Which of the following statements is a foundational assumption of economics?

Supply will always equal demand.

Quantity demanded will always exceed quantity supplied.

Marginal returns will always decrease.

Economic actors respond to incentives.

Businesses seek to maximize their total revenue.

Which of the following methods would produce an accurate market demand curve?

Adding horizontally at each price all the individual marginal benefit curves in the market

Drawing a downward-sloping line through the equilibrium price in the market

Drawing the marginal cost curve from its lowest point up

Taking the derivative of all the suppliers' total product curves

Multiplying the equilibrium price by all quantities supplied

A business notices that after it lowered its price it saw more quantity demanded but lower total revenue. What does this mean?

It is operating at productive inefficiency.

It is experiencing diminishing marginal returns.

It is in the elastic part of the demand curve for its product.

It is in the inelastic part of the demand curve for its product.

Its product's elasticity coefficient must be greater than one.

Assume a new technology is created that causes the cost of metal to decrease as the quantity increases. If metal is a major input in the production of automobiles, how is the change in economies of scale for metal from the new technology guaranteed to affect the elasticity of supply for automobiles?

The elasticity of supply for automobiles will become unit elastic.

The elasticity of supply for automobiles will become more elastic.

The elasticity of supply for automobiles will become more inelastic.

The elasticity of supply for automobiles will become perfectly elastic.

The elasticity of supply for automobiles will become perfectly inelastic.

If a consumer believes that businesses are charging a price well below equilibrium for a good he wants, what would be a rational response? Assume the good cannot be resold.

Not purchase any units to wait until the surplus leads to a lower price

Purchase more units than he wants to take advantage of the low price

Purchase his desired units quickly before there is a shortage

Purchase the closest substitute for that good

Purchase a complement to that good

A government imposes a $10 per-unit tax in a competitive market. Afterward, the seller's after-tax price falls from the original equilibrium price of $20 to $18. Based on this, which of the following is true?

Producers are bearing 10% of the tax burden.

The next after-tax equilibrium price will be $30.

Consumers are bearing 80% of the tax burden.

The government will collect less than $10 per unit exchanged of the good.

The quantity demanded will decrease by 10%.