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1) Perry's Production Possibilities FrontierJordan's Production Possibilities
Frontier
revenue will be equal to zero at a. Q = 10.
b. Q = 15. c. Q = 20. d. Q = 30.
7) Assume that Falda and Varick can switch between producing wheat and producing
cloth at a constant rate.
Falda has an absolute advantage in the production of
a.wheat.
b.cloth.
c.both goods.
d.neither good.
8) A profit-maximizing firm in a monopolistically competitive market can earn positive,
negative, or zero profits in the short run.
a.True
b.False
9) When economists refer to a firm's capital, they are describing the
a.markets for final goods and services.
b.stock of equipment and buildings used in production.
c.amount of bank financing used by the firm.
d.amount of financing provided by the equity markets.
10) If the demand for labor in a particular industry increases, the equilibrium wage in
that industry will also increase.
a.True
b.False
11) A firm in a monopolistically competitive market is usually indifferent to an
additional customer walking through the door, since a sale to that customer will not
increase the firm's profit.
a.True
b.False
12) For a competitive firm, which of the following quantities is equal to marginal cost?
a.wage marginalproductoflabor
b.wage valueofmarginalproductoflabor
c.price marginalproductoflabor
d.price valueofmarginalproductoflabor
13) The Council of Economic Advisers
a.was created in 1776 and consists of three members and a staff of several dozen
economists.
b.was created in 1776 and consists of thirty members and a staff of a dozen economists.
c.was created in 1946 and consists of three members and a staff of several dozen
economists.
d.was created in 1946 and consists of thirty members and a staff of a dozen economists.
14)
Which demand curve is perfectly inelastic?
a.A
b.B
c.C
d.D
15) If a monopolist has zero marginal costs, it will produce
a.the output at which total revenue is maximized.
b.in the range in which marginal revenue is still increasing.
c.at the point at which marginal revenue is at a maximum.
d.in the range in which marginal revenue is negative.
16) Figure 14-13
Suppose a firm in a competitive industry has the following cost curves:
If the price is $4.50 in the short run, what will happen in the long run?
a.Nothing. The price is consistent with zero economic profits, so there is no incentive
for firms to enter or exit the industry.
b.Individual firms will earn positive economic profits in the short run, which will entice
other firms to enter the industry.
c.Individual firms will earn negative economic profits in the short run, which will cause
some firms to exit the industry.
d.Because the price is below the firm's average variable costs, the firms will shut down.
17) Table 15-4
A monopolist faces the following demand curve:
If the monopolist produces 10 units, what is its marginal revenue?
a. $12.50
b.$5
c.-$5
d. -$12.50
18) Price discrimination
a.forces monopolies to charge a lower price as a result of government regulation.
b.is an attempt by a monopoly to prevent some customers from purchasing its product
by charging a high price.
c.is an attempt by a monopoly to increases its profit by selling the same good to
different customers at different prices.
d.increases the consumer surplus associated with a monopolistic market.
19) Figure 21-3
In each case, the budget constraint moves from BC-1 to BC-2.
Refer to Figure 21-3. Which of the graphs in the figure could reflect a simultaneous
decrease in the price of good X and increase in the price of good Y?
(i)graph a
(ii)graph b
(iii)graph c
(iv)graph d
a.(ii) only
b.(iii) only
c.(ii) or (iv) only
d.None of the above is correct.
