HI PLEASE ANSWER ALL 25 MULTIPLE CHOICE QUESTIONS

1. An economic system in which there are elements of both private and public enterprise is best classified as which of the following?

1. traditional economy
2. Market economy
3. Mixed economy
4. Centrally planned economy
5. 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)make 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