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1) Suppose the government used the following formula to compute a family's tax
liability: Taxes owed = 28% of income - $8,000. How much would a family that earned
$20,000 owe?
a.-$8,000
b.-$2,400
c.$0
d.$2,400
2) Monopolies use their market power to
a.charge prices that equal minimum average total cost.
b.increase the quantity sold as they increase price.
c.charge a price that is higher than marginal cost.
d.dump excess supplies of their product on the market.
3) If a 25% change in price results in a 40% change in quantity supplied, then the price
elasticity of supply is about
a.0.63, and supply is elastic.
b.0.63, and supply is inelastic.
c.1.60, and supply is elastic.
d.1.60, and supply is inelastic.
4) A firm in a competitive market has the following cost structure:
What is the lowest price at which this firm might choose to operate?
a.$2
b.$3
c.$4
d.$5
5) Figure 10-9
