Question

For Normax

Question

If an economy has used up all opportunities to make someone better off (without making someone else worse off) then it has achieved ________. (Points : 1)        equity
       opportunity cost
       marginal optimality
       efficiency

Question 5. 5. The study of a single firm and how it determines prices would fall under: (Points : 1)

       macroeconomics.
       microeconomics.
       economic growth.
       fiscal policy.

Question 6. 6. When moving along a production possibility frontier, the opportunity cost to society of getting more of one good: (Points : 1)

       is constant.
       is measured in dollar terms.
       is measured by the amount of the other good that must be given up.
       usually decreases.

Question 7. 7. Because Casey can type reports faster and more accurately than Ahmet, Casey has a(n) ________ in typing reports. (Points : 1)

       comparative advantage
       absolute advantage
       opportunity cost
       specialization

Question 8. 8. A simplified representation that is used to study a real situation is called: (Points : 1)

       a model.
       a production possibility frontier.
       an assumption.
       a trade-off.

Question 9. 9. An economy is said to have a comparative advantage in the production of a good if it can produce that good: (Points : 1)

       with more resources than another economy.
       with a higher opportunity cost than another economy.
       outside its production possibilities curve.
       at a lower opportunity cost than another economy.

Question 10. 10. The production possibility frontier illustrates that: (Points : 1)

       the economy will automatically end up at full employment.
       an economy's productive capacity increases proportionally with its population.
       if all resources of an economy are being used efficiently, more of one good can be produced only if less of another good is produced.
       economic production possibilities have no limit.

Question 11. 11. Alice goes to the local supermarket to purchase one package of her favorite taco shells. She often pays $1.50 for a package, but she finds they are on sale for $1 each. According to the law of demand, one can expect Alice to: (Points : 1)

       purchase an alternative good.
       purchase more than one package of taco shells.
       decide not to purchase taco shells on this visit.
       buy only one package of taco shells.

Question 12. 12. Recent research suggests that certain plastic containers may have cancer-causing elements in them. As a result of this research, one would expect that: (Points : 1)

       the demand for such containers would decrease.
       the quantity demanded for such containers might increase.
       no impact would be observed in this market.
       the price of the containers would change due to a movement along the demand curve.

Question 13. 13. An increase in the price of wheat, an important ingredient in the production of bread, combined with an increase in the number of people consuming bread, will result in which of the following changes in the bread market? (Points : 1)

       Both the equilibrium price and quantity will increase.
       Equilibrium quantity will decrease, but equilibrium price may decrease, increase, or stay the same.
       Both the equilibrium price and quantity will decrease.
       Equilibrium price will increase, but equilibrium quantity may decrease, increase, or stay the same.

Question 14. 14. Rice and potatoes are substitute goods. If the price of rice rises, and there is a bumper crop of potatoes, then in the market for potatoes one would expect that the: (Points : 1)

       equilibrium price would rise, fall, or stay the same while equilibrium quantity would rise.
       equilibrium price will rise, while the equilibrium quantity falls.
       equilibrium price and quantity will both fall.
       equilibrium price will rise, while the equilibrium quantity could fall, rise, or stay the same.

Question 15. 15. When a market is in equilibrium, one will find that the: (Points : 1)

       quantity demanded is equal to zero.
       quantity demanded is equal to quantity supplied.
       quantity demanded is greater than quantity supplied.
       quantity supplied is zero.

Question 16. 16. Which of the following is most likely to increase consumer surplus in the market for cotton T-shirts? (Points : 1)

       Weather conditions provide for an extremely productive cotton harvest.
       Consumer incomes fall and cotton T-shirts are normal goods.
       The price of polyester T-shirts falls.
       The price of industrial sewing machines used to produce garments increases.

Question 17. 17. Suppose the United States removes the current sugar quotas and the market price of sugar drops. In the candy bar market, we would expect: (Points : 1)

       the consumer surplus to increase.
       the consumer surplus to decrease.
       the consumer surplus to be unchanged.
       the deadweight loss to increase.

Question 18. 18. Along a given supply curve, an increase in the price of a good will: (Points : 1)

       increase producer surplus.
       decrease producer surplus.
       increase consumer surplus.
       decrease producer surplus and increase consumer surplus.

Question 19. 19. Which of the following is true if there is a decrease in the demand for cupcakes? (Points : 1)

       There is an increase in producer surplus.
       There is an increase in consumer surplus.
       There is an increase in total surplus.
       There is a decrease in producer surplus.

Question 20. 20. A price floor or a price ceiling is an example of: (Points : 1)

       a quantity control.
       a price control.
       market equilibrium price.
       a quota.

Question 21. 21. Inefficient allocations of goods to consumers often result from: (Points : 1)

       price ceilings.
       producer surplus.
       equilibrium prices.
       consumer surplus.

Question 22. 22. A rent control scheme that would set a maximum amount of rent paid that is below the equilibrium rental price would most likely be supported by which of the following groups? (Points : 1)

       people who wish to rent such an apartment
       people who own rental apartments
       both renters and owners
       neither renters nor owners

Question 23. 23. If demand is elastic, then: (Points : 1)

       the price effect dominates the quantity effect, and a fall in price will cause total revenue to rise.
       the price effect dominates the quantity effect, and an increase in price will cause total revenue to rise.
       the quantity effect dominates the price effect, and an increase in price causes total revenue to rise.
       the quantity effect dominates the price effect, and a decrease in price causes total revenue to rise.

Question 24. 24. If the absolute value of the price elasticity of demand is greater than 1, this means: (Points : 1)

       small percentage changes in price will lead to much larger changes in the percentage change in quantity demanded.
       small percentage changes in price will lead to even smaller changes in the percentage change in quantity demanded.
       percentage changes in price will lead to equal percentage changes in quantity demanded.
       changes in price will have no impact on changes in quantity demanded.

Question 25. 25. When the absolute value of the percentage change in quantity demanded is less than the absolute value of the percentage change in price, demand is: (Points : 1)

       inelastic.
       elastic.
       unit-elastic.
       unknown.

Question 26. 26. Jessica experienced an increase in her income by 10% this year. In the same year, Jessica's quantity demanded of milk increased by 10% and her quantity demanded for bread increased by 5%. This means that for Jessica: (Points : 1)

       both milk and bread are inferior goods.
       both milk and bread are normal goods.
       milk is an inferior good, but bread is a normal good.
       milk is a normal good, but bread is an inferior good.

Question 27. 27. A demand curve that is perfectly inelastic is: (Points : 1)

       horizontal.
       vertical.
       downward-sloping.
       upward-sloping.

Question 28. 28. Jie consumes 3 units of broccoli and 6 units of rice each week. The price of broccoli is $2 per unit and the price of rice is $4 per unit. Jie's marginal utility from the last unit of broccoli consumed is 4 utils while her marginal utility from her consumption of rice is 8 utils. If Jie wants to maximize her utility, Jie should: (Points : 1)

       increase her broccoli consumption and decrease her rice consumption.
       increase her rice consumption and decrease her broccoli consumption.
       continue to consume the amounts of broccoli and rice she is currently consuming.
       stop consuming both goods.

Question 29. 29. When a consumer maximizes utility, the marginal utility per dollar spent must be the same for all goods and services in the consumption bundle. This is referred to as: (Points : 1)

       the optimal consumption rule.
       law of demand.
       budget constraint.
       consumption possibilities.

Question 30. 30. George has a weekly income (I) of $50 which he uses to purchase donuts (D) and coffee (C). The price of a donut is $1 and the price of coffee is $2.50. Suppose George's income increases to $100 while the price of both donuts and coffee remain unchanged. Given this income change, one would expect George's budget line: (Points : 1)

       to shift to the right.
       to shift to the left.
       to rotate around the coffee axis point.
       not to be affected.

Question 31. 31. George has a weekly income (I) of $50 which he uses to purchase donuts (D) and coffee (C). The price of a donut is $1 and the price of coffee is $2.50. Suppose George experiences a decrease in his income to $25 while the prices of donuts and coffee each fall by one-half their initial prices. One would expect that George's budget line would: (Points : 1)

       shift to the right.
       shift to the left.
       rotate around one of the axes, but one cannot tell which one.
       not change.

Question 32. 32. When a consumer consumes more of a good that has become cheaper in place of a good that has become relatively more expensive, this is known as the: (Points : 1)

       substitution effect.
       income effect.
       budget constraint.
       inferior effect.

Question 33. 33. Economies and diseconomies of scale are associated with the: (Points : 1)

       long-run average total cost curve and the long run.
       short-run average total cost curve and the short run.
       marginal cost curve and both the long and short run.
       average fixed cost curve and the short run.

Question 34. 34. A factor of production whose quantity cannot be changed during a particular period is a(n): (Points : 1)

       marginal factor of production.
       fixed factor of production.
       incremental factor of production.
       variable factor of production.

Question 35. 35. When AVC eventually increases as output increases, this is referred to as the ________ effect. (Points : 1)

       diminishing returns
       spreading
       constant cost
       increasing returns

Question 36. 36. Janet's poodle grooming salon has a total cost curve expressed by the equation TC = 100 + 3Q2 where Q is the quantity of dogs groomed. Given this expression, if Janet grooms five dogs her total costs will be: (Points : 1)

       $100.
       $175.
       $225.
       $75.

Question 37. 37. If ATC
is equal to MC, then one is operating: (Points : 1)

       at the minimum point of ATC.
       on the downward-sloping portion of ATC.
       on the upward-sloping portion of ATC.
       at a profitable level of output.

Question 38. 38. A perfectly competitive industry with constant costs is initially operating in long-run equilibrium. When demand increases, one will observe that in the long and short runs: (Points : 1)

       positive economic profits will result for all firms.
       higher prices will result.
       output will increase.
       negative economic profits will result for some firms.

Question 39. 39. Hank operates a perfectly competitive firm in the long run. For several time periods, the market price has been $20 and he knows his break-even price is $22. Hank should: (Points : 1)

       stay in the industry since he can cover his fixed costs.
       exit the industry since he is making losses.
       stay in the industry since he is a perfect competitor and must take the price as given.
       wait for the short-run time period.

Question 40. 40. In a perfectly competitive market: (Points : 1)

       consumers are price-takers.
       producers are price-takers.
       both producers and consumers are price-takers.
       neither producers nor consumers are price-takers.

Question 41. 41. In the short run, a firm will continue to sell its product as long as: (Points : 1)

       it is making a positive profit.
       the price is greater than average total costs.
       the price is greater than average variable costs.
       its marginal cost is increasing.

Question 42. 42. The addition to total revenue from selling one more unit of the good is: (Points : 1)

       market price.
       average profit.
       marginal cost.
       marginal revenue.

Question 43. 43. An oligopoly is characterized as an industry in which: (Points : 1)

       there are few firms, each producing a differentiated or similar product.
       there are many firms, each producing a similar product.
       all market participants are price-takers.
       only one firm produces a very differentiated product.

Question 44. 44. A monopolistically competitive industry is made up of: (Points : 1)

       a few firms, each producing a very differentiated good.
       one firm that produces a very standardized good.
       market participants who are all price-takers.
       many firms producing a differentiated product.

Question 45. 45. If large fixed costs result in ATC falling as output increases, this industry is referred to as a: (Points : 1)

       constant cost industry.
       natural monopoly.
       network externality.
       profit-maximizer.

Question 46. 46. For a monopolist with a downward-sloping demand curve, the quantity effect dominates the price effect at: (Points : 1)

       lower levels of production.
       all levels of production.
       higher levels of production.
       only at those levels at which elasticity is unit-elastic.

Question 47. 47. A natural monopoly exists when: (Points : 1)

       a few firms collude to make one large firm.
       economies of scale provide large cost advantages to having one firm produce the industry's output.
       firms naturally maximize profit regardless of market structure.
       firms enter the industry as a result of profit incentives.

Question 48. 48. Suppose there are 10 identical firms in an industry and each produces 10% of the total market sales. The HHI for this industry would indicate that the industry is: (Points : 1)

       competitive.
       monopolistic.
       oligopolistic.
       Cannot be determined from the information provided.

Question 49. 49. Maximization of joint profits is most likely when firms are: (Points : 1)

       perfect competitors.
       monopolistic competitors.
       duopolists who collude.
       natural monopolists.

Question 50. 50. An oligopoly may result from: (Points : 1)

       the existence of increasing returns to scale in the industry.
       the standardization of a product.
       low or no barriers to entry.
       price-taking conditions for both buyers and sellers.

Question 51. 51. The existence of a buyer with significant buying power in an industry would make a tacit agreement: (Points : 1)

       more difficult to achieve.
       easier to achieve.
       have no effect on tacit agreement negotiations.
       result in a kinked demand curve.

Question 52. 52. Both monopolists and monopolistic competitors: (Points : 1)

       make positive economic profits in the long run.
       have high barriers to entry.
       charge a price that is greater than their MC of production.
       produce a product that is very unique.

Question 53. 53. A monopolistic competitor will engage in advertising in order to: (Points : 1)

       reduce excess capacity.
       increase demand for its product.
       collude more effectively with other firms.
       produce on the upward-sloping portion of its ATC curve.

Question 54. 54. Assume that a firm under monopolistic competition is producing a quantity that generates MC = MR. In this case, we can assume that profit: (Points : 1)

       can be increased by increasing production.
       is maximized.
       can be increased by decreasing the price.
       is maximized only if MC = P.

Question 55. 55. Monopolistically competitive firms: (Points : 1)

       engage in collusive activity in order to maximize profit.
       are very similar to perfect competitors in producing at the minimum ATC.
       earn a positive economic profit if price is greater than ATC.
       will set price where MC > MR.

Question 56. 56. Network externalities are often: (Points : 1)

       separate from positive feedback.
       a reason for natural monopolies.
       less likely to be communication or technological in nature.
       less likely to move toward market domination.

Question 57. 57. The marginal social cost of a unit of pollution: (Points : 1)

       is equal to the sum of the highest willingness to pay among all members of society to avoid that unit of pollution.
       is easy to calculate since pollution produces costs.
       is often overestimated.
       remains constant as more of a good is produced.

Question 58. 58. Firm A and Firm B both produce a good that causes pollution, but both firms differ in their marginal benefit from pollution. In this case, an emissions standard would: (Points : 1)

       reduce pollution in the most effective manner.
       lead to an unequal reduction in pollution for both firms.
       not be effective since it does not take into account differences in marginal benefits.
       be preferred to an emissions tax since it takes into account differences in marginal benefits.

Question 59. 59. A good is subject to a network externality when: (Points : 1)

       the value of the good to an individual is less when a large number of other people also use the good.
       the value of the good is determined only by marginal private benefits.
       an increase in the number of other people using the good increases its value to an individual.
       a good yields negative externalities.

Question 60. 60. In order to encourage consumption of a good that generates positive externalities, policymakers would: (Points : 1)

       impose a tax on the amount currently consumed in order to achieve the socially optimal level.
       mandate consumption of the good at the socially optimal level.
       provide a subsidy per unit of the good consumed in order to achieve the socially optimal level.
       do nothing, since the market will achieve the socially optimal level without government intervention.

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