What is comparative advantage?

Select one:

a.A government regulation which controls how much of a single product can be sold or produced in a competitive market.

b.An economic policy of protecting domestic producers by restricting the importation of foreign products.

c.An advantage in production as a result of possessing better skills, or equipment or resources in comparison to other individuals or countries.

d.The advantage gained from producing something at a lower opportunity cost than other producers are able to.

The shape of the demand curve facing the perfectly competitive firm is downward sloping

Select one:

True

False

An additional advantage of quota over tariff is that the benefits are shared between domestic producers and the government.

Select one:

True

False

Which of the following statements regarding a monopolist is correct?

Select one:

a.A monopolist will only produce an output where the demand is unitary elastic.

b.A monopolist will only produce an output where the demand is inelastic.

c.A monopolist will only produce an output where the demand is perfectly elastic.

d.A monopolist will only produce an output where the demand is elastic.

If the price of a product rises, which of the following statements regarding the perfectly competitive firm is correct?

Select one:

a.Its total revenue curve will be steeper.

b.Its average revenue curve will be steeper.

c.Its total revenue curve will be flatter.

d.Its average revenue curve will be flatter.

Which of the following characteristics most distinguishes an oligopoly industry from the other three types of market structures?

Select one:

a.The possibility of differentiated products.

b.Difficult entry.

c.Mutual interdependence.

d.Control of price by individual firms.

If a profit-maximizing firm finds that, at its current level of production, MR < MC, it will:

Select one:

a.increase output

b.decrease output.

c.operate at a loss.

d.shut down.

David Ricardo says a country will import a good from abroad although it can produce the good more cheaply at home.

Select one:

True

False

If you are making a loss in the short-run you should stop production

Select one:

True

False

What happens if the supply of labour increases more than does the demand for labour?

Select one:

a.Wages rates will decrease.

b.The quantity of hours worked will decline.

c.Wage rates will increase.

d.The effect on wage rates is indeterminate.

What is true about both perfectly competitive and monopolistically competitive firms in long-run equilibrium?

Select one:

a.They equate marginal cost and marginal revenue.

b.They produce at minimum average cost

c.They achieve productive efficiency.

d.They achieve allocative efficiency.

e.They earn economic profits.

A budget line shows various combinations of two goods you can buy with limited income that provide the same level of satisfaction.

Select one:

True

False

When a perfect competitive firm is in long-run equilibrium:

Select one:

a.MR = MC and minimum ATC > P.

b.P = MC = minimum ATC.

c.MR > MC and P = minimum ATC.

d.P = MC = ATC.

A simultaneous increase in both the demand for and supply of a good will lead to

Select one:

a.changes in both the quantity traded and price are indeterminate

b.an increase in quantity traded and fall in price

c.a decrease in quantity traded and no change in price

d.an increase in quantity traded but change in price is indeterminate

Suppose that a monopolist was selling 20 units at $50 each but has now reduced the price to $48 and is now selling 21 units. What is the monopolist's marginal revenue?

Select one:

a.$8.

b.$48.

c.$50.

d.$1,000