11

1. A local store noticed that when it increased the price of milk from $2.50 to $3.50 it sold exactly the same amount. Which statement below best describes what that means?
2. A.Demand is perfectly elastic.B.Demand is relatively inelastic.C.Demand is unitary elastic.D.The law of demand is irrelevant.E.The demand is perfectly inelastic.

QUESTION 12

1. When MR and MC intersect in two places, the profit-maximizing output will be the one from which MC crosses MR from below.
2. True
3. False

QUESTION 13

1. Which of the following is true regarding a demand curve?
2. A.Only price is held constant.B.Income and price are held constant.C.Only non-price determinants are held constant.D.All determinants are held constant.

QUESTION 14

1. For a perfectly competitive firm, the marginal revenue curve _____.
2. A.is horizontalB.is verticalC.is same as demand curveD.lies above demand curveE.lies below demand curve

QUESTION 15

1. In a competitive industry an increase in demand will cause which of the following?
2. A.Economic profit in short run and entry in long run.B.Economic profit in short run and long run.C.Economic loss in short run and long run.D.Economic profit in short run, exit in long run.

QUESTION 16

1. Which type of firm does not rely on the MR=MC rule for profit-maximizing output?
2. A.Perfect competitionB.MonopolyC.OligopolyD.Monopolistic competitionE.All of these rely on MR=MC

QUESTION 17

1. A fall in the price of rayon shirts will cause a decrease in the equilibrium price and quantity of cotton shirts.
2. True
3. False

QUESTION 18

1. Accounting profit will always be less than economic profit.
2. True
3. False

QUESTION 19

1. The lowest price the firm will operate at in the long run is where P equals ____.
2. A.AVCB.AFCC.MCD.ATCE.None of these

QUESTION 20

1. Under perfect competition, an increase in market price will increase each firm's marginal revenue.
2. True
3. False