1.Indicate whether the following change would cause a shift in the demand curve for product A and, if so, the direction of the shift.

Change	Demand Curve Shift?	Direction of Shift
A decrease in the price of product A	Yes or No	Decrease, n/a,increase

2. Suppose that on Valentine's Day, the demand for both roses and greeting cards increases by the same percentage amount. However, the price of roses increases by more than the price of greeting cards.

Based on this information, you can conclude that the supply of Valentine's cards is sensitive to price than the supply of roses. ( a or b)

A. more

B. less

3. Distributors of beer earn some monopoly profits in their local markets but see them slowly erode as substitutes enter the market. Suppose Nebraska has scheduled a vote on the legalization of marijuana. Additionally, suppose that marijuana and beer are substitutes and that the legalization of marijuana would lead to a decrease in the price of marijuana.

Given the relationship between marijuana and beer, the legalization of marijuana would lead to in demand for beer.

A. an increase

B. a decrease

Thus, distributors of beer would likely the legalization of marijuana.

A. oppose

B. support

4. Relative to managers in more industries, managers in more industries are more likely to spend their time on pricing strategies rather than on reducing costs.

A. monopolistic

B. competitive

2. competitive

Monopolistic

5. Describe the difference in economic profit between a competitive firm and a monopolist in both the short and long run. Which should take longer to reach the long-run equilibrium?

In the short run, both monopolists and competitive firms earn positive economic profits.

A.can

B. cannot

In the long run, can earn a positive economic profit.

A. competitive firms, not monopolists

B. neither monopolist, nor competitive firms

C. monopolist, but not competitive firms

D. both monopolists and competitive firms

True or False: The adjustment to long-run equilibrium occurs more quickly for monopolists than for competitive industries.

True

False