Archives: Quiz

Based on the Application, the marginal cost of sailing a ship faster is: A) more cargo delivered per year. B) more fuel cost incurred. C) less fuel costs incurred. D) less cargo delivered per year. Refer to Figure 5.6. The […]

The proportion of the tax burden that falls on consumers depends on: A) the price elasticity of demand. B) the size of the tax. C) the price elasticity of supply. D) both A and C A study done about gender […]

Suppose that the price of a donut is $1 each. Lorena is willing to pay $2 for the first donut, Ricky is willing to pay $1.80 for the second donut, Jennifer is willing to pay $1.50 for the third donut, […]

An Internet company wants to increase the consumption of Internet packages by 15%. The price elasticity of demand for Internet packages is 2. The telephone company should: A) lower the price of Internet packages by 30.0%. B) lower the price […]

Suppose that a market for a product is in equilibrium at a price of $3 per unit. At any price below $3 per unit: A) there will be an excess demand for the product. B) there will be an excess […]

Refer to Figure 1.1. The relationship between hours worked and income, as shown by the graph in Figure 1.1 is: Figure 1.1 A) negative. B) positive. C) nonlinear. D) exponential. Recall the application on happy hour pricing, each bar has […]

Suppose that it would cost a firm $9 million to develop a new drug. In the absence of a patent, other firms will be able to copy and bring to market a generic equivalent of the drug in three years. […]

Julianne runs a business and needs to decide how many hours to stay open. Table 2.2 illustrates her marginal costs of staying open for each additional hour. Suppose that Julianne’s marginal benefit of staying open per hour is $3. If […]

One advantage that a command-and-control policy has over a pollution tax is that: A) we will be able to accurately predict the amount of pollution that will occur. B) it generates a lower level of pollution at a lower cost. […]

Consider a market in which some high-quality goods are sold, but not as many as if there was perfect information about the quality of the good. This type of market is known as a: A) beneficial selection. B) thin market. […]

A reason for the increase in demand for workers with high levels of labor skills is: A) greater taxes paid on income earned. B) increased technological advances. C) reduced international trade from protectionism. D) B and C are correct. Figure […]

Consider the data in Table 16.2. Both firms can benefit if Firm A sells its pollution permit allowing it to generate 100 gallons of wastewater to Firm B for: Table 16.2 A) a price between $7 and $12. B) a […]

Suppose the price of a liter of soda is $2. If Sara is willing to pay $3 for that liter of soda, her consumer surplus is: A) $0. B) $1. C) $2. D) $3. Firms in a cartel usually charge: […]

Joe runs a business and needs to decide how many hours to stay open. Figure 2.4 illustrates his marginal benefit of staying open for each additional hour. Suppose that Joe’s marginal cost of staying open per hour is $40. How […]

If firms follow a low-price guarantee strategy, the price that will prevail in the market will be closest to: A) the price a monopolist will pick. B) the price that a perfectly competitive firm would pick. C) the duopoly price. […]

Suppose that Figure 10.5 shows a monopolist’s demand curve, marginal revenue, and its cost. The monopolist would maximize its profit by producing a quantity of ________ and by charging a price of ________. A) 35; $65 B) 50; $50 C) […]

For country A, an export is a good produced in: A) country B and purchased by residents of country B. B) country B and purchased by residents of country A. C) country A and purchased by residents of country B. […]

Predatory pricing occurs when a monopolist charges a: A) price above average total cost. B) price above average variable cost. C) low price to drive out competition, then charges a high price. D) high price to drive out competition, then […]

If the price of hotdogs are expected to decrease in the future, then: A) the current demand for hotdogs will increase. B) the current demand for hotdogs will decrease. C) the current quantity demanded for hotdogs will decrease. D) the […]

Figure 14.1 represents the market for used bikes. Suppose buyers are willing to pay $200 for a plum (high-quality) used bike and $50 for a lemon (low-quality) used bike. If buyers have pessimistic expectations about the used bikes in the […]

When the firm increases output and the costs rise disproportionately faster, then the long-run average cost curve is ________ and the firm is experiencing ________. A) horizontal; constant returns to scale B) downward sloping; constant returns to scale C) upward […]

At what point should Jasper Johns consider painting his own house? A) if the house painter charges $500 per day and takes 20 days to paint the house B) if the house painter charged $2,500 per day, since that is […]

According to the Application about productivity in the nation of Latvia in the 1990s,, workers in the EU were more productive than workers in Latvia in the 1990s, yet despite this, EU nations chose to trade with Latvia. Engaging in […]

Resources are all of the following EXCEPT: A) unlimited and in abundance. B) the things we use to produce goods and services. C) limited in quantity and can be used in different ways. D) scarce and therefore requiring choices to […]

Figure 6.8 shows the market for taxicab services in a small town. If the government limits taxicab services to 20 per day, then producer surplus will: A) increase by $10. B) increase by $6.25. C) decrease by $3.75. D) increase […]

Recall the application about the California kiwifruit market and the “lemons” problem. If the problem of adverse selection exists in the kiwifruit market, we can expect the quality of fruit to be ________ and the price to be ________. A) […]

The cross-price elasticity of demand between bananas and apples is most likely: A) positive. B) negative. C) zero. D) More information is needed to determine. In a thin market: A) only high-quality goods are sold. B) some high-quality goods are […]

A Nash Equilibrium in a game is that outcome in which: A) each player is doing the best he or she can given the other player’s action. B) the players’ profits are equal. C) the players’ earn the highest profits […]

If the demand for jelly decreases, and the price of grapes (used to make jelly) rises: A) the equilibrium price of jelly rises and the equilibrium quantity of jelly might rise or fall. B) the equilibrium price of jelly falls […]

With average cost pricing the firm in Figure 13.3 would be: A) making a zero economic profit. B) losing money. C) making a positive economic profit. D) shut down. Joe runs a restaurant. He pays his employees $200,000 per year. […]

Sara sells beer in a perfectly competitive market. This week Sara receives a lower price for a keg of beer than she did last week. Which of the following statements could explain this? A) The market demand for beer increased. […]

Under which conditions might diseconomies of scale result? A) hampered coordination brought about by bureaucracy B) increasing costs of inputs C) the firm uses a large amount of indivisible inputs D) both A and B If a variable is 100 […]

Importers collect additional revenues from a ________, and governments collect additional revenues from ________. A) tariff; voluntary export restraints B) quota; import bans C) quota; tariffs D) voluntary export restraint; quotas When Bob has to give up lunch in order […]

Recall the Application. In most cases where satellite TV service is introduced in an area with cable TV service, the quality of the cable TV service usually: A) increases. B) decreases. C) initially increases, then decreases. D) is unaffected. Recall […]

In the game shown in Table 12.2, when the firms choose their dominant strategies: Table 12.2 A) profits are lower than when the firms choose the strategy that is not the dominant strategy. B) the firms will make the highest […]

Refer to Figure 7.3. If the price of video game rentals is $4, the utility maximizing combination is ________ video game rentals and ________ energy drinks. Figure 7.3 The price of Video Game rentals is $2 For MUA/$ and $4 […]

If the car manufacturer enjoys economies of scale, then an increase in the number of cars manufactured will lead to a(n): A) decrease in average cost. B) increase in average cost. C) constant average cost. D) decrease in total cost. […]

Suppose Belgium produces only two goods, chocolate and lace. If Belgium has a comparative advantage in lace, a move toward free trade will: A) benefit chocolate workers, harm lace workers in the short run, but benefit the nation as a […]

Suppose the price elasticity of supply for poker chips is .7 and the price decreases by 30%. The quantity supplied will decrease by ________ %. A) 25 B) 30 C) 15 D) 21 Which of the following trade policies raises […]

Refer to Figure 4.1, which shows Molly’s and Ryan’s individual demand curves for compact discs per month. Assuming Molly and Ryan are the only consumers in the market, if the market quantity demanded is 15, the price must be: A) […]

Total variable cost: A) increases as output increases. B) is constant as output increases. C) decreases as output increases. D) is lowest for labor-intensive technologies. Which of the following strategic behaviors do firms in an oligopoly market usually engage? A) […]

Which one of the following is NOT a retaliation strategy that firms would apply to one that cheated on a price-fixing scheme by selling at a price below the agreed-upon fixed price? A) All other firms sell at the same […]

The summation of all individual firm marginal cost curves above the minimum of the average variable cost curve: A) forms a curve that is usually downward sloping. B) defines the relationship between price and demand. C) defines the relationship between […]

The problem with using voluntary contributions to support a public good is known as the ________ problem. A) user B) utility C) free-rider D) external cost Figure 8.3 shows a firm’s marginal cost, average total cost, and average variable cost […]

Figure 8.3 shows a firm’s marginal cost, average total cost, and average variable cost curves. At Q=100, the average fixed cost is: A) $30. B) $40. C) $50. D) $60. Markets exist: A) so people can buy and sell things. […]

Refer to Table 7.8. Jessy spends no more than $75 per month on movies and eating out. The price of a movie is $8 and the price of a meal out is $15. If Jessy watches two movies per month, […]

According to the Application, a recent study of search behavior for liquid detergent showed that a doubling of income ________ the cost of search and ________ the amount of searching by about 14 percent. A) increased; increased B) increased; decreased […]

Which of the following are examples of goods and services that have been subject to maximum prices or may be subject to maximum prices in the near future? A) gasoline B) rental housing C) medical goods and services D) all […]

The WTO and GATT promote trade by: A) reducing tariffs. B) directing trade. C) setting the prices of goods sold internationally. D) all of the above Figure 12.1 shows a successful price-fixing arrangement (cartel) between two identical firms. When the […]

In 1995, the United States threatened to impose 100 percent tariffs on ________ from ________ if it didn’t loosen its protectionist policies. A) luxury cars; Japan B) auto parts; Japan C) brandies; France D) light trucks; Germany When wages increase […]