1) The essence of an oligopolistic market is that there are only a few sellers.
a.True
b.False
2) Inefficiency exists in an economy when a good is
a.not being consumed by buyers who value it most highly.
b.not distributed fairly among buyers.
c.not produced because buyers do not value it very highly.
d.being produced with less than all available resources.
3) When a buyer’s willingness to pay for a good is equal to the price of the good, the
a.buyer’s consumer surplus for that good is maximized.
b.buyer will buy as much of the good as the buyer’s budget allows.
c.price of the good exceeds the value that the buyer places on the good.
d.buyer is indifferent between buying the good and not buying it.
4) Figure 21-5
Refer to Figure 21-5. In graph (b), what is the price of good Y relative to the price of
good X (i.e., PY/PX)?
a. 1/3
b.1
c.3
d.10
5) In a competitive market, sales go to those producers who are willing to supply the
product at the lowest price.
a.True
b.False
6) Which of the following is not correct?
a.The demand curve facing a competitive firm is perfectly elastic.
b.The demand curve facing a monopolist is the market demand curve.
c.A monopolist can charge any price and sell any quantity that it chooses.
d.A monopolist can alter the market price by adjusting the quantity that it produces.
7) Denmark is an importer of computer chips, taking the world price of $12 per chip as
given. Suppose Denmark imposes a $5 tariff on chips. Which of the following outcomes
is possible?
a.More Danish-produced chips are sold in Denmark.
b.More foreign-produced chips are sold in Denmark.
c.Danish consumers of chips become better off.
d.Total surplus in the Danish chip market increases.
8) The following diagram shows two budget lines: A and B.
Which of the following could explain the change in the budget line from A to B?
a.a decrease in income and a decrease in the price of X
b.a decrease in income and an increase in the price of X
c.an increase in income and a decrease in the price of X
d.an increase in income and an increase in the price of X
9) Much of the research on game theory in recent decades was driven by attempts to
analyze actions of players during
a.the Great Depression of the 1930s.
b.World War II.
c.the Cold War between the United States and the Soviet Union.
d.the ascendancy of the conservative movement in the United States in the 1970s and
1980s.
10) A consumer chooses an optimal consumption point where the
a.marginal rate of substitution is maximized.
b.slope of the indifference curve exceeds the slope of the budget constraint by the
greatest amount.
c.ratio of the marginal utilities equals the ratio of the prices.
d.All of the above are correct.