1. Ceteris paribus, ________ will increase quantity demanded, while ________ will decrease demand.

A. a price increase; more buyers

B.a price decrease; fewer buyers

C.a price decrease; a general income increase

D.advertising; more buyers

E.advertising; an income increase

2.Suppose the price elasticity of demand for widgets is 2, and the price of widgets decreases by 10 percent. The change in quantity demanded of widgets must

A.increase by 5 percent

B.decrease by 5 percent

C.increase by 20 percent

D.decrease by 20 percent

E.decrease by 200 percent

3.A technology company has invented a new device and has been awarded a patent for this product for twenty years. This creates ________, which provides the company opportunity to become a monopolist.

A.a barrier to entry

B.a few competitors

C.low startup costs

D.free entry and exit

E.similar but differentiated products

4.A worker can get paid $100 for a four-hour professional development course. If she must sacrifice making a product to sell online that earns her $10 per hour so she can attend the course, what is her opportunity cost?

A.$10

B.$25

C.$40

D.$100

E.$400

5.Country A and Country B are debating who has a comparative advantage and who has an absolute advantage. Country A has an opportunity cost ofcar for every plane produced. Country B has an opportunity cost ofcar for every plane produced. Given the information above, which of the following must be true?

A.Country A has an absolute advantage in plane production.

B.Country B has an absolute advantage in plane production.

C.Country B has a comparative advantage in plane production.

D.Country A has a comparative advantage in plane production.

E.Country A and Country B have a comparative advantage in plane production.

6.Assume a coal power plant is causing an increased amount of pollution because there is a change in the amount of carbon in the coal. If the pollution causes a negative social externality that has no effect on private costs and benefits, in which of the following ways does the socially efficient equilibrium compare to the free market equilibrium?

A.Optimal social quantity will equal private quantity, and social price will equal private price.

B.Optimal social quantity will be less than the private unregulated quantity, and social price will be less than private price.

C.Optimal social quantity will be less than the private unregulated quantity, and the optimal social price will be greater than the private price.

D.Optimal social quantity will be greater than the private unregulated quantity, and social price will be less than private price.

E.Optimal social quantity will be greater than the private unregulated quantity, and social price will be greater than private price.

7.Assume that there are two major telecommunications companies in a country. Firm A controls 45%, and Firm B controls 37% of the telecommunications market. Firm C controls the remaining portion of the total sales. For the market structure to be an oligopoly, what must be true?

A.All firms sell the same exact product.

B.One firm must control the entire market.

C.There is a dominant strategy for all firms.

D.The is no price discrimination of consumers.

E.There are high barriers to entry into the market.

8.Which of the following describes the effect that would occur on pencils if the government implemented a per unit subsidy on pencils?

A. The price of pencils would increase.

B. The output supplied in a market would increase.

C.The output supplied in a market would decrease.

D. A decrease in the number of suppliers of a product.

E.The opportunity cost of producing pencils would increase.

9.If marginal product increased from 50 to 60 when the quantity of labor increased from 200 to 205, then what must be true of costs over this range of output?

A. Marginal costs are decreasing.

B.Marginal costs are increasing.

C.Average total costs are increasing.

D.Average fixed costs are increasing.

E.Average variable costs are decreasing.