1. Suppose a manager raises the price of chicken tenders baskets from $8 to $10 and finds that consumption drops from 100 to 90 units per day. The price elasticity of demand is

a) in the elastic region

b) unitary

c) in the inelastic region

2. __________ will cause an inefficient allocation of resources in the market.

a) positive externalities

b) both, negative and positive externalities

c) negative externalities

3. Efficient scale is the level of production where _____________is minimized.

a) AVC

b) ATC

c) AFC

d) MC

4. The Total Cost (TC) is the sum of the Total Fixed Cost (TFC) and the Total Variable Cost (TVC). If when producing 4 units, the TC is 500 and the Average VARIABLE Cost is 50, how much is the Total FIXED Cost?

a) 200

b) 112.5

c) 300

d) 125

5. If the government places a 2$ tax on a good, the burden of the tax will be on consumers mostly if their demand is _________.

a) inelastic

b) elastic