Question 1

If a good is inferior and the income of the consumer increases:

Question 1 options:

A.The consumer will move to a lower indifference curve and the demand curve will shift right

B.The consumer will move to a lower indifference curve and the demand curve will shift left

C.The consumer will move to a higher indifference curve and the demand curve will shift right

D.The consumer will move to a higher indifference curve and the demand curve will shift left

Question 2

If the average variable cost is always increasing:

Question 2 options:

A.The ATC will not converge to the AVC

B.The ATC will always increase as wellsince ATC=AFC+AVC

C.The AVC will intersect the ATC at its minimum point

D.The ATC will still have a U-shape because of the AFC

Question 3

"There is no such thing as a free lunch" means:

Question 3 options:

A.Good quality food isn't cheap

B.That every choice has an opportunity cost

C.You'll have to pay later anyway

D.That you always have to pay for what you eat

Question 4

If the short run equilibirum price is such that a typical firm is making positive profits, what will happen in the long run?

Question 4 options:

A.More firms will enter, it'll increase the supply and decrease the price

B.More firms will enter the market, it'll increase the demand and increase the price

C.More firms will enter, it'll decrease the supply and decrease the price

D.The firms already in the market will increase the price in order to increase the profits

Question 5

A firm with a monopoly is producing less than firms in perfect competition because:

Question 5 options:

A.By producing less, it can charge more per unit

B.The firm with a monopoly wants to maximize profits

C.The demand is not perfectly elastic anymore

D.The marginal revenue is less than the price and thus crosses the marginal cost curve sooner