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1. All of the following are characteristics of monopolistic competition except that
   1. The firms tend not to recognize the reaction of competitors when determining prices.
   2. Individual firms have some control over the price of the product.
   3. The firms sell a homogeneous product.
   4. The consumer demand curve is highly elastic.
2. The difference between a normal profit and an economic profit is that an economic profit
   1. Is the payment required to acquire and retain entrepreneurial services?
   2. Is an amount in excess of the economic costs of the firm?
   3. Is an economic cost.
   4. Equals total revenue minus the costs of land, labor, and capital.
3. A supply curve illustrates the relationship between
   1. Price and consumer tastes.
   2. Price and quantity supplied.
   3. Supplyanddemand.
   4. Priceandquantitydemanded

4. Which of the following products are not complementary goods?

A. Cars and tires

B. Chips and dip

C. Lamps and light bulbs

D. Video tapes and DVDs

5. Y and Z are substitute goods. What would cause a shift in the supply curve to the right for Y, a normal good?

A. Cost-saving technological improvements in the production process for Y

B. Cost-saving technological improvements in the production process for Z

C. An expected increase in the future price of Y

D. An increase in the price paid for Z

6. What is the effect on the market price when both the supply and demand for a good increase?

A. Decrease only with inelastic demand

B. Decrease only with inelastic supply

C. Increase only with inelastic demand

D. Indeterminate from the given information

7. Marginal utility

A. Decreases when consumption expands

B. Increases when consumption expands

C. Indicates that a high consumption quantity is preferred to a low consumption quantity

D. Indicates that consumption decreases over time

8. What is disposable income?

A. The sum of consumption spending, interest payments, and savings

B. Gross domestic product divided by population, adjusted for inflation

C. Net domestic product plus a country's net income earned abroad less indirect business taxes

D. The total market value of all final goods and service produced within a specified country, less depreciation