, for most goods, a rise in income will cause an increase in quantity demanded.

True

False

QUESTION 10

1. When long run average total cost decrease as output increases, the firm is experiencing _____.

A.variable costs only

B.constant returns to scale

C.diseconomies of scale

D.economies of scale