1. Trade will definitely take place:

which answer below

a. None of the statements associated with this question are correct.

b. only if the maximum that a consumer is willing and able to pay is equal to the minimum price the producer is willing and able to accept for a good.

c. if the maximum that a consumer is willing and able to pay is less than the minimum price the producer is willing and able to accept for a good.

d. only if minimum price the consumer is willing to pay is less than the minimum price the producer is willing and able to accept.

e. if the maximum that a consumer is willing and able to pay is greater than the minimum price the producer is willing and able to accept for a good.

2.The following estimates have been obtained for the market demand for cereal: lnQ= 9.01 - 0.68 lnP+ 0.75 lnA- 1.3 ln M, whereQis the quantity of cereal,Pis the price of cereal,Ais the level of advertising, and M is income. Based on this information, determine the effect on the consumption of cereal of a4 percent increase in income.

which answer below

a. decrease of 0.75 percent

b. decrease of 5.2 percent

c. increase of 5.2 percent

d. decrease of 1.3 percent

e.increase of 1.3 percent

3. Scarce resources are ultimately allocated toward the production of goods most wanted by society because:

which answer below

a. these scarce resources are most efficiently utilized in these areas.

b. managers of firms are benevolent.

c. consumers demand inexpensive goods and services.

d. Firms wish to minimize costs

e. firms attempt to maximize profits.

4.A necessary cost-side condition for a firm to implement a cross-subsidization pricing strategy is:

which answer below

a. constant marginal cost.

b. economies of scale.

c. limited capacity.

d. diminishing marginal returns

e. economies of scope.

5.One of the conditions under which price discrimination is profitable is:

which answer below

a.physical separation of markets

b.inability of firms to resell the good.

c. differences in demand elasticities between markets

d. All of the statements associated with this question are correct.

e. ability of firms to identify consumer types.

6.A monopoly has produced a product with a patent for the last few years. The patent is going to expire. What will happen after the patent expires?

which answer below

a. Some firms will enter the industry.

b. The existing firm will retain its status as a monopoly but produce at a lower price.

c. The existing firm will shut down.

d. None of the answers in this question are correct.

e. The existing firm will leave the market.

1. 7.The figure below presents information for a one-shot game.

Firm AFirm BLow PriceHigh PriceLow Price(2, 2)(10, -8)High Price(-8, 10)(6, 6)

What are dominant strategies for firm A and firm B respectively?

which answer below

a. Neither firm has a dominant strategy.

b. (low price, low price)

c. (high price, high price)

d. (low price, high price)

e. (high price, low price)

8.Suppose that the members of the Federal Open Market Committee (the big-shots are the Federal Reserve) conclude that inflation is becoming too high. To control the inflation, they should implement

which answer below

a. a fiscal policy that increases government spending and reduces taxes

b. a fiscal policy that decreases government spending and increases taxes

c. a blended policy that both decreases government spending and raises interest rates.

d. a monetary policy that raises interest rates.

e. a monetary policy that lowers interest rates

9. Suppose the economy is entering a recession. Which of the following fiscal policies might Congress use to bring output up to its potential?

which answer below

a. An decrease in the deficit

b. An decrease in interest rates

c. A reduction in taxes

d. A decrease in both taxes and government spending

e. An decrease in government spending

10. Which of the following doesnotdescribe governmental policy actions that are helpful in supporting growth in an economy? Governmental policies that

which answer below

a. provide secure rights to private property.

b. establish an independent court system that impartially enforces contracts

c. provide an effective education

d. facilitate the development of an efficient financial system

e. ensure that new ideas or innovations are cheaply available to everyone in the economy once they are invented.

11.An economy can improve its standard of living by

which answer below

a. equalizing income across member of society which leads to a higher standard of living (on average).

b. reducing the amount of capital which leads higher productivity and thus to more jobs and a higher standard of living (on average).

c. investing in capital which leads to increased productivity and thus to a higher standard of living.

d. investing in capital which leads to lower productivity and thus to a higher standard of living.

e. reducing the amount of capital which leads lower productivity and thus to more jobs and a higher standard of living (on average),

12. Suppose that you are selling a good and you decide to increase your price, then you can expect

which answer below

a.the supply to respond to this change in demand thus arriving at equilibrium

b. fewer consumers to want your good, especially if there are many close substitutes for your product.

c. fewer consumers to want your good, especially if there are few close substitutes for your product.

d. to make a higher profit even with fewer consumers.

e. your customers to remain loyal and continue purchasing if you have a quality product

13. If a firm successfully uses advertising to increase the perception of differentiation between its product and those of its competitors, then the firm will

which answer below

a. be able to increase its price.

b. be able to increase sales quantity.

c. increase the welfare of society.

d. eventually have to reduce price to remain competitive

e. reduce its average total cost.

14. Suppose that the firms in a certain market are earning large economic profits. These profits will______________firms tothe market. This willdemand for everyone'sproducts, and willprice, and willprofits.

which answer below

a. force; exit; reduce; reduce; increase

b. attract other; enter; increase; increase; increase

c. force; exit; reduce; reduce; reduce

d. attract other; enter; reduce; reduce; reduce

e. force; exit; increase; increase; increase

15.When two parties engage in economic exchange

which answer below

a. both parties benefit and wealth is created.

b. one party wins and another party loses.

c. no party benefits from the transaction.

d. both parties benefit.

e. one party exerts economic power over the other.

16.Assume the government wants to protect consumers from higher gasoline prices by freezing prices at a low level.What should we expect to see in the market?

Group of answer choices

a surplus of gasoline

the quantity demanded of gasoline being equal to the quantity supplied of gasoline

more people being able to purchase gasoline because it is less expensive

a shortage of gasoline

demand of gasoline increasing and supply decreasing.

17.The opportunity cost of sitting in class is

which answer below

a. zero.

b. zero since this is your best alternative.

c. what you could be doing instead.

d. the tuition you paid divided by the number of hours you are taking.

e. the tuition you paid for this semester.

18.Assume a firm faces a market price of $50 and they sell eight units of product.Further, assume they face a total cost of $490 and an average variable cost of $30 when they product eight units.Should this firm stay open in the short run?

which answer below

a. No, because their average variable cost is less than the market price.

b. Yes because average variable cost is less than their total cost.

c. Yes because their average variable cost is less than the market price.

d. No, because they are not making a profit.

e. Yes because their total cost is greater than their revenue.

19.Rent-seeking by asking the government to license your profession does which of the following?

which answer below

a. All of the options are correct.

b. It creates an environment where fewer people can obtain the service.

c. It puts more emphasis on the license than creating value.

d. It transfers consumer surplus to producer surplus.

e. It raises prices for the licensed service.

20.You are sitting in your favorite seat before your final exam and there are no assigned seats.The person next to you is suffering from allergies.He is constantly blowing his nose, his eyes are tearing, he is constantly snorting, and he has used Kleenex all over his desk area.Assume this provides you $30 worth of annoyance.In other words, you would be willing to pay this person up to $30 to choose a seat farther away from you.Assume this person is willing to move to another seat for $20.

which answer below

a. You offer the allergy sufferer $40 to move.

b. This transaction cannot take place because it is immoral and unethical to pay someone suffering from allergies (a physical condition) to have to move because of their physical infirmity.

c. Even though you have $20, you cannot bargain with this person because property rights are not well defined.

d. You offer the allergy sufferer $20 and the two of you bargain to the efficient outcome.

e. Even though you have $20, you cannot bargain with this person because transaction costs are high and property rights are not well defined.