*******I am unsure about question 7 and 10****** Question 1 (1 point)

A rise in a good's price from $5 to $7 causes quantity demanded for that good to decline from 5000 to 3000 units. This means the value of the price elasticity of demand (rounding to 2 decimal places) is: Question 1 options: A) B) (-)0.67 C) (-)1.50 D) (-)0.40 E) none of the above

Question 2 (1 point)
2

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A single business's demand curve in a perfectly competitive market is: Question 2 options: A) perfectly inelastic. B) inelastic. C) unit-elastic. D) elastic. E) perfectly elastic. Save

Question 3 (1 point)
3

Which of the following statements applies to a profit-maximizing (price-taking) firm in perfect competition? Question 3 options: A) If marginal cost exceeds price, then output must be increased to reach the profit-maximizing point. B) C) If price exceeds marginal cost, then output must be increased to reach the profitmaximizing point. If average cost is greater than price at the profit-maximizing output, then the business is making a positive profit.

D) If price exceeds average cost at the profit-maximizing output, then the business is making a loss. E) If price and average cost are equal, the business is at its shutdown point. Save

Question 4 (1 point)
4

For any profit-maximizing monopolist charging a single price: Question 4 options: A) Marginal revenue is constant for any given output (sales). B) Marginal revenue is always increasing as output (sales) increases. C) Marginal revenue is always decreasing as output (sales) increases. D) Marginal revenue is always equal to average revenue. E) Marginal revenue is always greater than average revenue. Save

Question 5 (1 point)
5

You are told that a monopolist is producing an output level at which its marginal revenue is greater than its marginal cost. Meanwhile, its average cost exceeds its price. If the monopolist raises its output: Question 5 options: A) economic profits will increase. B) economic profits will decrease. C) economic losses will decrease. D) economic losses will increase. E) the monopolist will continue to break even. Save

Question 6 (1 point)
6

When demand is perfectly elastic Question 6 options: A) suppliers in the market are inefficient. B) the demand curve is horizontal. C) the good is in unlimited supply. D) total revenue in this market is always constant. E) price cannot be determined. Save

Question 7 (1 point)

You are the general manager of a price-setting firm (facing a downward sloping demand curve) that sets a single price for its product. You are told that at the current price, marginal revenue is less than marginal cost, while avergage revenue is greater than average cost per unit. If this is true, then in order to maximize profit, you should Question 7 options: A) Increase output and decrease the price. B) Decrease output and increase the price. C) Maintain the current output level and price. D) Set the price so that the price elasticity of demand is (-)1. E) Set the price so that the price elasticity of demand is less than (-)1. Save

Question 8 (1 point)
8

A perfect competitor will close down if: Question 8 options: A) price equals average cost at the business's profit-maximizing point. B) price equals marginal cost at the business's profit-maximizing point. C) price equals marginal revenue at the business's profit-maximizing point. D) marginal cost equals marginal revenue at the business's profit-maximizing point. E) price equals average variable cost at the business's profit-maximizing point. Save

Question 9 (1 point)
9

If a monopoly is broken up into perfectly competitive businesses: Question 9 options: A) equilibrium price in the market will fall, equilibrium quantity will rise and consumer surplus will fall. B) equilibrium price in the market will fall, equilibrium quantity will fall and consumer surplus will fall. C) equilibrium price in the market will rise, equilibrium quantity will rise and consumer surplus will fall. D) E) equilibrium price in the market will fall, equilibrium quantity will rise and consumer surplus will rise. equilibrium price in the market will fall, equilibrium quantity will fall and consumer surplus will not change.

F) Save

equilibrium price in the market will rise, equilibrium quantity will fall and Bill Banks will dance the tango with Gene Desca.

Question 10 (1 point)
10

Your firm sells a home-use drinking water test kit. Variable costs per unit (material costs and labour) are approximately $5. Your current selling price is $24 per unit. A business analyst tells you that your firmspecific price elasticity of demand for the test kits is (-)1.5. Assuming this information is correct, you should Question 10 options: a) Do nothing. b) Raise your price to $26 c) Lower your price to $20 d) Lower your price to $15 e) Raise your price to $30 Save

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