In the long run in monopolistic competition,
a. economic profits are zero.
b. P = MC.
c. P = minimum ATC.
d. firms have an incentive to leave.
e. the demand curve is tangent to the MC curve.
If the price of hot dogs increases, what will happen in the market for potato chips, a
complementary good?
a. Demand will increase.
b. Quantity demanded will increase.
c. Demand will decrease.
d. Quantity demanded will decrease.
e. Supply will decrease.
If the cost of fertilizer rises, then the price of corn will:
a. rise. c. remain unchanged.
b. fall. d. react unpredictably.
Exhibit 11-14 Labor cost data for a monopsonist
In Exhibit 11-14, the additional labor cost per 10 workers hired when the monopsonist
goes from 10 to 20 workers is:
a. $50.
b. $110.
c. $160.
d. $360.
e. $480.
The condition of scarcity:
a. cannot be eliminated.
b. prevails in poor economies.
c. prevails in rich economies.
d. All of these.
If product price decreases, then:
a. MP will increase.
b. MFC will increase.
c. MRP will increase.
d. MRP will decrease.
If a business firm is not operating at the point where MR = MC, then:
a. it should shut down.
b. it will incur losses.
c. it cannot be earning a profit.
d. its profit is zero.
e. it is not earning the maximum potential profit.
Exhibit 8-17 Marginal revenue and cost per unit curves
In Exhibit 8-17, if the price of the firm’s product is $20 per unit, the firm will produce:
a. 20 units per day.
b. 40 units per day.
c. 60 units per day.
d. 80 units per day.
Exhibit 17-1 Nation of Padia
Exhibit 17-1 shows the production possibility curve of the nation of Padia. Based only
on this information, the point which would produce the highest rate of growth would
be:
a. I
b. II
c. III
d. IV
e. V
Which of the following statements is true?
a. If the income elasticity of demand is less than zero, the good is an inferior good.
b. Only if the demand curve is vertical will sellers raise the price by the full amount of a
tax.
c. Two goods are substitutes if the cross-elasticity of demand coefficient is positive.
d. A price elasticity of supply coefficient equal to 1.5 means the product exhibits an
elastic supply and a 10 percent increase in the price will increase the quantity supplied
by 15 percent.
e. All of these.
If a country’s population grows at the same rate as its real GDP, then real per capita
GDP:
a. grows at an increasing rate.
b. grows at a constant rate.
c. doesn’t change.
d. decreases at a decreasing rate.
e. decreases at a constant rate.
Exhibit 3-10 Demand and supply curves
In Exhibit 3-10, what do you expect to happen in this market at point C?
a. Competition among demanders will drive the price down.
b. Competition among demanders will drive the price up.
c. Competition among suppliers will drive the price up.
d. Competition among suppliers will drive the price down.
e. The equilibrium price A is not attainable.
Which of the following is an implication of the law of diminishing returns?
a. Total output will decline as more workers are hired.
b. In the long run, average total cost will eventually decline as output is expanded.
c. In the short run, expansion of output will eventually lead to increases in marginal cost
and average total cost.
d. A doubling of all inputs will lead to more than a doubling of output.
Which of the following is not a characteristic of a public good?
a. It is scarce.
b. It is not diminished in amount as additional people consume the product.
c. Its benefits cannot be withheld from anyone.
d. It is free.
e. It yields widespread benefits.
Lori plans to buy a convertible this weekend. Her two favorite cars are the BMW, which
would give her 160,000 utils of satisfaction, and the Mitsubishi Eclipse Spyder, which
would give her only 124,000 utils of satisfaction. The BMW that she wants sells for
$37,220, while the Mitsubishi sells for $28,200. She can afford either car.
The marginal product curve rises when the marginal cost curve rises.
Discuss the determinants of a nation’s exchange rate value for its currency in foreign
exchange markets. What happens to a nation’s balance of trade if the nation’s currency
appreciates? Why?
The opportunity cost of attending a movie is the purchase price of a ticket.
The deadweight loss equals the consumer surplus minus the producer surplus resulting
from a non-equilibrium price.
If the U.S. dollar appreciates relative to the British pound, then we pay fewer dollars for
a pound.
According to the text, Singapore is classified as a less developed country (LDC).