1 - A firm that makes profit in addition to normal profit is making ?
1 - A firm that makes profit in addition to normal profit is making ?
supernormal profit
2 - An upward shift in marginal cost _____ output and an upward shift in marginal revenue ______ output?
2 - An upward shift in marginal cost _____ output and an upward shift in marginal revenue ______ output?
reduces; increases
3 - Marginal revenue is the ________ when output is __________?
3 - Marginal revenue is the ________ when output is __________?
Change in total revenue, increase by one unit
4 - Firms are assumed to ________ costs and to ________ profits?
4 - Firms are assumed to ________ costs and to ________ profits?
minimize, maximize
5 - The extra utility from consuming one more unit of a good is called ?
5 - The extra utility from consuming one more unit of a good is called ?
Marginal utility
6 - The opportunity cost of a student is____________?
6 - The opportunity cost of a student is____________?
What the student could have earned in the best job available by not studying
7 - If your income doubles and the prices of the goods you buy double then your demand for these goods will likely?
7 - If your income doubles and the prices of the goods you buy double then your demand for these goods will likely?
not change
8 - A measurement showing how quantity demanded varies with income is the ?
8 - A measurement showing how quantity demanded varies with income is the ?
income elasticity of demand
9 - The price elasticity of demand measures ?
9 - The price elasticity of demand measures ?
The responsiveness of quantity demanded to a change in price
10 - Increased level consumption ?
10 - Increased level consumption ?
shift aggregate supply to the left
11 - Improved training of employees would ?
11 - Improved training of employees would ?
Shift aggregate supply to the right
12 - Which of the following would increase aggregate demand ?
12 - Which of the following would increase aggregate demand ?
Increased taxation revenue
13 - Aggregate demand will increase if ?
13 - Aggregate demand will increase if ?
imports fall
14 - The price elasticity of supply is +4 The price increases by 15% sales were originally 200 units What will they be now ?
14 - The price elasticity of supply is +4 The price increases by 15% sales were originally 200 units What will they be now ?
320 units
15 - An increase in productivity should ?
15 - An increase in productivity should ?
Lead to a shift in supply outwards (i.e more supplied at each and every price)
16 - An increase in the costs of production will ?
16 - An increase in the costs of production will ?
Shift supply inwards
17 - A supply curve that starts at the origin has ?
17 - A supply curve that starts at the origin has ?
A price elasticity of supply equal to one
18 - If a 4% increase in price leads to a increase in the quantity supplied of 8% ?
18 - If a 4% increase in price leads to a increase in the quantity supplied of 8% ?
Supply is price elastic
19 - For a normal good ?
19 - For a normal good ?
The price elasticity of demand is negative the income elasticity of demand is positive
20 - if demand is price inelastic ?
20 - if demand is price inelastic ?
An increase in price increase revenue
21 - The price elasticity of demand is a negative number this means ?
21 - The price elasticity of demand is a negative number this means ?
The demand curve is downward sloping
22 - If the cross elasticity of demand is -2 ?
22 - If the cross elasticity of demand is -2 ?
The products are complements and demand is cross price elastic
23 - The price decrease from Rs 2,000 to Rs 1,800 Quantity demanded per year increases 5000 to 6000 units. Which of the following is correct ?
23 - The price decrease from Rs 2,000 to Rs 1,800 Quantity demanded per year increases 5000 to 6000 units. Which of the following is correct ?
The price elasticity of demand is -2
24 - If a product is an inferior good ?
24 - If a product is an inferior good ?
Demand is inversely related to income
25 - An increase in price all other things unchanged leads to ?
25 - An increase in price all other things unchanged leads to ?
A contractions of demand
26 - An increase in income should ?
26 - An increase in income should ?
shift demand for an inferior product inward
27 - According to the law of diminishing utility ?
27 - According to the law of diminishing utility ?
Total utility will rise at a falling rate as more units are consumed
28 - A fall in price ?
28 - A fall in price ?
May be caused by a fall in demand
29 - When the market operates without interference, price increases will distribute what is available to those who are willing and able to pay the most. This process is known as ?
29 - When the market operates without interference, price increases will distribute what is available to those who are willing and able to pay the most. This process is known as ?
price rationing
30 - If the cross-price elasticity of demand between two goods is negative, then the two goods are ?
30 - If the cross-price elasticity of demand between two goods is negative, then the two goods are ?
Complements
31 - The price of burgers increase by 22% and the quantity of burgers demanded falls by 25% This indicates that demand for burgers is ?
31 - The price of burgers increase by 22% and the quantity of burgers demanded falls by 25% This indicates that demand for burgers is ?
elastic
32 - The price of apples falls by 5% and quantity demanded increases by 6% This means that demand is ?
32 - The price of apples falls by 5% and quantity demanded increases by 6% This means that demand is ?
elastic
33 - A movement along the demand curve to the left may be caused by ?
33 - A movement along the demand curve to the left may be caused by ?
a decrease in supply.
34 - An increase in aggregate demand if aggregate supply is totally inelastic will ?
34 - An increase in aggregate demand if aggregate supply is totally inelastic will ?
increase price but not output
35 - When excess demand occurs in an unregulated market, there is a tendency for ?
35 - When excess demand occurs in an unregulated market, there is a tendency for ?
price to rise
36 - Which of the following is consistent with the law of supply ?
36 - Which of the following is consistent with the law of supply ?
As the price of calculators rise, the quantity supplied of calculators increases, ceteris paribus.
37 - If the demand for coffee decreases as income decreases, coffee is ?
37 - If the demand for coffee decreases as income decreases, coffee is ?
a normal good
38 - When the decrease in the price of one good causes the demand for another good to decrease, the goods are_________?
38 - When the decrease in the price of one good causes the demand for another good to decrease, the goods are_________?
substitutes
39 - The quantity demanded of Pepsi has decreased. The best explanation for this is that ?
39 - The quantity demanded of Pepsi has decreased. The best explanation for this is that ?
The price of Pepsi increased
40 - The Setrite Corporation produce chairs. An economist working for the firm predicts that if people's incomes rise next year, then the demand for our chairs will for our chairs will increase ceteris paribus The accuracy of the economist's prediction depends
40 - The Setrite Corporation produce chairs. An economist working for the firm predicts that if people's incomes rise next year, then the demand for our chairs will for our chairs will increase ceteris paribus The accuracy of the economist's prediction depends
are normal goods
41 - If both marginal cost and marginal revenue increase, a firm ?
41 - If both marginal cost and marginal revenue increase, a firm ?
will require further information on how to respond
42 - A firm that breaks even after all economic costs are paid is earning ?
42 - A firm that breaks even after all economic costs are paid is earning ?
Normal profit
43 - If a firm wage costs increase this will cause __________ and __________?
43 - If a firm wage costs increase this will cause __________ and __________?
marginal cost to increase, output to fall
44 - Profits are maximized when ?
44 - Profits are maximized when ?
marginal cost equals marginal revenue
45 - The increase in total cost when one more unit is produced is known as ?
45 - The increase in total cost when one more unit is produced is known as ?
average cost
46 - Adding up the quantities demanded of a good by different people facing the same price gives us the ?
46 - Adding up the quantities demanded of a good by different people facing the same price gives us the ?
Market demand curve
47 - Economics assumes that people consume goods and services to achieve ?
47 - Economics assumes that people consume goods and services to achieve ?
Utility
48 - The income effect of a price increase of a normal good is to ________ of that good and the substitution effect is to _________ of that good?
48 - The income effect of a price increase of a normal good is to ________ of that good and the substitution effect is to _________ of that good?
reduce quantity demanded, reduce quantity demanded
49 - Inferior goods have _________ and luxury goods have _________?
49 - Inferior goods have _________ and luxury goods have _________?
negative income elasticity income elasticity greater than 1
50 - Positive cross elasticities suggest that goods are ____ and negative cross-elasticities that goods are ?
50 - Positive cross elasticities suggest that goods are ____ and negative cross-elasticities that goods are ?
substitutes complements
51 - If demand is __________ then price cuts will _________ spending?
51 - If demand is __________ then price cuts will _________ spending?
elastic; increase
52 - Increased levels of spending on imports ?
52 - Increased levels of spending on imports ?
shift aggregate demand to the left
53 - Increase unemployment benefits and less incentive to work would ?
53 - Increase unemployment benefits and less incentive to work would ?
shift aggregate supply to the right
54 - Which of the following would decease aggregate demand ?
54 - Which of the following would decease aggregate demand ?
increasing export revenue
55 - An increase in aggregate demand will have most effect on prices if ?
55 - An increase in aggregate demand will have most effect on prices if ?
Aggregate supply is price elastic
56 - A shift in aggregate supply is likely to ?
56 - A shift in aggregate supply is likely to ?
Reduce the general price level and reduce national income
57 - An increase in price from 25 pence to 30 pence leads to an increase in the quantity supplied from 40 units to 44 units. The price elasticity of supply is ?
57 - An increase in price from 25 pence to 30 pence leads to an increase in the quantity supplied from 40 units to 44 units. The price elasticity of supply is ?
0.5
58 - An increase in price all other things unchanged leads to ?
58 - An increase in price all other things unchanged leads to ?
An extension of supply
59 - A contraction in supply occurs when ?
59 - A contraction in supply occurs when ?
The quantity supplied falls when the price falls
60 - Supply is likely to be more price elastic ?
60 - Supply is likely to be more price elastic ?
If it is easy to expand output
61 - Which best describes a supply curve ?
61 - Which best describes a supply curve ?
The quantity producers are willing and able to sell at each and every price all other things unchanged
62 - For an inferior good ?
62 - For an inferior good ?
The price elasticity of demand is negative: the income elasticity of demand is negative
63 - Price increases from 10 to 12 pence and the price elasticity of demand is -0.5 The quantity demanded was 500 units. What will it be now ?
63 - Price increases from 10 to 12 pence and the price elasticity of demand is -0.5 The quantity demanded was 500 units. What will it be now ?
450 units
64 - The income elasticity is +2 and income increases by 20% sales were 5000 units, what will they be now ?
64 - The income elasticity is +2 and income increases by 20% sales were 5000 units, what will they be now ?
7000
65 - If the price elasticity of demand is unit then a fall in price ?
65 - If the price elasticity of demand is unit then a fall in price ?
Leaves revenue unchanged
66 - Average income increase from Rs20,000 p.a to Rs 22,000 p.a Quantity demanded per year increases 5000 to 6000 units. Which of the following is correct ?
66 - Average income increase from Rs20,000 p.a to Rs 22,000 p.a Quantity demanded per year increases 5000 to 6000 units. Which of the following is correct ?
The product is normal
67 - If a product is a vablen good ?
67 - If a product is a vablen good ?
Demand is directly related to price
68 - An increase in the price of a complement for product A would ?
68 - An increase in the price of a complement for product A would ?
Shift demand for product A inwards
69 - If marginal utility is zero ?
69 - If marginal utility is zero ?
Total utility is maximized
70 - Demand for a normal product may shift outwards if ?
70 - Demand for a normal product may shift outwards if ?
The price of a substitute falls
71 - Which best describes a demand curve ?
71 - Which best describes a demand curve ?
The quantity consumers are willing and able to buy each and every price all other things changed
72 - If the quantity demanded of beef increases by 5% when the price of chicken increase by 20% the cross-price elasticity of demand between beef and chicken is ?
72 - If the quantity demanded of beef increases by 5% when the price of chicken increase by 20% the cross-price elasticity of demand between beef and chicken is ?
0.25
73 - The price of burgers increase by 22% and the quantity of burgers demanded falls by 25% This indicates that demand for burgers is ____________?
73 - The price of burgers increase by 22% and the quantity of burgers demanded falls by 25% This indicates that demand for burgers is ____________?
elastic
74 - The price elasticity of demand is the ?
74 - The price elasticity of demand is the ?
ratio of the percentage change in quantity demanded to the percentage change in price.
75 - Market equilibrium exists when _________ at the prevailing price?
75 - Market equilibrium exists when _________ at the prevailing price?
quantity demanded equals quantity supplied
76 - The price of computer chips used in the manufacture of personal computers has fallen. This will lead to _________ personal computer?
76 - The price of computer chips used in the manufacture of personal computers has fallen. This will lead to _________ personal computer?
an increase in the supply of
77 - Which of the following will NOT cause a shift in the demand curve for compact discs ?
77 - Which of the following will NOT cause a shift in the demand curve for compact discs ?
A change in the price of compact discs
78 - Suppose the demand for good Z goes up when the price of good Y goes down. We can say that goods Z and Y are ?
78 - Suppose the demand for good Z goes up when the price of good Y goes down. We can say that goods Z and Y are ?
complements
79 - Demand curves are derived while holding constant ?
79 - Demand curves are derived while holding constant ?
incomes, tastes, and the price of other goods.
80 - What effect is working when the price of a good falls and consumers tend to buy it instead of other goods ?
80 - What effect is working when the price of a good falls and consumers tend to buy it instead of other goods ?
The substitution effect
81 - The law of demand implies that ?
81 - The law of demand implies that ?
as prices fall, quantity demanded increase
82 - A model of Game theory of oligopoly is known as the ?
82 - A model of Game theory of oligopoly is known as the ?
Prisoner's Dilemma
83 - Suppose that ABC publishing sells an economics textbook and accompanying study guide. Raheel is willing to pay Rs75 for the text and Rs15 for the study guide. Mariam is willing to spend Rs60 for the text and Rs25 for the study guide. Suppose both the book
83 - Suppose that ABC publishing sells an economics textbook and accompanying study guide. Raheel is willing to pay Rs75 for the text and Rs15 for the study guide. Mariam is willing to spend Rs60 for the text and Rs25 for the study guide. Suppose both the book
Rs 75
84 - Many economics argue that resale price maintenance ?
84 - Many economics argue that resale price maintenance ?
has a legitimate purpose of stopping discount retailers from free riding on the services provided by full services retailers?
85 - As the number of sellers in an oligopoly increases ?
85 - As the number of sellers in an oligopoly increases ?
The price in the market moves closer to marginal cost
86 - When an oligopolist individually chooses its level of production to maximize its profits, it produces an output that is ?
86 - When an oligopolist individually chooses its level of production to maximize its profits, it produces an output that is ?
more than the level produced by a monopoly and less than the level produced by a competitive market
87 - Suppose an oligopolist individually maximizes its profits. When calculating profits, if the output effect exceeds the price effect on the marginal unit of production, then the oligopolist ?
87 - Suppose an oligopolist individually maximizes its profits. When calculating profits, if the output effect exceeds the price effect on the marginal unit of production, then the oligopolist ?
Should produce more units
88 - A market structure in which many firms sell products that are similar but not identical is known as ?
88 - A market structure in which many firms sell products that are similar but not identical is known as ?
monopolistic competition
89 - In a cartel ?
89 - In a cartel ?
Firms collude
90 - In the Kinked demand curve theory ?
90 - In the Kinked demand curve theory ?
non-price competition is likely
91 - The Kinked Demand curve theory assumes ?
91 - The Kinked Demand curve theory assumes ?
Firms are competitive
92 - In a cartel member firms may be given a fixed amount to produce. This is called a ?
92 - In a cartel member firms may be given a fixed amount to produce. This is called a ?
Quota
93 - Laws that make it illegal for firms to conspire to raise prices or reduce production are known as ?
93 - Laws that make it illegal for firms to conspire to raise prices or reduce production are known as ?
antitrust laws
94 - Suppose that ABC publishing sells an economics textbook and accompanying study guide. Raheel is willing to pay Rs75 for the text and Rs15 for the study guide. Mariam is willing to spend Rs60 for the text and Rs25 for the study guide. Suppose both the book
94 - Suppose that ABC publishing sells an economics textbook and accompanying study guide. Raheel is willing to pay Rs75 for the text and Rs15 for the study guide. Mariam is willing to spend Rs60 for the text and Rs25 for the study guide. Suppose both the book
Rs 85
95 - Collusion is difficult for an oligopoly to maintain ?
95 - Collusion is difficult for an oligopoly to maintain ?
all of these answers
96 - A situation in which oligopolists interacting with one another each choose their best strategy given the strategies that all the other oligopolists have chosen is known as a ?
96 - A situation in which oligopolists interacting with one another each choose their best strategy given the strategies that all the other oligopolists have chosen is known as a ?
Nash equilibrium
97 - When a oligopolist individually chooses its level of production to maximize its profits it charges a price that is ?
97 - When a oligopolist individually chooses its level of production to maximize its profits it charges a price that is ?
less than the price charged by a monopoly and more than the price charged by a competitive market
98 - As the number of sellers in an oligopoly grows larger, an oligopolistic market looks more like ?
98 - As the number of sellers in an oligopoly grows larger, an oligopolistic market looks more like ?
a competitive market
99 - If oligopolists engage in collusion and successfully from a cartel, the market outcome is ?
99 - If oligopolists engage in collusion and successfully from a cartel, the market outcome is ?
the same as if it were served by a monopoly.
100 - The market for hand tools (such as hammers and screwdrivers) is dominated by Draper Stanley, and Craftsman This market is best described as ?
100 - The market for hand tools (such as hammers and screwdrivers) is dominated by Draper Stanley, and Craftsman This market is best described as ?
an oligopoly
101 - In cartels ?
101 - In cartels ?
There may be an incentive to cheat
102 - Firms in oligopoly are likely to ?
102 - Firms in oligopoly are likely to ?
Try to be a price maker
103 - In Game Theory ?
103 - In Game Theory ?
Firms consider the actions of others before deciding what to do
104 - In the kinked Demand Curve theory it is assumed that ?
104 - In the kinked Demand Curve theory it is assumed that ?
An increase in price by the firm is not followed by others
105 - If a few firms dominate an industry the market is known as ?
105 - If a few firms dominate an industry the market is known as ?
Oligopoly
106 - Which of the following best defines price discrimination ?
106 - Which of the following best defines price discrimination ?
selling a certain product of given quality and cost per unit at different prices to different buyers
107 - Compared to the case of perfect competition, a monopolist is more likely to ?
107 - Compared to the case of perfect competition, a monopolist is more likely to ?
all of the above
108 - In pure monopoly, what is the relation between the price and the marginal revenue ?
108 - In pure monopoly, what is the relation between the price and the marginal revenue ?
the price is greater than the marginal revenue
109 - If a marginal revenue exceeds marginal cost, a monopolists should?
109 - If a marginal revenue exceeds marginal cost, a monopolists should?
increase should
110 - If regulators break up a natural monopoly into many smaller firms, the cost of production ?
110 - If regulators break up a natural monopoly into many smaller firms, the cost of production ?
will rise
111 - Public ownership of natural monopolies ?
111 - Public ownership of natural monopolies ?
tends to be inefficient.
112 - Using government regulations to force a natural monopoly to charge a price equal to his marginal cost will ?
112 - Using government regulations to force a natural monopoly to charge a price equal to his marginal cost will ?
Cause the monopolist to exit the market
113 - Compared to a perfectly competitive market a monopoly market will usually generate ?
113 - Compared to a perfectly competitive market a monopoly market will usually generate ?
higher prices and lower output
114 - A monopolist maximizes profit by producing the quantity at which ?
114 - A monopolist maximizes profit by producing the quantity at which ?
marginal revenue equals marginal cost
115 - A firm whose average total cost continually declines at least to the quantity that could supply the entire market is known as a ?
115 - A firm whose average total cost continually declines at least to the quantity that could supply the entire market is known as a ?
natural monopoly
116 - In the UK the government ?
116 - In the UK the government ?
Has the right to investigate monopolies and will assess each one on its own merits
117 - According to Schumpeter ?
117 - According to Schumpeter ?
Monopoly profits ac as an incentive for innovation
118 - In a monopoly which of the following is not true ?
118 - In a monopoly which of the following is not true ?
There is freedom of entry and exit into the industry in the long run
119 - In monopoly in long run equilibrium ?
119 - In monopoly in long run equilibrium ?
The firm is allocatively inefficient
120 - The marginal revenue curve in monopoly ?
120 - The marginal revenue curve in monopoly ?
Lies below and diverges from the demand curve
121 - In price discrimination, which section of the market is charged the higher price ?
121 - In price discrimination, which section of the market is charged the higher price ?
The section with the most inelastic demand
122 - In order to practice price discrimination which of the following is needed ?
122 - In order to practice price discrimination which of the following is needed ?
all of the above
123 - Which of the following is necessary for a natural monopoly ?
123 - Which of the following is necessary for a natural monopoly ?
all of the above
124 - This monopolist should produce ?
124 - This monopolist should produce ?
3
125 - In order to maximize profits, a monopoly company will produce that quantity at which the ?
125 - In order to maximize profits, a monopoly company will produce that quantity at which the ?
marginal revenue equals marginal cost
126 - Which of the following is a characteristic of pure monopoly ?
126 - Which of the following is a characteristic of pure monopoly ?
One seller of the product
127 - A monopoly is able to continue to generate economic profits in the long run because ?
127 - A monopoly is able to continue to generate economic profits in the long run because ?
there is some barrier to entry to that market
128 - Which of the follow statements about price discrimination is not true ?
128 - Which of the follow statements about price discrimination is not true ?
Perfect price discrimination generates a deadweight loss
129 - The purpose of antitrust (also known as competition) laws is to ?
129 - The purpose of antitrust (also known as competition) laws is to ?
Increase competition in an industry by preventing mergers and breaking up large firms.
130 - The monopolist's supply curve ?
130 - The monopolist's supply curve ?
does not exist
131 - The inefficiency associated with monopoly is due to ?
131 - The inefficiency associated with monopoly is due to ?
underproduction of the good
132 - Thomas is a monopolist in the production of your textbook because ?
132 - Thomas is a monopolist in the production of your textbook because ?
Thomson has a legally protected exclusive right to produce this textbook
133 - Which of the following statements about price and marginal cost in competitive and monopolized markets is true ?
133 - Which of the following statements about price and marginal cost in competitive and monopolized markets is true ?
In competitive markets, price equals marginal cost, in monopolized markets price exceeds marginal cost.
134 - When a monopolist produces an additional unit, the marginal revenue generated by that unit must be ?
134 - When a monopolist produces an additional unit, the marginal revenue generated by that unit must be ?
below the price because the price effect outweighs the output effect
135 - Which of the following is not a barrier to entry in a monopolized market ?
135 - Which of the following is not a barrier to entry in a monopolized market ?
A single firm is very large
136 - A welfare loss occurs in monopoly where ?
136 - A welfare loss occurs in monopoly where ?
The price is greater than the marginal cost
137 - In monopoly which of the following is true ?
137 - In monopoly which of the following is true ?
There is one main seller
138 - Barriers to entry do not include ?
138 - Barriers to entry do not include ?
Mobility of resources
139 - In monopoly when abnormal profits are made ?
139 - In monopoly when abnormal profits are made ?
The price set is greater than the marginal cost
140 - X inefficiency occurs when ?
140 - X inefficiency occurs when ?
Costs are higher than they could be due to a lack of competitive pressure
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