Question 1 (2 points) Price elasticity of demand describes:

Question 1 options:

the size of the percentage change in the quantity supplied of a good or service when its demand changes due to a price change.

the size of the shift in demand of a good or service when its price changes by one percent.

None of these is true.

the size of the percentage change in the quantity demanded of a good or service when its price changes by one percent.

Question 2 (4 points) Pencils are likely ____________ than diamonds because ___________.

Question 2 options:

less price elastic; they have more available substitutes

more price elastic; they have more practical uses

less price elastic; they cost much less than a diamond

more price elastic; they have more available substitutes

Question 3 (3 points) Although individual perfectly competitive firms can influence the price of their product, these firms as a group cannot influence market price.

Question 3 options: True False Question 4 (3 points) Marginal revenue is the addition to total revenue resulting from the sale of one more unit of output.

Question 4 options: True False Question 5 (3 points) In a perfectly competitive market, producers:

Question 5 options:

can influence the price upward by restricting output.

often undercut the competition's price and force firms to leave the market.

None of these is true of perfectly competitive markets.

are able to sell as much as they want without affecting the market price.

Question 6 (3 points) The demand curves for firms in a perfectly competitive industry are perfectly elastic.

Question 6 options: True False Question 7 (3 points) Perfect competition is a market structure characterized by a single seller of a product or service.

Question 7 options: True False Question 8 (3 points) The study of how people behave strategically under different circumstances is called:

Question 8 options:

game theory.

strategy theory

game strategy.

strategy optimization.

Question 9 (3 points) If a perfectly competitive firm faces a market price of $3 per unit, and it decides to produce 30,000 units, the market price will likely:

Question 9 options:

stay the same.

increase.

decrease.

Cannot answer without more information.

Question 10 (3 points) When consumers' buying decisions are less sensitive to changes in price, we say that their demand is:

Question 10 options:

unit elastic

highly elastic.

less elastic.

very sensitive to changes in the price.

Question 11 (3 points) A Nash equilibrium:

Question 11 options:

is a concept named after the famous game theorist John Nash.

is reached when all players choose the best strategy they can, given the choices of all other players.

is a point in a game when no player has an incentive to change his or her strategy, given what the other players are doing.

All of the choices describe a Nash equilibrium.

Question 12 (4 points) The start-up costs associated with establishing water, sewer services, electricity, and energy and distributing products are substantial. This is an example of:

Question 12 options:

economies of scale.

aggressive tactics.

government intervention.

scarce resources.

Question 13 (4 points) ___________________ is about the number of firms, and ________________ is about the variety of products.

Question 13 options:

Oligopoly; monopolistic competition

Monopolistic competition; oligopoly

Monopoly; oligopoly

Perfect competition; monopoly

Question 14 (4 points) When average costs are increasing, marginal costs are greater than average costs.

Question 14 options: True False Question 15 (3 points) Which of the following is inconsistent with perfect competition?

Question 15 options:

a large number of buyers and sellers

price taker firms

product differentiation

freedom of entry or exit for firms

Question 16 (4 points) If the price of a good increases by 10 percent, its quantity demanded drops by 50 percent. The price elasticity of demand is:

Question 16 options:

-1

-0.2

-5

-2

Question 17 (4 points) One barrier to entry into a monopoly market is:

Question 17 options:

the existence of large economies of scale.

the high cost of required infrastructure for an industry.

All of these are barriers to a monopoly market.

very large fixed costs relative to variable costs.

Question 18 (4 points) In the short run, a competitive firm will not produce unless price is equal to average total cost.

Question 18 options: True False Question 19 (3 points) Which of the following industries most closely approximates perfect competition?

Question 19 options:

agriculture

steel

farm implements

clothing

Question 20 (4 points) Graphically, we can think of the marginal product of a factor as the:

Question 20 options:

additional cost associated with producing one more unit of output.

slope of the total cost curve, when output is plotted against the costs of the quantity of the inputs used.

slope of the total production curve, when output is plotted against the quantity of the input that is used.

additional inputs associated with producing one more unit of output.

Question 21 (3 points) The market model with the largest number of firms is:

Question 21 options:

monopoly.

monopolistic competition

oligopoly.

perfect competition.

Question 22 (3 points) An essential characteristic of a perfectly competitive market is:

Question 22 options:

goods are unique

sellers are price makers.

buyers and sellers share market power.

goods are standardized.

Question 23 (4 points) Suppose when the price of a can of tuna is $1, the quantity demanded is 250, and when the price is $2, the quantity demanded is 100. Using the mid-point method, the price elasticity of demand is:

Question 23 options:

78 percent.

-0.78.

128 percent.

-1.29.

Question 24 (3 points) If the price of a cup of coffee increases by 50 percent, the quantity demanded decreases by 50 percent. The price elasticity of demand is:

Question 24 options:

unit elastic.

zero.

inelastic.

elastic.

Question 25 (2 points) A one-firm industry is known as a(n):

Question 25 options:

oligopoly.

monopolistically competitive market.

monopoly.

perfect competition

Question 26 (4 points) One of the defining characteristics of an oligopoly is that:

Question 26 options:

all firms act in unison to create a perfectly competitive outcome.

one firm's behaviour can affect the others' profits.

all firms act in unison to create a monopoly outcome.

None of these statements is true.

Question 27 (3 points) Collusion is:

Question 27 options:

None of these statements is true

buyers acting in unison against a company in efforts to change its practices.

the act of firms undercutting one another in competition until zero profits are earned.

the act of firms working together to make decisions about price and quantity.

Question 28 (4 points) If the price of a cup of coffee increases by 50 percent, the quantity demanded decreases by 50 percent. The price elasticity of demand is:

Question 28 options:

inelastic.

zero.

unit elastic.

elastic.

Question 29 (4 points) Average fixed costs diminish continuously as output increases.

Question 29 options: True False Question 30 (3 points) In perfect competition, the demand for the product of a single firm is perfectly:

Question 30 options:

elastic because many other firms produce the same product.

inelastic because the firm produces a unique product.

elastic because the firm produces a unique product.

inelastic because many other firms produce the same product.