HI PLEASE ANSWER ALL

1. Assume the market for apples is initially in equilibrium. Which of the following will result in a higher equilibrium price of apples? a. An increase in both the demand for and the supply of apples b. An increase in the demand for and a decrease in the supply of apples c. A decrease in the demand for and a decrease in the supply of apples d. A decrease in the demand for and an increase in the supply of apples e. A decrease in the demand for apples and no change in the supply of apples

2. The production possibilities model is used to demonstrate which of the following? a. The combination of two goods produced with limited resources b. The amount of resources used to produce only one good c. The equitable distribution of goods among consumers d. The price paid for different goods that are produced e. The desired amount of goods to be produced

3. If the government is concerned about the high cost of higher education, how might it lower the price of higher education without resorting to price controls? a. It can subsidize universities, thereby shifting the supply curve to the right. b. It can subsidize universities, thereby shifting the supply curve to the left c. It can subsidize universities, thereby shifting the demand curve to the right. d. It can subsidize students, thereby shifting the supply curve to the right. e. It can subsidize students, thereby shifting the demand curve to the left 4. To raise revenue, a state government is considering imposing a new per-unit tax on the sales of goods X and Y. The price elasticity of demand is -0.75 for good X and in-2.5 for good Y. Imposing the tax on which goods will generate the most revenue for the government?

a. Good Y, because its demand is more elastic than that of Good X b. Good Y, because its demand is less elastic than that of Good X. c. Good X, because it demand is less elastic than that of Good Y d. Good X. because its demand is more elastic than that of Good Y e. Good x, if it is an inferior good

5. If the government levies a tax on a good for which the demand is more price elastic than the supply, the burden of the tax will a. fall entirely on the sellers b. fall entirely on the buyers c. fall more on the buyers than on the sellers d. fall more on the sellers than on the buyers e. depend on whether the good is a normal good or an inferior good

6. The theory of comparative advantage can best explain which of the following phenomena? a. Countries can achieve mutual benefits through trade. b. Opportunity cost increases with quantity of output c. Competitive firms are more efficient than monopolies d. Production possibilities curves shift with better technology capabilities. e. Some resources are equally adaptable to alterative uses.

7. Which of the following is true of scarcity? a. An increase in standard of living in developed economies means that it is just a matter of time before scarcity is eliminated.

b. Scarcity can be eliminated because people have unlimited wants that motivate them to work hard to satisfy the wants c. Scarcity can be eliminated, but only after global economic efficiency is achieved d. Scarcity can never be eliminated regardless of the level of wealth e. Scarcity is exclusively a problem of low-income economies.

8. If the demand for a good is highly price elastic, which of the following is true? a. A large percent change in price will lead to a smaller percent change in quantity demanded b. An increase in price will lead to a lower total revenue. c. The good's demand curve in very steep. d. The proportion of income spent on the good is small e. The elasticity coefficient is positive

9. Which of the following is true along a downward sloping demand curve a. The demand curve is perfectly elastic b. The demand curve is perfectly inelastic c. The quantity demanded will increase as price decreases d. The equilibrium quantity will decrease as supply increases e. The equilibrium price will increase as supply increases.

10. Which of the following is true about a market economy? a. It lacks incentives but values competition b. It promotes government involvement over individual entrepreneurship.

c. It values equality over efficiency d. It recognizes the advantages of private property rights. e. It relies on central planning for resource allocation 11. Which of the following explains the fundamental reason for the study of economics? a. The capitalist system prevents the efficient use of resources to meet society's needs. b. Countries have been unable to maintain full employment. c. Individuals make decisions based on their self-interest. d. There are limited resources to meet unlimited wants e. An allocation problem exists because resources exceed wants.

12. Specialization in production in beneficial because it a. increases overall production of goods and services b. promotes price stability c. eliminates the need for barter d. reduces monopoly power e. limits government interference in the marketplace 13. Jim Smith is happy that he is making a weekly profit of $750 from a small business that he runs in the family garage Jim's father is more pessimistic about this business venture as he believes that Jim could be earning $950 a week by working for someone else doing the same work In his thinking. Jim's father has used the concept of a. comparative advantage b. opportunity cost c. producer surplus d. utility maximization

e. cost minimization 14. Gwen owns a shop that sells popcorn and cotton candy. If the price elasticity of demand for her popcorn is -2.3 and the price elasticity of demand for her cotton candy is-1.3, which of the following will lead to the largest increase in Gwen's total revenue? a. An increase in the price of both popcom and cotton candy b. An increase in the price of popcorn and a decrease in the price of cotton candy c. A decrease in the price of popcom and an increase in the price of cotton candy d. A decrease in the price of both popcorn and cotton candy e. A decrease in the price of popcom and no change in the price of cotton candy

15.Which of the following is most likely to cause a production possibilities curve to exhibit increasing opportunity costs? a. International trade b. Technological advances in the production of both goods c. Inputs not equally adaptable to alternative uses d. Inefficient use of resources e. An increase in the price level 16.Assume the market for potatoes is perfectly competitive. The government sets an effective price floor in the potato market to raise the incomes of potato farmers. As a result, which of the following will occur? a. There will be a shortage in the market for potatoes b. The quantity supplied of potatoes will exceed the quantity demanded c. The quantity demanded of potatoes will increase d. The market price will fall toward the equilibrium price e. The supply of potatoes will increase, and the demand will decrease

17.Assume that a good has a perfectly inelastic market demand curve and a relatively elastic supply curve. If the government grants a per-unit subsidy to the producers of the good, the subsidy will result in a. a decrease in both the equilibrium price and quantity b. an crease in the equilibrium quantity only c. a decrease in the equilibrium price and no change in the equilibrium quantity d. an increase in the equilibrium price and a decrease in the equilibrium quantity e. an increase in both the equilibrium price and quantity 18.An economy that produces two goods-X and Y- is currently producing at a point on its production posibilities curve. If the economy wishes to increase the production of good X, it must a. increase the production of good Y b. shift the production possibilities curve inward c. lower the price of good X d. lower the price of good Y e. decrease the production of good Y

19.The trade-offs associated with a movement along a production possibilities curve represent a. comparative advantage b. absolute advantage c. allocative efficiency d. productive efficiency e. Opportunity cost 20.Treadmill machines and stationary bikes are substitutes. Which of the following is most likely to occur if the price of stationary bikes increases?

a. The demand curve for stationary bikes will shift to the right. b. The equilibrium quantity of stationary bikes will increase c. The demand curve for treadmill machines will shift to the left. d. The equilibrium price of treadmill machines will decrease e. The equilibrium quantity of treadmill machines will icrease. 21.If there is a 10 percent increase in the price of hamburgers, a 15 percent decrease in the quantity demanded of hamburgers, and a 5 percent increase in the quantity demanded of chicken, which of the following is true? a. The cross price elasticity of demand between chicken and hamburgers is equal to +0.5, and hamburgers are a normal good b. The cross price elasticity of demand between chicken and hamburgers is equal to +0.5, and chicken and hamburgers are substitute goods. c. The cross price elasticity of demand between chicken and hamburgers is equal to -0.5, and hamburgers are an inferior good d. The cross price elasticity of demand between chicken and hamburgers is equal to +2.0, and chicken and hamburgers are substitute goods. e. The cross price elasticity of demand between chicken and hamburgers is equal to +1.5, and the demand for hamburgers is inelastic 22.In a perfectly competitive industry, the market equilibrium price is $5 per unit. An individual firm's. marginal revenge must be a. less than marginal cost b. greater than marginal coat c. equal to $5 d. Less than $5 e. greater than 55 23.A good can be produced at a lower average cost by a single firm supplying the entire market rather than several firms each supplying a fraction of the market when there is a

a. pure monopoly b. monopsony c. natural monopoly d. positive externality in production e. positive externality in consumption 24.Which of the following true for a perfectly competitive firm that is in long run equilibrium? a. The firm earns a positive economic profit. b. The sum of producer surplus and consumer airplus is minimized. c. There is deadweight loss in production d. The marginal revenue of the last unit produced is equal to the average fixed cost e. The firm produces at the minimum of its average total cost curve. 26.Which of the following is true of economic profit and accounting profit? a. Economic profit treats normal profit as an explicit cost, while accounting profit treats it an a implicit cost b. Both economic profit and accounting profit include normal profit as an implicit cost c. Economic profit takes into account both long run and short run costs, while accounting profit d. takes into account only short-run costs. Economic profit takes into account only implicit costs, while accounting profit takes into account only explicit costs e. Economic profit takes into account both explicit and implicit costs, while accounting profit takes to account only explicit costs

29.Which of the following is an example of price discrimination? a. A New York City grocery store charging a higher price for a Florida-grown orange than that charged by a Miami, Florida, store

b. A theater charging a 40-year old person more to see an evening movie than it charges a senior citizen c. A professional yard-care expert charging more to mow a large yard than to mow a small yard d. A small appliance store charging a higher price for a given telivision set than that charged by a large-volume discount store e. A local gasoline station charging a higher price for premium gas than for regular gas 30.Which of the following can be a barrier to entry in a product market? a. Constant returns to scale b. A homogeneous product c. A patent d. A price inelastic demand e. An income-melastic demand 31.Which of the following is true in the long run, but not in the short run, for all market structures? a. All inputs and costs are variable. b. Firms earn zero economic profits c. A firm's total cost increases an output produced increases d. Marginal product eventually falls because of the law of diminishing returns. e. Market prices decrease when demand decreases 32.Marginal utility is defined as the a. extra satisfaction a consumer receives from the consumption of an additional unit of a good b. increase in efficiency that comes from additional technology used in production

c. extra profit generated from a reduction in energy costs d. difference between marginal revenue and marginal cost at a given level of output e. extra income workers receive when working additional hours in overtime 33.Plastic bottles are produced in a perfectly competitive market. Which of the following will result if the govemment imposes an excise tax on producers of plastic bottles? a. The consumer surplus will decrease b. The producer surplus will increase c. The demand for plastic bottles will increase d. The supply of plastic bottles will increase e. The price of plastic bottles will decrease

34.Price elasticity of demand measures which of the following? a. The slope of the demand curve at a specified level of output b. The responsiveness of quantity demanded to a change in the price of a complementary good c. The responsiveness of quantity demanded to a change in the price of a substitute good. d. The responsiveness of quantity demanded to a change in consumer income e. The responsiveness of quantity demanded to a change in the price of a good 35.The slope of which of the following cost curves is equal to marginal cost? a. The total fixed cost curve b. The total variable cost curve c. The average total cost curve d. The average fixed cost curve e. The average variable cost curve

36.When a firm increases all of its inputs by 10 percent, its output increases by more than 10 percent. It can be concluded that the firm's production function exhibits a. decreasing returns to scale b. increasing returns to scale c. constant returns to scale d. diseconomies of scale e. diminishing marginal returns 37.When Wilmer Doors, Inc, reduced the price of its windproof door by 10 percent, the quantity of windproof doors demanded increased by 25 percent. Along this portion of ita demand curve, the absolute value of the price elasticity of demand for the windproof doors must be a. 1.50 b. 0.25 c. 2.50 d. 10.00 e. 25.00 38.Which of the following is true at a firm's profit maxmizing level of output? a. Marginal cost is constant b. Marginal cost is decreasing c. Marginal revenue is equal to marginal cost d. Marginal revenue is greater than marginal cost e. Price is greater than average revenue 39.As output increases, the long-run average total cost curve initially slopes downward and then slopes upward showing a. a decrease in short-run average fixed costs b. a decrease in short-run average variable costs

c. economies of scale and duseconomies of scale d. decreasing input prices and increasing product prices e. a decrease in labor and an increase in capital 40.In long-run cost analysis, which of the following costs would be equal to zero?

a. Marginal costs b. Total costs c. Variable costs d. Fixed costs e. Average total costs 41. Which of the following occurs when a firm is experiencing economies of scale

a. Its total cost in minimized b. Its total cost is falling c. Its long-run average total cost is rising. d. Its long-run average total cost is falling e. Its marginal cost is rising 42.Which of the following will result from a firm experiencing economies of scale?

a. Long-run cost per unit falls as more output is produced b. Long run cost per unit increases as more output is produced c. Short run cost per unit falls as more output is produced d. Marginal cost falls as more output is produced.

e. Marginal cost increases as more output is produced. 43.The market price for product X is $1.25 per unit. A firm selling product X raised its price to $1.26 und discovered that it was not able to sell a single unit of product X. From this information we can conclude that the firm must be operating in a. a monopolistic market b. a monopolistically competitive market c. a perfectly competitive market d. an oligopolistic market e. a duopolistic market 44.Which of the following is true about a perfectly competitive firm that is producing such that price equals marginal cost and average variable cost? a. It is making a positive economic profit b. It is making a positive accounting profit c. It has a loss less than its fixed costs d. It has a loss equal to its fixed costs. e. It has a loss greater than its fixed costs 45.The marginal revenue product of labor for a firm that sells its output in a perfectly competitive market is equal to a. price times average product of labor b. price times marginal product of labor c. price divided by average product of labor d. marginal revenue times average product of labor e. marginal revenue divided by price elasticity of demand 46.Major antitrust legislation is based on the assumption that

a. cooperation between firms in the industry is more desirable than competition b. the standard of living can be raised by government regulation of wages and prices c. competitive conditions can be maintained through government intervention d. the trend toward a collectivist economy in inevitable e. labor unions are monopolies 47. If the production of a good generates a negative externality, the market equilibrium output of the good will be a. sold at a price greater than the marginal social benefit b. sold at a price less than the marginal external cost c. larger than the socially optimal output d. smaller than the socially optimal output 48.If the production of a good pollutes the environment, which of the following is true? a. The price of the good in an unregulated market exceeds the socially efficient price b. The social marginal cost of production exceeds the private marginal cost of production c. A per unit tax on the good will necessarily lead to a further loss of efficiency. d. The private market produces too little of the good, necessitating a subsidy to reach the efficient level of output e. There is no economic justification for continuiing production. 49.If the demand for college graduates increases relative to the demand for high school graduates and the tution at universities increases, wages of college graduates relative to high school graduates will a. increase, resulting in more income inequality b. decrease, resulting in more income inequality c. increase, resulting in less income inequality

d. decrease, resulting in less income inequality e. remain constant 50.When the marginal social costs of producing a good exceed the marginal private costs, the socially optimal level of production can be achieved by a. setting the price of the product at the market equilibrium price b. decreasing the price of the product c. encouraging more firms to enter the industry d. imposing a tax on producers to limit output e. subsidizing producers to increase output 51.Tiffany quits her job as a professor, which pays her $60,000 a year, to open a surf shop. At the end of the surf shop's first year, Tiffany has made an accounting profit of $125,000. The value of Tiffany's economic profit is

1. $60,000 b. $65,000 c. $100,000 d. $125,000 e. $185,000
2. 52. When a perfectly competitive firm is producing the profit-maximizing quantity of output, which of the following must be true m the short run? a. Marginal Revenue=Marginal Cost= Price b. Marginal Revere =Marginal Cost= Average Cost c. Marginal Revenue=Price, and Price >Marginal Cost d. Marginal Revenue= Marginal Cost, and Marginal Cost >Price e. Marginal Revenue=Marginal Cost, and Marginal Cost

53.Which of the following is true for a perfectly competitive firm that is in long run equilibrium? a. The firm earns a positive economic profit. b. The sum of producer surplus and consumer surplus is minimized. c. There is deadweight loss in production d. The marginal revenue of the last unit produced is equal to the average fixed cost e. The firm produces at the minimum of its average total cost curve. 54.In a perfectly competitive industry, the market equilibrium price is $5 per unit. An individual firm's. marginal revenge must be a. less than marginal cost b. greater than marginal coat c. equal to $5 d. Less than $5 e. greater than 55 55.Which of the following is true of economic profit and accounting profit? a. Economic profit treats normal profit as an explicit cost, while accounting profit treats it as an implicit cost b. Both economic profit and accounting profit include normal profit as an implicit cost c. Economic profit takes into account both long run and short run costs, while accounting profit takes into account only short-run costs. d. Economic profit takes into account only implicit costs, while accounting profit takes into account only explicit costs e. Economic profit takes into account both explicit and implicit costs, while accounting profit takes into account only explicit costs 56.When firms in monopolistic competition operate in long-run equilibrium, they have excess capacity because they produce an output level that is a. less than the level that maximizes their total revenues

b. greater than the level that maximizes their total revenues c. less than the level that minimizes their long-run average total costs d. greater than the level that minimizes their long-run average total costa e. generating zero economic profits 57.Firms A, B, and C, the only firms in an industry, have formed a cartel. Each firm has a quota for the quantity that the firm is allowed to sell. If Firm A deviates from the quota and sells a higher quantity, but Firm B and Firm C stick to their quota, which of the following will most likely occur in the short run? a. firm A will earn lower profits, and Firms B and C will earn higher profits b. Firm A will earn higher profits, und Firms B and C will earn lower profits c. All three firms will earn lower profits. d. All three firms will earn higher profits e. All three firms will earn zero economic profit

58.Which of the following is true of a monopoly? a. It has a perfectly inelastic demand curve b. Its marginal revenue curve lies below its demand curve. c. It raises its price to sell a greater amount of its product d. It sets its price below average variable cost to prevent entry of new firms into the industry. e. It produces the output level that minimizes average total cost.

59.Which of the following will most likely occur in the labor market for fast-food workers if the number of workers in the labor force decreases? a. The demand curve of labor will shift to the right, increasing the equilibrium wage rate b. The supply curve of labor will shift to the right, decreasing the equilibrium wage rate

c. The supply curve of labor will shift to the right, but the wage rate will remain constant d. The supply curve of labor will shift to the left, increasing the equilibrium wage rate e. The supply curve of labor will shift to the left, but the wage rate will remain constant 60.In an imperfectly competitive labor market, the equilibrium quantity of workers in determined at the intersection of a. demand for and supply of labor b. demand and marginal revenue product c. marginal revenue product and marginal cost of labor d. marginal cost of labor and supply of labor e. marginal revenue and marginal cost of output 61.What happens when a natural monopoly is regulated to charge its customers a price equal to its average total cost rather than the profit-maximizing price a. The monopoly's profits increase b. The area of consumer surplus decreases c. The output produced by the monopoly decreases d. The price charged by the monopoly decreases e. The price charged by the monopoly increases 62.Raphael gave up a job earning $20,000 per year to start his own lawn mowing business. He spent $6,000 for fuel, maintenance, and insurance in the first year of operations. If Raphael reported total revenue of $35,000 for the year, what was his economic profit a. $6,000 b. $9,000 c. $14,000 d. $29,000

e. $15,000 63.A good that is neither excludable nor rivalrous is known as a. a private good b. an inferior good c. a public good d. a normal good e. a common resource good 64.The manager of a car wash firm determines that hiring an additional worker will result in 9 more car washes per day and will cost $80 per day. If the price of a car wash is $10, that last worker should a. be hired because the worker's marginal revenue product is greater than the worker's marginal labor cost b. be hired because the worker's marginal revenue is greater than the worker's marginal labor cost c. not be hired because the worker's marginal product is less than the worker's marginal labor cost d. not be hired because the worker's marginal revenue product is less than the worker's marginal labor cost e. not be hired because the workers wage is greater than the worker's marginal product 65.A firm uses capital and labor to produce its output. At its current output level, the marginal product of capital is 60 units of output and the marginal product of labor is 30 units of output. The rental price of capital in $60 If the firm is minimizing the cost of producing its current output, what is the wage rate of labor a. $90 b. $60 c. $15 d. $30

e. It cannot be determined from the given information 66.The demand for houses makes demand for products and services such as lumber and carpenters in this case, the demand for lumber and carpenters is an example of a. the substitution effect b. the income effect c. factor productivity d. derived demand e. aggregate demand 67.If the current year's Lorenz curve is farther away from the diagonal 45- degree line than the previous year's Lorenz curve, the increase in distance reflects a a. larger surplus of workers b. lower market demand c. larger trade deficit d. higher income level e. greater degree of income inequality 68.A perfectly competitive firm in long-run equilibrium will be all of the following EXCEPT a. producing where price equals marginal cost b. producing where price equals average total cost c. producing where margial cost is at a minimum d. operating at the efficient scale e. earning zero economic profit

69.An increase in the minimum wage will result in

a. an increase in the quantity of labor supplied b. in increase in the demand for labor c. an increase in the amount of labor employed d. decrease in the demand for labor e. decrease in the supply of labor 70.An admision policy that requires students entering college to provide evidence that they were vaccinated against commonly known diseases, such a measles, results in a. negative externalities b. a decrease in the external benefit of vaccinations c. an increase in the external cost of vaccinations d. positive externalities e. an increase in the demand for teachers

71.In which market does allocative efficiency occur in the long run? a. Perfect competition b. Monopolistic competition c. Oligopoly d. Monopoly e. Cartel

72.Labor market monopoly power exists in which of the following situation? a. A firm becomes a wage taker b. There is a single employer of a particular type of labor. c. Highly skilled workers generate higher than average profits

d. A good is manufactured by only one firm that hires unskilled workers e. Labor unions participate in negotiating labor contracts

1. The question of for whom to produce goods and services is primarily answered by which of the following in a command economy?

a)Consumers' choice

b)Producers' choice

c)The price system

d)The government

e)Consumers' willingness to pay

2. Using all its available resources, Country Y can produce either 150 units of food or 30 units of clothing, whereas Country Z can produce either 40 units of food or 30 units of clothing. Which of the following is true?

a)Country Y has a comparative advantage in producing clothing and an absolute advantage in producing food

b)Country Z has a comparative advantage in producing clothing and an absolute advantage in producing both food and clothing.

c)Country Y has a comparative advantage in producing clothing, but Country Z has an absolute advantage in producing food

d)Country Z has a comparative advantage in producing clothing, and Country Y has a comparative advantage in producing food.

e)Country Y has an absolute advantage in producing both clothing and food, and Country Z has a comparative advantage in producing both clothing and food.

3. Countries can gain from trade as long as each country specializes in the production of the goods

a)in which it has an absolute advantage in production

b)in which it has a comparative advantage in production c)that use labor-intensive technology

d)that use capital-intensive technology e)that have a higher opportunity cost than those produced by other countries

4. According to marginal analysis, a decision maker undertakes an activity if

a)the activity cost is within the budget of the decision maker b)the activity generates income for the decision maker

c)the marginal benefit of the activity is greater than the marginal cost of the activity

d)the marginal cost of the activity is constant and predictable e)the activity can be financed by margin borrowing

5. Which of the following best defines the terms of trade?

a)Whether a nation has a most-favored-nation designation from another nation

b)The ratio at which two nations exchange two goods

c)The equal division of gains from trade between two nations

d)The unequal division of gains from trade between two nations

e)The exchange rate between two nations currencies

6.The production possibilities curve illustrates the basic principle that

a)production of more goods requires fewer resources

b)to produce more of one good, less of another good must be produced

c)the economy automatically attains optimum efficiency d)the economy always increases productivity e)prices determine the most efficient allocation of resources

7. If Tom can knit 1 sweater or cook 5 dinners in an evening while John can knit 1/2 a sweater or cook 5 dinners in an evening, then

a)John has an absolute advantage in cooking dinners

b)John has an absolute advantage in knitting sweaters

c)John has a comparative advantage in cooking dinners d)John has a comparative advantage in knitting sweaters e)more information is needed to determine who has a comparative advantage in cooking dinners

8. A price ceiling set below the market equilibrium price will most likely lead to

a)an excess supply

b)a decrease in the per-unit production cost

c)profit minimization

d)a less efficient outcome

e)a decrease in the marginal benefit from the last unit sold

9. Which of the following will shift the demand curve for natural gas to the right?

a)A new production process makes it less expensive to produce natural gas.

b)A recession causes people's incomes to decrease, and natural gas is a normal good.

c)The price of coal increases, and coal is a substitute for natural gas.

d)The price of natural gas decreases

e)The government limits the amount of natural gas that can be produced each year.

10.If a society is producing a combination of goods on its production possibilities curve, which of the following must be true of the society?

a)It is producing efficiently

b)It is not using all the available c)The economy is growing d)There is unemployment.

e)There is inflation.

11. If a country eases its immigration policy and immigration to the country increases, which of the following is most likely to occur?

a)An outward shift in its production possibilities curve because the demand for goods and services in the country will increase b)An outward shift in its production possibilities curve because the country has more labor resources

c)No change in its production possibilities curve because immigrants are not considered to be part of the country's labor force d)An inward shift in its production possibilities curve because most of the immigrants will be employed in low-wage occupations e)An inward shift in its production possibilities curve because the country's unemployment rate will increase.

12.Assume that the price elasticity of demand for pencils is equal to - 2. If the price of pencils decreases by 10 percent, which of the following can be concluded?

a)The quantity demanded of pencils will increase by 20 percent.

b)The quantity demanded of pencils will decrease by 5 percent.

c)total revenue will decrease by 10 percent.

d)Total revenue will increase by 10 percent.

e)The demand for pencils is inelastic in this price range.

13. Afler a per-unit tax is placed on producers of a pood in the market, the entire burden of the tax has been shifled to consumers in the form of a higher price. Based on the information, which of the following must be true?

a)The demand curve for the good is downward sloping

b)The supply of the good is perfectly inelastic.

c)The demand for the good is perfectly inelastic.

d)Consumers will purchase fewer units of the good at a higher price.

e)The tax acts like a price floor in the market.

14. Morgan wants to buy two tickets to a concert. The price of a ticket is $50, and he expects to wait 30 minutes in line to buy the tickets. If Morgan's wage is $24 per hour, the opportunity cost of buying the two tickets is

a)$24

b) $50

c)$100

d)$112

e)$124

15. For a normal good, the income and substitution effects of a price change are used to explain

a)the positive relationship between price and total revenue

b)the negative relationship between price and quantity demanded

c)why marginal revenue decreases over higher levels of output for a monopolist

d)why surpluses or shortages occur in competitive markets

e)how businesses choose the least cost combinations of inputs

16. Which of the following would cause a decrease in the demand for a good?

a)A decrease in the supply of the good

b)A decrease in the price of the good

c)An increase in the number of producers manufacturing the good

d)An increase in the price of a substitute good e)An increase in the price of a complementary good

17. when the demand for a good is price inelastic an increase of the price of the good will cause

a)an increase in the firm's total revenue

b) a decrease in the firm's total revenue

c)an increase in the demand for the good

d) a decrease in the demand for the good

e)an increase in the supply of the good

18. If the government levies a tax on a good for which the demand is more price elastic than the supply, the burden of the tax will

a)fall entirely on the sellers

b)fall entirely on the buyers

c)fall more on the buyers than on the sellers d)fall more on the sellers than on the buyers

e)depend on whether the good is a normal good or an inferior good

19. if the demand for kale increases at the same time the supply decreases, what will happen to the equilibrium price and quantity of kale?

a)The price will increase the quantity wiil decrease

b)The price will decrease and the quantity will be indeterminate

c)the price will increase and the quantity will be indeterminate

d) the price will be indeterminate and the quantity will decrease

e) The price will be indeterminate and the quantity will increase

20. If income elasticity of demand for a good is negative, what does it mean when income increases?

a)Demand for the good increases because the good is a normal good

b)Demand for the good increases because the good is an inferior good

c)Demand for the good decreases because the good is an inferior good.

d)The price of the good increases because the good is a normal good

e)The price of the good decreases because the good is a normal good

21. When spending all of a fixed amount of income on good X and Y, what condition must be met to determinate the optimal consumption bundle?

a)the marginal utility of good X must equal the marginal utility of good Y

b) the marginal cost of good X must equal the marginal revenue of good Y

c) the total utility of good X must equal the total utility of good

d) the total utility of good X divided by the price of good X must equal the total utility of good Y divided by the price of good Y

e) the marginal utility of good X divided by the price of good X must equal the marginal utility of good Y divided by the price of good Y.

22. What does a short run production function assume?

a)Production occurs during a time period of one year or less

b)Production occurs during a time period of six months or less

c)At least one factor of production is fixed.

d)All factors of production are variable.

e) None of the factors of production are variable.

23.Production efficiency occurs when a firm produces an output level that does which of the following?

a)Minimizes average total cost

b)Minimizes average variable cost

c)Minimizes marginal cost

d)Maximizes short-run economic profit

e)Maximizes revenue

24.Which of the following is true about average fixed cost?

a)It is at its minimum at the quantity of zero units.

b) It is equal to average total cost plus average variable cost.

c) It is equal to the vertical distance between the average total cost curve and the average variable cost curve at any level of output.

d)It falls over lower levels of output and then gradually increases over higher levels of output.

e)It is equal to the vertical distance between the marginal cost curve and the marginal revenue curve at any level of output

25.When the marginal cost curve is above the average total cost curve, the average total cost is

a) rising

b)falling

c)constant

d)at its minimum

e)equal to the average variable cost

26. Which of the following statements about short-run costs is correct?

a)Average fixed cost decreases as a firm's output level increases.

b)Marginal cost equals average variable cost when average variable cost is at maximum.

c)Average variable cost must be decreasing when marginal cost is increasing.

d)The difference between average total cost and average variable cost remains constant as a firm's output level increases.

e)Marginal cost can be negative if marginal product is negative

27. Excess capacity exists when which of the following is true?

a)A firm is charging a price higher than what consumers are willing to pay.

b)A firm is producing a quantity lower than the quantity that minimizes average total cost.

c)A firm is producing a quantity higher than the quantity where marginal revenue equals marginal cost

d)A firm is receiving a price that is lower than the amount a consumer is willing to pay.

e)A firm is experiencing an increase in the average fixed cost.

28. A factor that affects the price elasticity of demand for a product is

a)availability of substitutes for the product

b)the supply of the product

c)the number of firms selling the product in the market

d)the marginal cost of production for the product

e)the market equilibrium price

29.When Lillian's annual income increases from $40,000 to $80,000, her quantity demanded for movies increases from 25 to 30. Which of the following statements is true?

a)Movies are an inferior good for Lillian.

b)Lillian's income elasticity of demand for movies is less than 1

c)Lillian's income elasticity of demand for movies is 1.

d)Lillian's demand for movies is price inelastic.

e)Lillian's price elasticity of demand for movies is 1

30.If the absolute value of the price elasticity of demand for oranges is 2.5, then increasing the price of oranges by 10 percent will result in

a)the sale of 10 additional oranges

b)the sale of 25 additional oranges

c)the sale of 25 fewer oranges

d)a 25% increase in the quantity of oranges demanded

e)a 25% decrease in the quantity of oranges demanded

31. Hezi spends all his income on three items: food (F), clothing (C), and entertainment (E). With MU representing marginal utility and P representing price, which of the following conditions ensures that Hezi maximizes his total utility?

a) f/ = c = Pe/Pf

b) MUF/MUc = MUC/MUE = MUe/MUf

c)MUf/PF + MUc/Pc + MUe/Pe = 1

d)MUf/PF = MUc/Pc = MUe/PE

e)MUF + MUc + MUe = PF + Pc + PE

32. Farmer Jones uses labor and capital to produce wheat. Between 1990 and 2000 the number of person-hours needed to produce a bushel of wheat fell from 0.5 to 0.3, resulting in employment of fewer workers. This is an example of

a)a decrease in labor productivity

b)an increase in labor productivity

c)the law of diminishing returns

d)economies of scale

e)diseconomies of scale

33. 'The demand curve for a normal good is downward sloping because

a)the substitution effect of a price decrease causes a decrease in consumers' purchasing power

b)the income effect of a price decrease offsets the substitution effect

c)both the income and substitution effects of a price decrease cause the consumer to purchase more of the good

d) there are no substitutes for a normal good; consumers will buy more of the good even when the price increases

e)there is a positive relationship between price and quantity purchased by consumers

34.Which of the following can be a barrier to entry in a product market?

a)Constant returns to scale

b)A homogeneous product

c)A patent

d)A price-inelastic demand

e)An income-inelastic demand

35.Which of the following is a unique characteristic of oligopoly?

a)Easy entry into or exit from the industry

b) Significant diseconomies of scale

c)Interdependence among firms

d)Absence of deadweight loss

e)Zero economic profit in the long run

36.The market price for product X is $1.25 per unit. A firm selling product X raised its price to $126 and discovered that it was not able to sell a single unit of product X From this information we can conclude that the firm must be operating in

a)a monopolistic market

b)a monopolistically competitive market

c)a perfectly competitive market

d)an oligopolistic market

e)a duopolistic market

37.Which of the following is true of economic profit and accounting profit?

a)Economic profit treats normal profit as an explicit cost, while accounting profit treats it as implicit cost.

b)Both economic profit and accounting profit include normal profit as an implicit cost

c)Economic profit takes into account both long run and short-run costs, while accounting profit takes into account only short-run costs

d)Economic profit takes into account only implicit costs, while accounting profit takes into account only explicit costs.

e)Economic profit takes into account both explicit and implicit costs, while accounting profit takes into account only explicit costs.

38. A firm's demand for capital is known as a derived demand because

a)it is derived from the demand for labor

b) it is derived from the firm's desire to possess capital

c)the price paid for capital is derived from the market for capital

d)the amount of capital needed depends on the demand for the firm's products

e) the firm will benefit from hiring an additional unit of capital

39. Which of the following explains why the government provides for national defense?

a)People will honestly tell the government how much they value national defense.

b)People cannot be excluded from benefiting from national defense.

c)Protecting one person means less protection for someone else.

d)The public feels threatened by the private sector's provision of national defense.

e)The marginal cost of national defense to serve an additional person is positive.

40. The labor demand curve for a perfectly competitive firm is

a)perfectly elastic at the market wage rate

b)the same as the demand curve for the firm's product

c)the same as the value of the marginal product of labor

d)derived from the marginal factor cost

e)negatively related to the demand for the firm's product

41. A pollution tax is imposed on firms whose production processes discharge toxins into the environment to account for

a)the unpaid private production costs

b) the costs of pollution cleanup

c)the external benefit of production

d)the external cost of pollution

e)the external cost created by the tax

42. If there is a decrease in the demand for automobiles, how will the price of automobiles and the wages of autoworkers be affected?

The Price of Automobiles. Wages

a)Increase Increase

b)Increase decrease

c)No change Decrease

d)Decrease Increase

e)Decrease Decrease

43. If positive externalities exist in a market, which of the following government actions will most likely increase allocative efliciency?

a)Subsidizing the producers in that market

b)Taxing the consumers in that market

c)Taxing the producers in that market

d)Setting a price ceiling in that market

e)Setting a price floor in that market

44. Hats are produced in a constant-cost perfectly competitive industry. If the market demand for hats decreases, what will happen to the number of workers a typical firm hires and the wages in the long run?

a)Each firm will hire fewer workers and pay the same wages.

b)Each firm will hire the same number of workers and pay lower wages.

c)Each firm will hire more workers and pay the same wages.

d)Each firm will hire more workers and pay lower wages.

e)Each firm will hire more workers and pay higher wages

45. FasF has a Gini index of 0.5 and Country B has a Gin index of 0.3. Which of the following statements must be true?

a)Country A has higher per capita income than Country B

b)Country B has higher per capita income than Country A.

c)Country A has more unequal income distribution than Country B.

d)Country B has more unequal income distribution than Country A

e)Country A has a larger population than Country B.

46. The portion of an individual's labor supply curve that bends backward at higher wages represents a preference for

a)higher wages

b)other occupations

c)higher productivity

d)work over leisure

e)leisure over work

47. A profit-maximizing firm will continue to hire additional units of labor until the marginal revenue profit of the last unit of labor is

a)greater than zero

b)equal to zero

c)less than the wage or marginal factor cost

d) equal to the wage or marginal factor cost

e)greater than the wage or the marginal factor cost

48. Assume that production of good X has an external cost. Which of the following is true of the industry that produces good X?

a)It will overproduce X because marginal social benefit is less than marginal private benefit.

b)It will overproduce X because marginal social benefit is greater than marginal private benefit.

c)It will overproduce X because the industry ignores marginal social cost.

d)It will underproduce X because the industry ignores marginal social benefit.

e) It will underproduce X because marginal social cost is greater than marginal private cost.

49. In what type of market structure is non-cooperative strategic behavior among firms in the same industry most likely to occur?

a)Perfect competition

b)Monopolistic competition

c)Monopsony

d)Oligopoly

e)Monopoly

50. Assume that a firm is producing the output level Qo with labor and capital and that the unit price of labor is $10 and the unit price of capital is $20. If the marginal product of the last unit of labor is 100 units, what must be the marginal product of the last unit of capital if the firm is using the input combination that minimizes total cost?

a)5

b)20

c)50

d)100

e) 200

51. As long as the price is greater than average variable cost, a monopolist chooses its profit-maximizing output where

a) =

b)P = ATC

c)MR = MC and sets its price equal to marginal cost

d)MR = MC and sets its price above marginal cost

e)MR = MC and sets its price equal to its average total cost

52. Which of the following price regulations would allow a natural monopoly to earn normal profit?

a)Setting a price equal to marginal cost

b)Setting a price equal to average fixed cost

c)Setting a price equal to average total cost

d)Setting a price equal to average variable cost

e)Setting a price equal to long run total cost

1. An economic system in which there are elements of both private and public enterprise is best classified as which of the following?
2. traditional economy
3. Market economy
4. Mixed economy
5. Centrally planned economy
6. Feudal economy

2. A new chemical cleaning solution is introduced to the market. Demand is qd=1000-2p and supply is qs=100+p. Which of the following is the equilbrium price (P) and guantity (q) in this market?

a)$2;100

b)$100; 1,000

c)$300; 400

d)$400; 300

e)$1,000; 100

3.The govemment plans to impose a $I per-unit tax on either gasoline or apples. Which of the following is the best reason for taxing gasoline over apples?

a)The price elasticity of demand for gasoline is relatively inelastic, so the tax revenue will be higher and the deadweight loss will be higher than if it taxed apples.

b)The price elasticity of demand for gasoline is relatively inelastic, so the tax revenue will be higher and the deadweight loss will be lower than if it taxed apples.

c)The price elasticity of demand for gasoline is relatively inelastic, so the tax revenue will be lower and the deadweight loss will be lower than if it taxed apples.

d)The price elasticity of demand for gasoline is relatively elastic, so the tax revenue will be higher and the deadweight loss will be lower than if it taxed apples.

e)The price elasticity of demand for gasoline is relatively elastic, so the tax revenue will be higher and the deadweight loss will be higher than if it taxed apples.

4. Given that labor is the only variable input, what happens in the short run if the marginal product of labor is always falling?

a) Marginal product is greater than average product for all labor units hired after the first worker.

b)Average product is greater than marginal product for all labor units hired after the first worker.

c)Marginal product may be either greater than or less than average product for all labor units hired after the first worker.

d)Marginal product is constant for all labor units hired after the first worker.

e) Average product is constant for all labor units hired after the first worker.

5. All of the following are sources of monopoly power EXCEPT

a)ownership of essential resources

b)government licenses

c)a large number of firms in the market

d)economies of scale

e)patent ownership

6.If firms are earning an economic profit in a perfectly competitive market, then which of the following will occur in the market?

a)The market price will rise.

b)The firms' marginal costs will fall.

c)The firms' marginal costs will rise.

d)New firms will enter the industry.

e)The market will become a monopoly.

7.Economic profit or loss is equal to total revenue minus

a)all explicit costs

b)all implicit costs

c)both implicit and explicit costs

d)total fixed costs

e)total variable costs

8. A situation in which a monopolist charges different prices for a product to different customers for reasons not associated with cost of production is known as

a)product differentiation

b)price leadership

c)price discrimination

d)scaling the market

e)monopolistic competition

9. John's Deli is operating in a monopolistically competitive market and is currently caring positive economic profit. In the long run, John's Deli will earn

a)the same amount of economic profit because of its market power

b)zero economic profit because of the entry of new fins

c)greater profit by minimizing its long-run average cost of production

d)greater profit by charging a price higher than its marginal cost

e)greater profit by maximizing sales

10. Which of the following is always true for firms in a perfectly competitive industry?

a)Price is greater than marginal revenue.

b)Price is equal to marginal revenue.

c)Price is less than marginal revenue.

d)Marginal revenue increases as price decreases.

e)Marginal revenue increases as total revenue increases.

11. A monopolistically competitive firm undertakes an extensive advertising campaign to shift the?

a)marginal cost curve down

b)average total cost curve down

c)average variable cost curve up

d)marginal revenue curve to the left

e)demand curve to the right

12. When an imperfectly competitive firm is producing the profit-maximizing quantity of output, which of the following must be true in the short run?

a)Marginal revenue = marginal cost = price

b)Marginal revenue =marginal cost = average cost

c)Marginal revenue = price, and price > marginal cost

d)Marginal revenue = marginal cost, and marginal cost > price

e)Marginal revenue = marginal cost, and marginal cost < price

13. Which of the following is true for a monopoly?

a)There are low barriers to entry.

b)Price is greater than marginal revenue.

c)The firm shuts down in the short run if it does not ear positive economic profits.

d)Marginal revenue exceeds price at each unit of output

e)The firm maximizes profit by choosing an output at which price equals marginal cost.

14. Which of the following is a characteristic of an oligopoly?

a)There are few interdependent firms competing in a market.

b)There are no barriers to enter or exit the market.

c)There are many firms producing differentiated products.

d)Fins are exempt from government regulation.

e)Fins are guaranteed economic profits both in the short run and in the long run

15. A public utility is usually licensed to operate as a natural monopoly. A regulatory strategy that prevents the firm from capitalizing oh its monopoly power and allows it to earn only zero economic profits is to impose

a)marginal cost pricing that sets the firm's selling price equal to its marginal cost

b)marginal cost pricing that sets the firm's marginal cost equal to its marginal revenue

c)marginal cost pricing that sets the firm's average revenue equal to its marginal cost

d)average cost pricing that sets the firm's marginal cost equal to its average total cost

e)average cost pricing that sets the firm's selling price equal to its average total cost

16. A market structure with a large number of producers selling differentiated products is known as

a)oligopoly

b)monopoly

c)monopsony

d)monopolistic competition

e)perfect competition

17. In monopolistic competition, a firm's demand curve becomes more clastic as

a)new firms enter the market

b)existing firms exit the market

c)products become more differentiated

d)advertising increases

e)price falls

18. If at a given level of production, marginal revenue is $9 and marginal cost is $7, a profit-maximizing firm should

a)maintain its current level of production

b)decrease its level of production so that marginal revenue exceeds marginal cost

c)decrease its level of production until marginal revenue is equal to marginal cost

d)increase its level of production until marginal revenue is equal to marginal cost

e)consider the market structure before changing production levels

19. ClearWater is a profit-maximizing firm that supplies water to a city. The average total and marginal cost curves for Clear Water are negatively sloped at all possible ranges of production. If the socially optimal quantity of water is to be produced, the city government should set the price of water equal to the

a)average total cost and subsidize the resulting loss of Clear Water

b)average total cost and tax the resulting profit of Clear Water

c)marginal cost and subsidize the resulting loss of Clear Water

d)marginal cost and tax the resulting profit of Clear Water

e)difference between the average total cost and marginal cost

20. If marginal social benefit is greater than marginal private benefit, the level of output produced by the private market is

a)greater than the socially optimal quantity

b)less than the socially optimal quantity

c)not consumed by people who value it the most

d)sold at a higher price than the market equilibrium price, creating a persistent surplus

e)sold at a lower price than the market equilibrium price, creating a persistent shortage

21. The purpose of government antitrust policies is to

a)eliminate moral hazard problem

b)create a more equal income distribution

c)increase competition in a market

d)reduce the free-rider problem

e)increase the number of college graduates

22. Which of the following is true of public goods?

a)Nonpayers can be excluded from consuming public goods.

b)People need tax incentives to buy public goods.

c)Public goods are consumed by low-income consumers only.

d)Public goods are produced at zero cost to the public.

e)Public goods often involve spillover benefits.

23. For a monopolist, except for the first unit, why is marginal revenue always less than price?

a)The firm has market power to charge any price it wants for its product

b)The firm must lower prices on all units to sell additional units of output.

c)The firm faces an elastic demand curve in the relevant range of its output.

d)The firm produces a product that has no close substitutes

e)The firm sets its profit-maximizing quantity by equating marginal revenue with marginal cost

24. Economic profit is equal to which of the following?

a)Total revenue - explicit cost

b)Total revenue - implicit cost

c)Accounting profit - explicit cost

d)Accounting profit - implicit cost

e)Accounting profit - (explicit cost + implicit cost)

25. A firm's demand for labor curve is the same as which of the following?

a)Average product of labor curve

b)Marginal revenue curve

c)Marginal revenue product curve

d)Marginal product of labor curve

e)Marginal profit curve