FinalExamPracticeQuestions

Due Jun17at11:59pm
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Questions 105

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FinalExampracticequestions.Youhaveunlimitedattemptsandnotimelimitsperattempt.Thereareatotalof100questionsdrawnfromChapters:3,
5,6,7,10,12,13,&15.Yourfinalexamquestionswillbedrawnfromthispool

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SubmittedJun15at7:19pm

Question1

0/0pts

Marketequilibriumoccurswhen:

thereisnoincentiveforpricestochangeinthemarket.
quantitydemandedequalsquantitysupplied.
themarketclears.
thereisnoincentiveforpricestochangeinthemarket,quantitydemandedequalsquantitysupplied,andthemarketclears.

Question2

0/0pts

Whichofthefollowingbestexemplifiesthelawofdemand?

Asincometaxesrise,fewernewcarsarepurchased.
Asthepriceofcornrises,moreacresofcornareplanted.
Asthepriceofacarrentalrises,fewercarsarerented.
Asthepopulationrises,moreelectricityisconsumed.

Incorrect

Question3
Anincreaseinsupplyiscausedby:

0/0pts

anincreaseininputprices.
suppliers'expectationsofhigherpricesinthefuture.
anincreaseinthepriceofthegood.
adecreaseinthepriceofresourcesusedinproduction.

Question4

0/0pts

Thetypicalsupplycurveillustratesthat:

otherthingsequal,thequantitysuppliedforagoodisinverselyrelatedtothepriceofagood.
otherthingsequal,thesupplyofthegoodcreatesitsowndemandforthegood.
otherthingsequal,thequantitysuppliedforagoodispositivelyrelatedtothepriceofagood.
priceandquantitysuppliedareunrelated.

Incorrect

Question5

0/0pts

YounoticethatthepriceofBlurayplayersfallsandthequantityofBlurayplayerssoldincreases.Yoususpectthat_____Blurayplayers
shiftstothe_____.

demandforright.
demandforleft.
supplyofright.
supplyofleft.

Question6

0/0pts

Adecreaseindemandwithnochangeinsupplywillleadto_____inequilibriumquantityand_____inequilibriumprice.

anincreaseanincrease
anincreaseadecrease
adecreaseanincrease
adecreaseadecrease

Question7
Anincreaseinsupplywithnochangeindemandwillleadto_____inequilibriumquantityand_____inequilibriumprice.

0/0pts

anincreaseanincrease
anincreaseadecrease
adecreaseanincrease
adecreaseadecrease

Incorrect

Question8

0/0pts

Whichofthefollowingwouldshiftthedemandcurvefornewtextbookstotheright?

adecreaseinthepriceofpaper
afallinthepriceofusedtextbooks
anincreaseincollegeenrollment
afallinthepriceofnewtextbooks

Question9

0/0pts

Themarketforcornisinequilibrium.WhichofthefollowingismostlikelytoINCREASEtheequilibriumpriceofcorn?

abountifulharvest
increasingproductionofcornbasedethanol
decreasinghouseholdincomes,withcornbeinganormalgood
adecreaseinthepriceofwheat,asubstituteinconsumption

Question10

0/0pts

Reference:Ref35

(Table:TheMarketforChocolateCoveredPeanuts)LookatthetableTheMarketforChocolateCoveredPeanuts.Ashortageof210bags
ofchocolatecoveredpeanutsexistsifthepriceis_____perbag.

$0.80
$0.60
$0.40

$0.30

Incorrect

Question11

0/0pts

Figure:TheDemandandSupplyofWheat

Reference:Ref36

(Figure:TheDemandandSupplyofWheat)LookatthefigureTheDemandandSupplyofWheat.Atemporarypriceof$4inthismarket
wouldresultina_____of_____bushels.

surplus4,000
shortage2,000
shortage4,000
surplus2,000

Question12

0/0pts

Manypublicutilitiesburnoiltogenerateelectricity.Ifthepriceofoilincreases,weexpectashifttothe_____inthe_____curvefor_____
anda_____priceforelectricity

rightsupplyelectricitylower
leftsupplyelectricityhigher
rightdemandoilhigher
leftdemandoillower

Question13
Anincreasein_____willhaveanambiguous(uncertain)effectonprice.

tastesandpreferences
thepriceofasubstitute

0/0pts

thepriceofacomplement
income

Question14

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Figure:TheDemandandSupplyofWheat

Reference:Ref36

(Figure:TheDemandandSupplyofWheat)LookatthefigureTheDemandandSupplyofWheat.Atemporarypriceof$2inthismarket
wouldresultina_____of_____bushels.

surplus4,000
shortage8,000
shortage10,000
surplus10,000

Incorrect

Question15

0/0pts

_____illustratesapositiverelationshipbetweenpriceandquantity.

Ademandcurve
Asupplycurve
Aproductionpossibilityfrontier
Equilibrium

Question16
Themostlikelyreasonthatthegovernmentimplementsa_____isbecauseitfeelsthepriceistoohighfor_____.

priceceilingconsumers
pricefloorconsumers

0/0pts

priceceilingproducers
pricefloorproducers

Question17

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Figure:SupplyandDemand

Reference:Ref512

(Figure:SupplyandDemand)LookatthefigureSupplyandDemand.Abindingpricefloorisrepresentedby:

P1.
P2.
P3.
pointC.

Question18

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Apriceceilingisnoteffectiveif:

itissetabovetheequilibriumprice.
theequilibriumpriceisabovethepriceceiling.
itissetbelowtheequilibriumprice.
itcreatesashortage.

Question19
Governmentscontinuetoimposepricecontrols.WhichofthefollowingisNOTavalidreasonforthis?

Somepeopledobenefitfromsuchpricecontrols.
Peoplefearthatpriceswillchangedramaticallyifthepricecontrolsareremoved.
Itispoliticallyexpedienttoenactregulationsthatbenefitinfluentialvotinggroups.
Pricecontrolsarealwayseffective.

0/0pts


Incorrect

Question20

0/0pts

Apriceceilingresultsin:

inefficiencyresultingfromoverproductionofthegood.
inefficiencybecausetransactionsareheldbelowtheequilibriumquantity.
adecreaseinwastedresources,asconsumersfindsuchgoodsmoreeasily.
surplusesinthemarket,whicheventuallyleadtoinefficientproductioncosts.

Incorrect

Question21

0/0pts

Quotalimitscause:

thedemandpricetobeabovethesupplyprice.
thequantitydemandedtobemorethanthequantitysupplied.
thequantitydemandedtobelessthanthequantitysupplied.
thedemandpricetobelessthanthesupplyprice.

Incorrect

Question22

0/0pts

Whichofthefollowingisanexampleofapricefloor?

arentcontrolledapartment
amaximumlegalpricethatcouldbechargedforgasolineduringatimeofwar
theminimumwage
agovernmentdecreethatcappedthepriceofbottledwaterintheaftermathofadevastatinghurricane

Question23

0/0pts

Reference:Ref52

(Table:TheMarketforSoda)LookatthetableTheMarketforSoda.Ifthegovernmentdoesnotimposeapricecontrol,thepriceofacanof
sodawillequal:

$0.50.

$0.75.
$1.00.
$1.25.

Question24

0/0pts

Figure:MarketI

Reference:Ref533

(Figure:MarketI)LookatthefigureMarketI.Asurplusofthegoodwillresultifthepriceis:

$15.
$9.
$6.
$0.

Question25

0/0pts

ThepersistentunwantedsurplusthatresultsfromapricefloorcausesinefficienciesthatincludeallofthefollowingEXCEPT:

inefficientlylowquality.
inefficientallocationofsalesamongsellers.
wastedresources.
thetemptationtobreakthelawbysellingbelowthelegalprice.

Question26
WhichisNOTacorrectstatementabouttheundesirablesideeffectsofaquantitycontrol?

Quantitycontrolsdonotleadtodeadweightloss.
Somemutuallybeneficialtransactionsdonotoccurbecauseofquantitycontrols.

0/0pts

Quantitycontrolsprovideincentivesforillegalactivities.
Quantitycontrolscauseawedgebetweenthedemandpriceandsupplyprice.

Incorrect

Question27

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Supposethegovernmentsetsapricefloorbelowthecurrentpriceofagood.Thispricefloorwill:

resultinanexcesssupplyofthegood.
resultinanexcessdemandforthegood.
havenoeffectonthepriceofthegood.
increasethequantitysuppliedofthegood.

Question28

0/0pts

ThepurposeofmedallionsissuedinNewYorkCityinthe1930swasto:

limitthenumberofpeoplewhousedthesubwayduringrushhour.
ensurethattaxicabsmetstandardsofsafetyandcleanliness.
givetheownertherighttobuyandsellsecuritiesontheNewYorkStockExchange.
encouragecitizenstobuytheirowncars.

Incorrect

Question29

0/0pts

Ifthegovernmentimposesbindingrentcontrol:

rentwillbesetabovetheequilibriumprice.
itmayresultinsomelandlordsleavingthebusinessbecausetheycannotcovercosts.
itwillleadtorentalunitsbeinghigherinqualitybecauselandlordsareguaranteedahighprice.
itwillcauseasurplusofhousing.

Question30
Figure:PriceControls

0/0pts

Reference:Ref520

(Figure:PriceControls)LookatthegraphPriceControls.Aneffectivepricefloorwouldbeatprice_____anda_____wouldresultfromthe
differencebetweenpoints_____.

csurplusfande
bsurplusfande
dshortageiandh
bshortagefande

Question31

0/0pts

Aregressivetaxtakesa:

fixedpercentageofincome.
lowerpercentageofincomeasincomerises.
higherpercentageofincomeasincomerises.
lowerpercentageofincomeasincomefalls.

Incorrect

Question32

0/0pts

Anexcisetaxthatthegovernmentcollectsfromtheproducersofagood:

shiftsthesupplycurveupward.
reducesrevenueforthegovernment.
hasaneffectsimilartothatofataxsubsidy.
shiftsthesupplycurvedownward.

Question33
Theincidenceofatax:

isameasureoftherevenuethegovernmentreceivesfromit.
referstowhowritesthechecktothegovernment.

0/0pts

referstohowmuchofthetaxisactuallypaidbyconsumersandproducers.
isameasureofthedeadweightlossfromthetax.

Question34

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Accordingtothe_____principle,thosecanafforditshouldpaymoretax.

abilitytopay
taxfairness
benefits
affordability

Question35

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Figure:AMarketwithaTax

Reference:Ref717

(Figure:AMarketwithaTax)LookatthefigureAMarketwithaTax.Thetaxrevenuecollectedbythegovernmentisequaltothearea:

(P1P3)Q1.
(P1P5)Q2.
(P2P3)Q1.
(P1P2)Q2.

Question36

0/0pts

Assuminganormalupwardslopingsupplycurveanddownwardslopingdemandcurve,ifthegovernmentimposesa$5excisetaxon
leathershoesandcollectsthetaxfromthesuppliers,thepriceofleathershoeswill:

increaseby$5.
increasebymorethan$5.
increasebylessthan$5.

increase,butwecannotdeterminebyhowmuch.

Question37

0/0pts

Thebenefitsprincipleoftaxationmeansindividualspayaccordingto:

whetherandhowmuchtheyuseagoodorservice.
benefitsgainedbysocietyasawhole.
benefitstogovernmentfromhavingtaxpayers.
abilitytopay.

Question38

0/0pts

Consumersinaparticularmarketwillbearthegreaterburdenofanexcisetax:

themorepriceelasticsupplyisrelativetodemand.
thelesspriceelasticsupplyisrelativetodemand.
ifsupplyhasthesamepriceelasticityasdemand.
regardlessofthepriceelasticityofdemandorsupply.

Incorrect

Question39

0/0pts

Figure:TheMarketforYachts

Reference:Ref715

(Figure:TheMarketforYachts)LookatthefigureTheMarketforYachts.Ifthegovernmentimposesa$30,000taxonyachts(collected
fromtheproducers),thepriceofyachtswillriseto_____andthegovernmentwillcollect_____.

$100,000$120million
$120,000$90million

$140,000$90million
$160,000$120million

Incorrect

Question40

0/0pts

Figure:TheMarketforBlueJeans

Reference:Ref79

(Figure:TheMarketforBlueJeans)LookatthefigureTheMarketforBlueJeans.Thegovernmentrecentlylevieda$10taxonthe
producersofbluejeans.Whatareaorareasinthegraphidentifythelossofproducersurplusduetothetax?

d+e
e
d
d+e+f

Question41

0/0pts

The_____rateappliestoanadditional$1oftaxableincome.

marginal
average
total
lower

Question42

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Thenumberofseatsinafootballstadiumisfixedat70,000.Thecitydecidestoimposeataxof$10perticket.Inresponse,theteam
managementraisestheticketpricefrom$30to$40andstillsellsall70,000tickets.Thetaxcausedachangeintheconsumersurplusof
_____,achangeintheproducersurplusof_____,andadeadweightlossof_____.

$10$0$10
$700,000$0$700,000

$10$0$0
$700,000$0$0

Incorrect

Question43

0/0pts

Thetwoprinciplesoftaxfairnessare:

theminimizedistortionsprincipleandthemaximizerevenueprinciple.
thebenefitsprincipleandtheabilitytopayprinciple.
theproportionaltaxprincipleandtheabilitytopayprinciple.
theequityprincipleandtheefficiencyprinciple.

Incorrect

Question44

0/0pts

_____taxisNOTamajorsourceofrevenueforthefederalgovernment.

Income
FICA
Profits
Property

Incorrect

Question45

0/0pts

Reference:Ref716

(Table:ThreeTaxStructureProposals)LookatthetableThreeTaxStructureProposals.Aregressivetaxstructurecanbefoundin:

proposal1.
proposal2.
proposal3.
alloftheproposals.

Question46

0/0pts

Thesatisfactionthataconsumergetsfromtheconsumptionofabundleofgoodsandservicesis:

utility.
rationalization.
budgetconstraints.
income.

Question47

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Utilityisthe:

differencebetweenafirm'stotalrevenueanditstotaleconomiccost.
goodnotadequatelyprovidedbyafreemarketandusuallyprovidedbythegovernment.
satisfactionconsumersderivefromtheirconsumptionofgoodsandservices.
lowestpricethatbuyersarewillingtopayforagivenquantityofagood.

Incorrect

Question48

0/0pts

WhichofthefollowingstatementsisFALSE?

Theincomeeffectofnormalgoodscountersthesubstitutioneffect,sothedemandcurveslopesupward.
Theincomeeffectandthesubstitutioneffectreinforceeachotherwhenthepriceofanormalgoodchanges.

Theincomeeffectrepresentsthedecreaseinquantitydemandedcausedbytheimplicitchangeinincomeduetoafallinthepriceofaninferiorgoodbut
notofanormalgood.

Thesubstitutioneffectreflectsthechangeinquantitydemandedsolelybecauseofachangeintherelativepriceofagood.

Question49
Theoptimalconsumptionruleforallgoodsrequires:

themarginalutilityofallgoodsconsumeddividedbythepricetobeequaltothebudgetconstraint.
themarginalutilityofallgoodsconsumedtoexceedthetotalutilityofallgoods.
themarginalutilityofallgoodsconsumeddividedbytherespectivepricetobeequal.
thepricesofallgoodstobeequal.

0/0pts

Question50

0/0pts

Emiliofindsanewjobthatdoubleshisincome.Headjustshisconsumption.FromthisweknowthatforeverynormalgoodEmiliobuys,
his:

marginalutilityperdollarwillrise.
marginalutilityperdollarwillfall.
marginalutilityperdollarwillstayconstant.
totalutilitywillfall.

Question51

0/0pts

Reference:Ref1010

(Table:MarginalUtilityperDollarofM&Ms)LookatthetableMarginalUtilityperDollarofM&Ms.ThepriceofM&Msis$2perbag.Ifthe
priceofM&Msincreasesto$3perbag,themarginalutilityperdollarforeachbagofM&Mswill:

increase.
decrease.
remainconstant.
fluctuaterandomly.

Question52

0/0pts

Thesubstitutioneffectalwaysinvolvesachangeinconsumptioninthe_____directionas(to)the_____change.

samebudget
sameprice
oppositeprice
oppositebudget

Question53

0/0pts

Reference:Ref1013

(Table:UtilityfromBurgersandMilkshakes)LookatthetableUtilityfromBurgersandMilkshakes.David'smarginalutilitiesformilkshakes
andburgersaregiveninthetable.Thepriceofmilkshakesis$2,andthepriceofburgersis$5.IfDavid'sincomeis$10,tomaximizehis
utility,hebuys_____shake(s)and_____burger(s).

11
no2
5no
21

Question54

0/0pts

Theincomeeffectreferstoachangein:

incomebecauseofachangeinbusinessinvestment.
moneyornominalincomebecauseofachangeinwages.
thequantitydemandedofagoodbecauseofanimplicitchangeinthebuyer'sincomecausedbyachangeinthepriceofagoodorservice.
thequantitydemandedofagoodbecauseofachangeinthebuyer'smoneyincome.

Incorrect

Question55
Whichofthefollowingbestdescribestheamountofutilitythatisgainedbyspendinganadditionaldollaronyogurt?

theaverageutilityofyogurtdividedbythepriceofyogurt
themarginalutilityofonetubofyogurtdividedbythepriceofyogurt
thetotalutilityofatubofyogurtdividedbythepriceofyogurt
thevalueequaltothepriceofarelatedgood.

0/0pts

Incorrect

Question56

0/0pts

Reference:Ref1018

(Table:ConsumerEquilibrium)LookatthetableConsumerEquilibrium.Assumethatthepriceofbothgoodsis$1perunit,thatyou
consumefourunitsofgoodXandtwounitsofgoodY,andthatyouarespendingallofyourincome.Tomaximizeutility,assumingthatthe
goodsaredivisible,youwouldconsume_____ofXand_____ofY.

lessmore
moremore
lessless
moreless

Question57

0/0pts

Themarginalutilityofeatingsweetpotatoesisthe:

changeintotalutilityfromconsuminganadditionalserving.
totalutilitydividedbythenumberofservingsconsumed.
changeintotalutilitydividedbythenumberofservingsconsumed.
totalutilitydividedbythechangeinthenumberofservingsconsumed.

Question58

0/0pts

Howmuch_____Susanobtainsfromeatinggreenbeansisameasureoftheutilityofgreenbeansforher.

efficiency
usefulness
cost
satisfaction

Incorrect

Question59

0/0pts

Reference:Ref1010

(Table:MarginalUtilityperDollarofM&Ms)LookatthetableMarginalUtilityperDollarofM&Ms.ThepriceofM&Msis$2perbag.The
marginalutilityperdollarofthefirstbagofM&Msis:

12.
6.
3.
2.

Question60

0/0pts

Theprincipleofdiminishingmarginalutility:

referstothetendencyoftotalutilitytoincreaseuntilanindividual'sbudgetisnolongerconstrained.
referstothetendencyofmarginalutilitytodeclineastheamountofconsumptionofagoodorserviceincreases.
indicatesthatifagoodisinferior,lessofitwillbepurchasedwhenincomefalls.
assumesallgoodsarenormal.

Question61

0/0pts

Inthemodelofperfectcompetition:

theconsumerisatthemercyofpowerfulfirmsthatcansetpriceswherevertheyprefer.
individualfirmscaninfluencetheprice,butonlyslightly.
noindividualorfirmhasenoughpowertoaffectprice.
thepriceisdeterminedbyhowmanyyearsareleftintheproduct'spatent.

Incorrect

Question62
Ifthepriceisconsistentlybelowaveragetotalcost,thenintheshortrunaperfectlycompetitivefirmshould:

shutdown.
continuetoproducetominimizelosses.

0/0pts

raisetheprice.
Thereisnotenoughinformationgiventoanswerthisquestion.

Question63

0/0pts

SupposeSarah'spotterystudioischargingthemarketprice,whichisjusthigherthanherminimumaveragetotalcost.Thismeansthat
Sarah:

isbreakingeven.
shouldshutdownimmediately.
isearningasmalleconomicprofit.
isincurringasmalleconomicloss.

Question64

0/0pts

Perfectcompetitionischaracterizedby:

rivalryinadvertising.
fiercequalitycompetition.
theinabilityofanyonefirmtoinfluenceprice.
widelyrecognizedbrands.

Incorrect

Question65

0/0pts

Reference:Ref1223

(Table:VariableCostsforLots)LookatthetableVariableCostsforLots.Duringthewinter,Alexarunsasnowclearingserviceina
perfectlycompetitiveindustry.Assumethatcostsareconstantineachintervalthatis,thevariablecostofclearinganywherefrom1
through10lotsis$200.Heronlyfixedcostis$1,000forasnowplow.Hervariablecostsincludefuel,hertime,andhotcoffee.Whatis
Alexa'sshutdownpriceintheshortrun?

$20
$15
$50
$42

Question66

0/0pts

Pricetakersareindividualsinamarketwho:

selectapricefromawiderangeofalternatives.
selectthelowestpriceavailableinacompetitivemarket.
selecttheaverageofpricesavailableinacompetitivemarket.
havenoabilitytoaffectthepriceofagoodinamarket.

Question67

0/0pts

IfaperfectlycompetitivefirmisproducingaquantitywhereMC>MR,thenprofit:

ismaximized.
canbeincreasedbyincreasingproduction.
canbeincreasedbydecreasingproduction.
canbeincreasedbydecreasingtheprice.

Question68

0/0pts

IfaperfectlycompetitivefirmisproducingaquantitywhereP>MC,thenthefirmcanincreaseprofitby:

makingnochangeinoutputorpricebecauseitisalreadymaximizingprofit.
increasingtheprice.
decreasingtheprice.
increasingproduction.

Question69
Supposethatsomefirmsinaperfectlycompetitiveindustryearnnegativeeconomicprofits.Inthelongrun,the:

shortrunindustrysupplycurvewillnotshift.
shortrunindustrysupplycurvewillshifttotheleft.
numberoffirmsintheindustrywillnotchange.
numberoffirmsintheindustrywillincrease.

0/0pts

Question70

0/0pts

Figure:GameDayShirts

Reference:Ref1221

(Figure:GameDayShirts)Rickisoneof10vendorswhosellgamedayTshirtsatfootballgamesinaperfectlycompetitivemarket.His
costsareidenticaltothecostsoftheother9vendors.Ifthepriceofashirtis$11,theshortrunindustrysupplywillbe_____shirts.

140
200
220
240

Question71

0/0pts

Themarketforbreakfastcerealcontainshundredsofsimilarproducts,suchasFrootLoops,cornflakes,andRiceKrispies,thatare
consideredtobedifferentproductsbydifferentbuyers.Thissituationviolatestheperfectcompetitionassumptionof:

manybuyersandsellers.
astandardizedproduct.
easeofentry.
easeofexit.

Incorrect

Question72
Thebreakevenpriceforaperfectlycompetitivefirmisequalto:

theminimumvalueofaveragevariablecost.
themarginalrevenue,providedthatmarginalrevenueisequaltomarginalcost.
theaveragefixedcostatthegivenoutputlevel.
theminimumvalueofaveragetotalcost.

0/0pts

Incorrect

Question73

0/0pts

IfaperfectlycompetitivefirmisproducingaquantitywhereP<MC,thenprofit:

ismaximized.
canbeincreasedbydecreasingtheprice.
canbeincreasedbyincreasingproduction.
canbeincreasedbydecreasingproduction.

Incorrect

Question74

0/0pts

Aperfectlycompetitiveindustrywithconstantcostsinitiallyoperatesinlongrunequilibrium.Whendemandincreases:

intheshortrun,pricesandprofitswillbehigher,butinthelongrun,pricewillfallbacktoitsoriginallevelandfirmswillagainearnzeroeconomicprofit.

inthelongrunandtheshortrun,pricesandprofitswillbehigherthanbeforethedemandincrease.
intheshortrun,pricesandprofitswillfall,butinthelongrun,pricewillrisebacktoitsinitiallevel,aswillprofits.
inthelongrunandtheshortrun,pricesandprofitswillbelowerthanbeforethedemandincrease.

Question75

0/0pts

Ifthelongrunmarketsupplycurveforaperfectlycompetitivemarketishorizontal,thenthisindustryexhibits_____costs.

constant
decreasing
increasing
absenceofmarginal

Incorrect

Question76
NaturalmonopoliesarelikelytoincludeallofthefollowingEXCEPT:

adiamondminingcompany.
agascompany.
anelectricitycompany.
railways.

0/0pts


Incorrect

Question77

0/0pts

Figure:WaterWorks

Reference:Ref1310

(Figure:WaterWorks)LookatthefigureWaterWorks,whichdescribesasmalltown'swaterworks,anaturalmonopoly.Ifregulators
requirethewaterworkstochargethepricethateliminatesdeadweightloss,thewaterworkswill:

earnprofits.
breakeven.
incurlosses.
havealargeproducersurplus.

Question78

0/0pts

Figure:TheProfitMaximizingOutputandPrice

Reference:Ref1317

(Figure:TheProfitMaximizingOutputandPrice)LookatthefigureTheProfitMaximizingOutputandPrice.Assumethattherearenofixed
costsandAC=MC=$200.Theprofitmaximizingoutputforamonopolistis:

0.
8.
16.
20.

Incorrect

Question79

0/0pts

Amonopolyisamarketcharacterizedby:

asingleseller.
aproductwithmanyclosesubstitutes.
alargenumberofsmallfirms.
asmallnumberoflargefirms.

Incorrect

Question80

0/0pts

Anaturalmonopolistthatispriceregulatedatthemarginalcostoutputlevelwill:

producetheoptimallevelofoutputandearnanormalprofit.
eventuallyincurlossesifMCislessthanATC.
beproducingatthesameoutputandpricethatanunregulatednaturalmonopolistwouldchoose.
producetheoptimallevelofoutputandearnaneconomicprofitgreaterthanzero.

Question81

0/0pts

Ifafirmwantstochargedifferentcustomersdifferentprices,itmustbe:

apricetaker.
inperfectcompetition.
apricesetter.
apricesetterinperfectcompetition.

Question82
Adownwardslopingdemandcurvewillensurethat:

P=MR.
P>MR.
P<MR.
P=MC.

0/0pts

Question83

0/0pts

Onegovernmentpolicyfordealingwithnaturalmonopolyisto:

imposeapricefloortoeliminatethedeadweightloss.
imposeapriceceilingtoreduceeconomicprofit.
breakitupintosmallerfirms.
imposefinesonthemonopolist.

Question84

0/0pts

Reference:Ref138

(Table:Lunch)LookatthefigureLunch.Joemakesandsellspicniclunchestopeopletakingalldayraftingtripsontheriver.Themarginal
costandaveragecostofeachlunchareaconstant$4.IfJoeisoneofmanyfirmsinacompetitiveindustry,whatpricewillhechargefora
lunchinthelongrun?

$10
$8
$6
$4

Question85

0/0pts

Goodsthataresubjecttonetworkexternalitiestendtobeones:

forwhichthevalueofthegoodtoanindividualislowerwhenmorepeopleuseit.
thatarelandintensive.
forwhichthevalueofthegoodtoanindividualishigherwhenmorepeopleuseit.
forwhichonepersonowningthegoodenhancesitsvaluebecauseit'stheonlyone.

Question86
Figure:ComputingMonopolyProfit

0/0pts

Reference:Ref135

(Figure:ComputingMonopolyProfit)LookatthefigureComputingMonopolyProfit.ProducingatpointNwould:

resultinMR=MC.
resultinpositiveeconomicprofits.
neverbeprofitmaximizing,sinceatthisoutputMR<0andMC>0.
resultinthefirmbreakingeven.

Incorrect

Question87

0/0pts

Thedemandcurveforamonopolyis:

theMCcurveabovetheAVCcurve.
theMRcurveabovethehorizontalaxis.
identicaltotheMRcurve.
alsotheindustrydemandcurve.

Incorrect

Question88

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WhichofthefollowingstatementsconcerningmonopolyisTRUE?

Monopolyfirmsarealwayslargerthanperfectlycompetitivefirms.
Amonopolyhasnorivals.
Barrierstoentrydonotpreventotherfirmsfromenteringamonopolizedindustry.
Monopolistsproducemoreoutputthanacompetitivemarketwiththesamedemandandcoststructure.

Question89
WhenafirmfindsthatitsATCofproductiondecreasesasitincreasesproduction,thisfirmissaidtobeexperiencing:

0/0pts

profitmaximization.
economicprofit.
economiesofscale.
abarriertoentry.

Question90

0/0pts

TheGoSportsCompanyisaprofitmaximizingfirmwithamonopolyintheproductionofschoolteampennants.Thefirmsellsitspennants
for$10each.WecanconcludethatGoSportsisproducingalevelofoutputatwhich:

averagetotalcostequals$10.
averagetotalcostisgreaterthan$10.
marginalrevenueequals$10.
marginalcostequalsmarginalrevenue.

Incorrect

Question91

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Monopolisticallycompetitivefirmsproducelessthantheoutputatwhichaveragetotalcostisminimizedinthelongrun.Asaresult,there
is:

irrationalcapacity.
excesscapacity.
productdifferentiation.
zeroeconomicprofit.

Incorrect

Question92

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Monopolisticallycompetitivefirms:

engageincollusiveactivitytomaximizeprofit.
areverysimilartoperfectcompetitorsinproducingattheminimumATC.
earnapositiveeconomicprofitifpriceisgreaterthanATC.
willsetpricewhereMC>MR.

Question93
A(n)_____isasinglefirmwith_____,whereasa(n)_____impliesanindustrywith_____firm(s)and_____.

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oligopolynobarrierstoentrymonopolymanyeasyentryandexit
monopolybarrierstoentrymonopolisticcompetitionmanyeasyentryandexit
monopolybarrierstoentryoligopolyfewnobarrierstoentry
monopolisticcompetitorbarrierstoentrymonopolyonebarrierstoentry

Question94

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IfafirmoperatinginmonopolisticcompetitionisproducingaquantityatwhichMC<MR,thenprofitcanbe_____by_____.

increaseddecreasingproduction
increasedincreasingproduction
increasedincreasingtheprice
maximizeddecreasingproduction

Question95

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Excesscapacityisaprobleminmonopolisticcompetitionbecauseiftherewerefewerfirmsintheindustry:

therewouldbemorechoicesforconsumers.
averagetotalcostswouldbehigherandprofitswouldbelower.
averagetotalcostswouldbelowerandthepricespaidbyconsumerscouldbelower.
therewouldbelessneedforgovernmentregulation.

Question96

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Becausemostcommunitieshavealargenumberofsimilarbutnotidenticalsubstitutes,themarketforfinancialplannersisbestconsidered
tobe:

amonopoly.
anoligopoly.
perfectcompetition.
monopolisticallycompetitive.

Question97
Figure:ProfitsinMonopolisticCompetition

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Reference:Ref155

(Figure:ProfitsinMonopolisticCompetition)LookatthefigureProfitsinMonopolisticCompetition.Azeroeconomicprofitisearnedifthe
profitmaximizingpriceis_____inpanel_____.

A(A)
B(A)
N(C)
E(B)

Incorrect

Question98

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Perfectcompetitorsandmonopolisticcompetitorsbothearn_____economicprofitinthelongrun,butperfectcompetitorsproduceatthe
_____oftheATCcurve,whilemonopolisticcompetitorsproduce_____oftheATCcurve.

zerominimumpointonthedownwardslopingportion
positiveminimumpointontheupwardslopingportion
negativeminimumpointattheminimumpoint
zerodownwardslopingportionattheminimumpoint

Incorrect

Question99

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Thedemandcurveforafirmoperatinginamonopolisticallycompetitivemarketisbestdescribedas:

Ushaped.
upwardsloping.
downwardsloping.
horizontal.

Question100

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Becausemostcommunitieshavealargenumberofsimilarbutnotidenticalsubstitutes,themarketforchiropractorsisbestconsideredto
be:

anoligopoly.
perfectcompetition.

monopolisticallycompetitive.
amonopoly.

Question101

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Wheninitiallyamonopolisticallycompetitiveindustryearnseconomicprofit,theresultofcompetitionamongsellersisusuallythat:

thepriceoftheproductincreasestomonopolylevel.
thepriceoftheproductquicklyreachestheperfectlycompetitivelevel.
firmsintheindustrygainmarketshare.
firmsintheindustrylosemarketshare.

Question102

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Monopolisticallycompetitivefirmshavezeroeconomicprofitsinthelongrunbecauseof:

excesscapacity.
pricewarsamongfirms.
easyentryandexit.
excessiveadvertising.

Incorrect

Question103

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Figure:MonopolisticCompetitionVI

Reference:Ref1512

(Figure:MonopolisticCompetitionVI)ThefigureMonopolisticCompetitionVIillustratesafirminthe_____inthe_____,thedemandand
marginalrevenuecurveswillshifttothe_____.

shortrunlongrunright
longrunshortrunleft
shortrunlongrunleft
longrunshortrunright

Question104

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AfirmoperatinginamonopolisticallycompetitivemarketisproducingaquantityatwhichMC=MR.Profit:

canbeincreasedbyincreasingproduction.
ismaximized.
canbeincreasedbydecreasingtheprice.
ismaximizedonlyifMC=P.

Incorrect

Question105

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Ifamonopolisticallycompetitivefirmisproducingtheprofitmaximizinglevelofoutputandisearninganeconomicprofitintheshortrun:

priceislessthanaveragetotalcosts.
priceislessthanmarginalcost.
marginalrevenueislessthanmarginalcost.
marginalrevenueequalsmarginalcost.