1.Which of the following is NOT the impact from a unit sales tax on a product?

A)It will shift the market demand curve to the left.

B)It will shift the market supply curve to the left.

C)It will lower the consumer surplus.

D)It will lower the producer surplus

2.Assume that a perfectly competitive firm faces the market equilibrium price P*=$6. When the firm maximizes its positive profit in the short-run, its average total cost (ATC) and marginal cost (MC) are most likely as

A)ATC=6 and MC=4

B)ATC=6 and MC=6

C)ATC=4 and MC=4

D)ATC=4 and MC=6

3.Which of the following is NOT true at the market equilibrium price?

A)The quantity demanded equals the quantity supplied.

B)There are no shortages in demand or surpluses in supply.

C)Both buyers and sellers have no incentive to change price.

D)Consumer surplus equals producer surplus.

4.In general, the production possibilities frontier (PPF) is bowed out from the origin because

A)economic growth is occurring.

B)the law of increasing costs holds.

C)the economy cannot produce outside its bounds.

D)the economy is inefficient.

5.Assume that the production function for a firm is referred asQ = F(L,K) = 2L+0.5K. Which for the following is an INCORRECT statement for the production function?

A)It is a long-run production function.

B)WhenL=1 andK=2, the outputQ=3.

C)If the inputsLandKdouble, the outputQwill also double.

D)If the inputsLandKincrease, the unit cost of outputQwill decrease.

6."When the unit price is $10, I can sell 12 units; when the unit price is $14, I can only sell 10 units." Given the information, we can conclude that the salesman faces _______ demand.

A)elastic

B)inelastic

C)unitarily elastic

D)upward-slopping

7.Which of the following statement is INCORRECT about international trade?

A)Any trade barrier such as tariff or quota decreases the welfare of import country.

B)The key gain from trade is that both countries can consume outside their PPF.

C)When a country's currency depreciates, the country's exports will increase in the short run.

D)When a developing country trades with a developed country, the former always benefits but the later may or may not benefit.

8.Which of the following can be referred as the fixed cost in TV manufacturing?

A)Electric power bill

B)Salary of workers

C)Costs of raw materials

D)Mortgage payment of equipment

9.GasandAutomobilesare complements. If gas price drops, then auto's market equilibrium price will be likely to ____ and market equilibrium quantity will be likely to ____.

A)increase; increase

B)increase; decrease

C)decrease; decrease

D)decrease; increase

10.A firm's short-run costs are as the following:FC(fixed costs) = $500;VC(variable costs) = $1,000. The largest possible loss in the short-run should be

A)unavailable due to the lack of information.

B)$1,500

C)$1,000

D)$500