1.The condition P =MSC must be met for which of the following:

a)To ensure Q(D) = Q(S)

b)Efficient Allocation of Resources

c)Profit Maximization

d)To ensure MC = min. AC.

e)To maintain Tacit Collusion

2.Which of the following is FALSE?

a)Imperfect competition means oligopolistic competition.

b)Public goods are both non-exclusive and non-rival.

c)Within an Edgeworth Box, convex indifference curves are considered to be the usual case.

d)Incomplete information means asymmetric information.

e)The slope of the PPF represents the rate of product transformation.

3.Which of the following is TRUE?

a)If a firm's MC is greater than its MR, then it can increase its profits by producing higher quantities.

b)If the demand faced by a firm is inelastic, selling one more unit of output will increase revenue.

c)A price taker is a firm whose decisions have little effect on the prevailing market price of a good.

d)When demand is inelastic, marginal revenue is greater than 0.

e)Firms choose the output level which has the greatest difference between revenue and cost.

4.The marginal revenue curve will lie:

a)On the demand curve.

b)Above the demand curve.

c)Below the average revenue curve.

d)Parallel to the marginal cost curve.

e)Orthogonal to the marginal cost curve.

5.Bridget owns a price-taking firm. She notices that her equilibrium price is greater than her SAC, which means that:

a)Profits are negative.

b)She will earn zero profits since her firm is a price-taking firm.

c)She should lower her price so that her equilibrium price is equal to her SAC.

d)Profits are positive.

e)None of the above is correct.

6.Markets with elastic supply and demand curves:

a)Have demand and supply curves that never intersect.

b)Are very sensitive to a change in price.

c)Have greater movements in quantity than prices.

d)Are very sensitive to a change in quantity.

e)Are only theoretical and do not exist in the real world.

7.Which of the following is FALSE about the long-run supply curve?

a)The change in price divided by the change in quantity will be greater than zero for the long-run supply curve if there are increasing costs.

b)If there are constant costs, the long-run supply curve will increase when firms exit the market and increase when new firms join the market.

c)If long-run elasticities are high, real resource prices will not increase rapidly over time.

d)In the long run, economic profits are equal to zero due to entry/exit.

e)The long-run supply curve will have a negative slope if there are decreasing cost.

Questions 8, 9, and 10 are based on the supply and demand diagram below for the NVIDIA GTX 3000 series graphics cards.

Price A E P D B Quantity per periodPrice A PM B E MC = AC PPC MR D OM QPc Quantity per week