1) When small changes in price lead to infinite changes in quantity demanded, demand
is perfectly
a.elastic, and the demand curve will be horizontal.
b.inelastic, and the demand curve will be horizontal.
c.elastic, and the demand curve will be vertical.
d.inelastic, and the demand curve will be vertical.
2) When a shortage exists in a market, sellers
a.raise price, which increases quantity demanded and decreases quantity supplied until
the shortage is eliminated.
b.raise price, which decreases quantity demanded and increases quantity supplied until
the shortage is eliminated.
c.lower price, which increases quantity demanded and decreases quantity supplied until
the shortage is eliminated.
d.lower price, which decreases quantity demanded and increases quantity supplied until
the shortage is eliminated.
3) Table 16-1
The following table shows the percentage of output supplied by the top eight firms in
four different industries.
Which industry has the lowest concentration ratio?
a.Industry A
b.Industry B
c.Industry C
d.Industry D
4) Refer to Figure 9-22. With free trade, the country imports
a.300 units of the good.
b.600 units of the good.
c.900 units of the good.
d.1,200 units of the good.
5) For a monopoly market, total surplus can be defined as the value of the good to
a.producers minus the cost incurred by consumers.
b.producers plus the cost incurred by consumers.
c.consumers minus the costs of producing the good.
d.consumers plus the cost of producing the good.
6) Figure 16-13
Use the letters to identify the area of total revenue for this firm.
7) Two types of private solutions to the problem of externalities are
a.charities and the Golden Rule.
b.charities and subsidies.
c.the Golden Rule and taxes.
d.taxes and subsidies.
8) Which of the following statements is not correct?
a.Government policies may improve the market’s allocation of resources when negative
externalities are present.
b.Government policies may improve the market’s allocation of resources when positive
externalities are present.
c.A positive externality is an example of a market failure.
d.Without government intervention, the market will tend to undersupply products that
produce negative externalities.
9)
Suppose Phil and Miss Kay are the only consumers in the market. If the price is $6,
then the market quantity demanded is
a.4 units.
b.6 units.
c.8 units.
d.12 units.
10) Figure 17-5. Two companies, ABC and QRS, are sellers in the same market. Each
company decides whether to charge a high price or a low price. In the figure, the dollar
amounts are payoffs and they represent annual profits for the two companies.
Refer to Figure 17-5. The dominant strategy for ABC is to
a.charge a high price, and the dominant strategy for QRS is to charge a high price.
b.charge a high price, and the dominant strategy for QRS is to charge a low price.
c.charge a low price, and the dominant strategy for QRS is to charge a high price.
d.charge a low price, and the dominant strategy for QRS is to charge a low price.
11) Table 16-3
The following table shows the output produced by each of the top eight firms in four
industries as well as the total industry output for those industries.
What is the concentration ratio for Industry A?
a.approximately 52%
b.approximately 58%
c.approximately 66%
d.approximately 72%