(17329) 5. Refer to Table 7-9. The equilibrium price is A. $8.00. B. $4.00. C. $10.00. D. $6.00.

A. $8.00.

Rent control
A. serves as an example of how a social problem can be alleviated or even solved by goverment
B. serves as an example of a price ceiling.
C. is regarded by most economists as an efficient way of helping the poor.
D. is the most efficient way to allocate scarce housing resources.

B. serves as an example of a price ceiling.

Which of the following would most likely serve as an example of alejonopoly?
A. a bakery in a large city
B. a bank in a large city
C. a local cable television company
D. a small group of corn farmers

C. a local cable television company

(17476) A competitive firm would benefit from charging a price below the market price because the firm would achieve
a. (i) higher average revenue.
b. (ii) higher profits.
c. (iii) lower total costs.
d. None of (i), (ii), and (iii) is correct.

d. None of (i), (ii), and (iii) is correct.

Goods that are not excludable include both
A. private goods and public goods.
B. natural monopolies and common resources.
C. common resources and public goods.
D. private goods and natural monopolies.

. common resources and public goods.

17498) The production decisions of perfectly competitive firms follow one of the Ten Principles of Economics, which states that rational people
A. consider sunk costs.
B. equate prices to the average costs of production.
C. will eventually leave markets that experience zero profit.
D. think at the margin.

D. think at the margin.

The goal of rent control is to
A. facilitate controlled economic experiments in urban areas.
B. help landlords by assuring them a low vacancy rate for their apartments.
C. help the poor by assuring them an adequate supply of apartments.
D. help the poor by making housing more affordable.

D. help the poor by making housing more affordable.

(Choose 1 answer)
(17167) Refer to Figure 2-7. In order to reach point C. the economy would have to
A. None of (i). (ii), and (iii) are correct; the economy will never be able to reach point C.
B. (i) acquire more resources or experience a technological advance.
C. (i) begin using its available resources more efficiently than it is currently using them.
D. (iii) shift resources away from the production of ribeye steaks and toward production of books.

B. (i) acquire more resources or experience a technological advance.

Refer to Figure 7-1. If the supply curve is S. the demand curve is D. and the equilibrium price is $100, what is the producer surplus?
A. $625
B. $1,250
C. $5.000
D. $2.500

D. $2.500

A price ceiling will only be binding if it is set
A. equal to equilibrium price.
B. above equilibrium price.
C. below equilibrium price.
D. A price ceiling is never binding in a free market system.

C. below equilibrium price.

Indifference curves tend to be bowed inward because of dimifishing
A. (i) marginal rates of substitution.
B. (i) demand for the good as prices rise.
C. (il) income.
D. Both (i) and (i) are correct.

A. (i) marginal rates of substitution.

(17526)
When a monopolist decreases the price of its good, consumes
A. continue to buy the same amount.
B. buy more.
C. buy less.
D. may buy more or less, depending on the price elasticity of demand.

B. buy more.

In considering how to allocate its scarce resources among its various members, a household considers
a. (i) each member's abilities.
b. (ii) each member's efforts.
c. (iii) each member's desires.
d. all of (i), (ii), and (iii).

d. all of (i), (ii), and (iii).

Suppose Jan started up a small lemonade stand business last month. Variable costs for Jan's lemonade stand now include the cost of
A. (i) building the lemonade stand.
B. (ii) hiring an artist to design a logo for her sign.
C. (iii) lemons and sugar.
D. All of (i, (ii), and (il) are correct.

C. (iii) lemons and sugar.

The price elasticity of demand measures
A. buyers' responsiveness to a change in the price of a good.
B. the extent to which demand increases as additional buyers enter the market.
C. how much more of a good consumers will demand when incomes rise.
D. the movement along a supply curve when there is a change in demand.

A. buyers' responsiveness to a change in the price of a good.

Which of the following statements is correct?
A. When the price of a normal good decreases, both the income and substitution effects encourage the consumer to purchase more of the good.
B.When the price of a normal good decreases, both the income and substitution effects encourage the consumer to purchase less of the good.
C. When the price of a normal good decreases, the income effect encourages the consumer to purchase

A. When the price of a normal good decreases, both the income and substitution effects encourage the consumer to purchase more of the good.

Firms may have an incentive to advertise because they sell a
A. homogeneous product and charge a price = MC
B. homogeneous product and charge a price > MC
C. differentiated product and charge a price = MC
D. differentiated product and charge a price > MC

D. differentiated product and charge a price > MC

If the government levies a $500 tax per car on sellers of cars, then the price received by sellers of cars would
A. decrease by exactly $500
B. decrease by less than $500
C. decrease by more than $500
D. increase by an indeterminate amount

B. decrease by less than $500

According to the neoclassical theory of distribution, the wages paid to workers depend on the
A. supply of labor
B. demand for labor
C. marginal productivity of labor
D. All of the above are correct

D. All of the above are correct

Which of the following statements is correct?
A. Since air pollution creates a negative externality, social welfare will be enhanced when some, but not all air pollution is eliminated.
B. Since air pollution creates a negative externality, social welfare is optimal when all air pollution is eliminate
C. Since air pollution creates a negative externality, governments should encourage private firms to consider only private costs.
D. Since air pollution creates a negative externality, the free market result maximizes social welfare.

A. Since air pollution creates a negative externality, social welfare will be enhanced when some, but not all air pollution is eliminated.

When firms exit a monopolistically competitive market, profits of remaining firms
A. decrease and product diversity in the market decreases
B. decrease and product diversity in the market increases
C. increase and product diversity in the market decreases
D. increase and product diversity in the market increases

C. increase and product diversity in the market decreases

Which of the following statements is correct?
A. All remedies for externalities share the goal of moving the allocation of resources toward the market equilibrium.
B. All remedies for externalities share the goal of moving the allocation of resources toward the socially optimal equilibrium.
C. All remedies for externalities share the goal of increasing the allocation of resources.
D. All remedies for externalities share the goal of decreasing the allocation of resources

B. All remedies for externalities share the goal of moving the allocation of resources toward the socially optimal equilibrium.

Which of the following statements is correct?
A. Economists represent a consumer's preferences using demand curves.
B. Economists represent a consumer's preferences using budget constraints.
C. Economists represent a consumer's preferences using indifference curves.
D. Economists represent a consumer's preferences using supply curves.

C. Economists represent a consumer's preferences using indifference curves.

Suppose sellers of liquor are required to send $1.00 to the government for every bottle of liquor they sell. Further, suppose this tax causes the price paid by buyers of liquor to rise by $0.60 per bottle. Which of the following statements is correct?
a. (i) The effective price received by sellers is $0.40 per bottle less than it was before the tax.
b. (ii) Sixty percent of the burden of the tax falls on sellers.
c. (iii) This tax causes the demand curve for liquor to shift downward by $1.00 at each quantity of liquor

d. All of (i), (ii), and (iii) are correct.

. (i) The effective price received by sellers is $0.40 per bottle less than it was before the tax.

Consumer surplus
A. is the amount a buyer is willing to pay for a good minus the amount the buyer actually pays for it
B. is the amount a buyer is willing to pay for a good minus the cost of producing the good.
C. is the number of consumers who are excluded from a market because of scarcity.
D. measures how much a seller values a good.

A. is the amount a buyer is willing to pay for a good minus the amount the buyer actually pays for it

The factors of production are best defined as the
A. output produced from raw materials
B. inputs used to produce goods and services
C. wages paid to the workforce
D. goods and services sold in the market

B. inputs used to produce goods and services

Productivity is defined as the
A. amount of goods and services produced from each unit of labor input.
B. number of workers required to produce a given amount of goods and services.
C. amount of labor that can be saved by replacing workers with machines.
D. actual amount of effort workers put into an hour of working time.

A. amount of goods and services produced from each unit of labor input.

Economists sometimes give conflicting advice because
A. graduate students in economics are encouraged to argue with each other.
B.economists have different values and scientific judgment.
C.economists acting as scientists do not like to agree with economists acting as policy advisers.
D. economics is more of a belief system than a science.

B.economists have different values and scientific judgment.

When the price of pizza falls, the substitution effect, for normal goods Pepsi and pizza, causes a
A. shift to a lower indifference curve so the consumer buys more Pepsi.
B. shift to a higher indifference curve so the consumer buys more Pepsi.
C. movement along the indifference curve so the consumer buys more Pepsi.
D. movement along the indifference curve so the consumer buys less Pepsi.

D. movement along the indifference curve so the consumer buys less Pepsi.

When a firm has little ability to influence market prices it is said to be in what kind of a market?
A. a competitive market
B. a strategic market
C. a thin market
D. a power market

A. a competitive market

(17574) A monopolistically competitive firm chooses the quantity to produce where
A. (i) price equals marginal cost.
B. (i1) demand equals marginal cost.
C. (iii) marginal revenue equals marginal cost.
D. Both (i) and (iii) are correct.

C. (iii) marginal revenue equals marginal cost.

(17371)
All externalities
A. cause markets to fail to allocate resources efficiently.
B. cause equilibrium prices to be too high.
C. benefit producers at the expense of consumers.
D. cause equilibrium prices to be too low.

A. cause markets to fail to allocate resources efficiently.

The theory of oligopoly provides another reason that free trade can benefit all countries because
A. (i) increased competition leads to larger deadweight losses.
B. (il) as the number of firms within a given market increases, the price of the good decreases.
C. (ii) as the number of firms within a given market increases, the profit of each firm increases.
D. All of (), (ii), and (il) are correct.

B. (il) as the number of firms within a given market increases, the price of the good decreases.

A perfectly competitive market
A. may not be in the best interests of society, whereas a monopoly market promotes general economic well-being
B.promotes general economic well-being, whereas a monopoly market may not be in the best interests ofsociety.
C. and a monopoly market are equally likely to promote general economic well-being.
D. is less likely to promote general economic well-being than a monopoly market.

B.promotes general economic well-being, whereas a monopoly market may not be in the best interests ofsociety.

Suppose there is currently a tax of $50 per ticket on airline tickets. Buyers of airline tickets are required to pay the tax to the goverment. If the tax is reduced from $50 per ticket to $30 per ticket, then
A. the demand curve will shift upward by $20, and the price paid by buyers will decrease by less than $20.

B. the demand curve will shift upward by $20, and the price paid by buyers will decrease by $20.
the supply curve will shift downward by $20, and the effective price received by sellers will increase by less
than $20.
the supply curve will shift downward by $20, and the effective price received by sellers will increase by $20.

A. the demand curve will shift upward by $20, and the price paid by buyers will decrease by less than $20.

(Choose 1 answer)
11747 The fine to Table
produce a quantity
greater than 4 because
marinal co output.
A. is less than marginal revenue.
Big greeth.
C. equals marginal
D. is minimized

A. is less than marginal revenue.

When two variables have a positive correlation,
A. (i) when the x-variable increases, the y-variable decreases.
B. (ii) when the x-variable decreases, the y-variable increases.
C. (iii) when the x-variable increases, the y-variable increases.
D. More than one of (i), (ii), and (il) is correct.

C. (iii) when the x-variable increases, the y-variable increases

When a buyer's willingness to pay for a good is equal to the price of the good, the
A. buyer's consumer surplus for that good is maximized.
B. buyer will buy as much of the good as the buyer's budget allows.
C. price of the good exceeds the value that the buyer places on the good.
D. buyer is indifferent between buying the good and not buying it.

D. buyer is indifferent between buying the good and not buying it.

Two goods are complements when a decrease in the price of one good
A. decreases the quantity demanded of the other good.
B. decreases the demand for the other good.
C.increases the quantity demanded of the other good.
D. increases the demand for the other good.

D. increases the demand for the other good.

(17627) An agreement among firms regarding price and/or production levels is called
A. an antitrust market.
B. a free-trade arrangement.
C. collusion.
D. a Nash agreement.

C. collusion.

Minimum-wage laws dictate the
A. average price employers must pay for labor.
B. highest price employers may pay for labor.
C. lowest price employers may pay for labor.
D. the highest and lowest prices employers may pay for labor.

C. lowest price employers may pay for labor.

Suppose that electricity producers create a negative externality equal to $6 per unit. Further suppose that the government imposes a $8 per-unit tax on the producers. What is the relationship between the
after-tax equilibrium quantity and the socially optimal quantity of electricity to be produced?
A. They are equal.
B. The after-tax equilibrium quantity is greater than the socially optimal quantity.

C. The after-tax equilibrium quantity is less than the socially optimal quantity.
D. There is not enough information to answer the question.

C. The after-tax equilibrium quantity is less than the socially optimal quantity.

(17446)
Which of the following measures of cost is best described as "the increase in total cost thatarises from an extra unit of production?"
A. variable cost
B. average variable cost
C. average total cost
D. marginal cost

D. marginal cost

(17427)
Larry's Lunchcart is a small street vendor business. If Larry makes 15 pretzels in his first hour of C
business and incurs a total cost of $16.50, his average total cost per pretzel is
A. $1.10.
B.$6.50.
C. $15.00.
D. $16.50.

A. $1.10.

(17633) Refer to Table 17-2. Suppose there are exactly two sellers
of gasoline in Pittsville: Exxoff and BQ. If Exxoff sells 300 gallons
and BQ sells 400 gallons, then
A. there is an excess supply of gasoline in Pittsville.
B. Exxoff's profit is $900 and BQ's profit is $1,200.
C. there is an excess demand for gasoline in Pittsville.
D. Exxoff's profit is $2.100 and BQ's profit is $2.400.

B. Exxoff's profit is $900 and BQ's profit is $1,200.

(17206)
Suppose that Carolyn receives a pay increase. We would expect
A. to observe Carolyn moving down and to the right along her given demand curve.
B. Carolyn's demand for inferior goods to decrease.
C. Carolyn will go shopping at a clothing store worse than before.
D. Carolyn's demand for normal goods to decrease.

B. Carolyn's demand for inferior goods to decrease.

Market efficiency occurs when
A. total surplus is maximized.
B. producer surplus is maximized.
C. all resources are being used.
D. consumer surplus equals producer surplus.

A. total surplus is maximized.

A tradeoff exists between a clean environment and a higher level of income in that
A. studies show that individuals with higher levels of income actually pollute less than low-income individuals
B. to pay for pollution clean-up, the government must increase taxes which lowers income.
C. laws that reduce pollution raise costs of production and reduce incomes.
D. by employing individuals to clean up pollution, employment and income both rise.

C. laws that reduce pollution raise costs of production and reduce incomes.

The "invisible hand" leads a market to maximize
A. producer profit from that market.
B. total benefit to society from that market.
C. both equity and efficiency in that market.
D. output of goods or services in that market.

B. total benefit to society from that market.

(17188)
Soup is an inferior good if
A. The demand for soup falls when the price of a substitute for soup rises.
B. The demand for soup rises when the price of soup falls.
C. The demand curve for soup slopes upward
D. The demand for soup falls when income rises.

D. The demand for soup falls when income rises.

(17443)When, for a firm, long-run average total cost decreases as the quantity of output increases, we have a situation of
A. economies of scale.
B. diseconomies of scale.
C. coordination problems arising from the large size of the firm.
D. fixed costs greatly exceeding variable costs.

A. economies of scale.

An increase in the overall level of prices in an economy is referred to as
A. economic growth.
B. inflation.
C. monetary policy.
D. supply shocks.

B. inflation.

(17468) Refer to Table 13-6. What is the shape of the marginal
cost curve for this firm?
A. constant
B. downward-sloping
C. U-shaped
D. upward-sloping

D. upward-sloping

Refer to Table 14-4. The fim will produce a quantity greater than 4 because at 4 units of output, marginal cost
A. equals marginal revenue.
B. is greater than marginal revenue.
C. is minimized.
D. is less than marginal revenue.

D. is less than marginal revenue.

Which of the following causes a shortage of a good?
A. (i) a binding price floor
B. (ii) a binding price ceiling
C. (iii) a tax on the good
D. More than one of (i), (il), and (iii) is correct.

B. (ii) a binding price ceiling

Refer to Figure 15-3. What area measures the monopolist's profit?
A. (B-G)*K
B. (B-F)*K
C. 0.5[(B-F)*(L-K)]
D. (A-H)*J

A. (B-G)*K

The forces that make market economies work are
A. work and leisure.
B. politics and religion.
C. supply and demand.
D. taxes and government spending

C. supply and demand.

Refer to Figure 15-11. If the monopoly firm perfectly price discriminates, then consumer surplus amounts to
A. $1.000.
B. $500.
C. $250.
D. $0.

D. $0.

The sign on a church in your neighborhood reads "All are welcome at Sunday Service." Because co the church has limited seating and is usually full, the Sunday Service is
A. a private good.
B. a public good.
C. a natural monopoly.
D. a common resource.

D. a common resource.

Suppose Larry, Moe and Curly are bidding in an auction for a mint-condition video of Charlie Chaplin's first movie. Each has in mind a maximum amount that he will bid. This maximum is called
A. a resistance price.
B. willingness to pay.
C. consumer surplus.
D. producer surplus.

B. willingness to pay.

The field of economics is traditionally divided into two broad subfields,
A. national economics and international economics.
B. consumer economics and producer economics.
C. private sector economics and public sector economics.
D. microeconomics and macroeconomics.

D. microeconomics and macroeconomics.

Refer to Figure 15-1. Considering the relationship between average total cost and marginal cost, the marginal cost curve for this firm
A. must lie entirely above the average total cost curve.
B. must lie entirely below the average total cost curve.
C. does not exist.
D. must be upward sloping.

B. must lie entirely below the average total cost curve.

Pens are normal goods. What will happen to the equilibrium price of pens if the price of pencils rises, consumers experience an increase in income, writing in ink becomes fashionable, people expect the price of pens to rise in the near future, the population increases, fewer firms manufacture pens, and the wages of pen-makers increase?
A. Price will rise.
B. Price will fall.
C. Price will stay exactly the same.
D. The price change will be ambiguous.

A. Price will rise.

Which of the following is not a characteristic of a perfectly competitive market?
A. Firms are price takers.
B. Firms can freely enter the market.
C. Many firms have market power.
D. Goods offered for sale are largely the same.

C. Many firms have market power.

An FM radio signal is an example of a good that is
A. private.
B. nonrival in consumption.
C. social.
D. nonexcludable in production.

B. nonrival in consumption.

A profit-maximizing firm in a monopolistically competitive market is characterized by which of the following?
A. Average revenue exceeds marginal revenue.
B. Marginal revenue exceeds average revenue.
C. Average revenue is equal to marginal revenue.
D. Revenue is always maximized along with profit.

A. Average revenue exceeds marginal revenue

When consumers face rising gasoline prices, they typically
A. reduce their quantity demanded more in the long run than in the short run.
B. reduce their quantity demanded more in the short run than in the long run.
C. do not reduce their quantity demanded in the short run or the long run.
D. increase their quantity demanded in the short run but reduce their quantity demanded in the long run.

A. reduce their quantity demanded more in the long run than in the short run.

In a perfectly competitive market, the market supply curve is
A. the marginal cost curve above average total cost for a representative firm.
B. the horizontal sum of all the individual firms' supply curves.
C. the vertical sum of all the individual firms supply curves.
D. always a horizontal line.

B. the horizontal sum of all the individual firms' supply curves.

Refer to Table 14-7. If the firm is currently producing 14 units, what would you advise the owners?
A. increase quantity to 16 units
B. increase quantity to 17 units
C. continue to operate at 14 units
D. decrease quantity to 13 units

A. increase quantity to 16 unitsA. increase quantity to 16 units

Suppose the government has imposed a price ceiling on televisions. Which of the following events could transform the price ceiling from one that is not binding into one that is binding?
A. Firms expect the price of televisions to fall in the future.
B. The number of firms selling televisions decreases.
C. Consumers' income decreases, and televisions are a normal good
D. The number of consumers buying televisions decreases.

B. The number of firms selling televisions decreases.

Generally, the market for ice cream would be considered
A. a monopolistic market.
B. a competitive market.
C. more organized than an auction.
D. a market where individual sellers have significant pricing power.

B. a competitive market.

Consumer surplus is the
A. amount of a good consumers get without paying anything.
B. amount a consumer pays minus the amount the consumer is willing to pay.
C. amount a consumer is willing to pay minus the amount the consumer actually pays.
D. value of a good to a consumer.

C. amount a consumer is willing to pay minus the amount the consumer actually pays.

The imposition of a binding price floor on a market causes quantity demanded to be
A. (i) greater than quantity supplied.
B. (ii) less than quantity supplied.
C. (iii) equal to quantity supplied
D. Both (i) and (ii) are possible.

B. (ii) less than quantity supplied.

Patent and copyright laws are major sources of
A. (i) natural monopolies.
B. (ii) government-created monopolies.
C. (iii) resource monopolies.
D. None of (i), (ii), and (iii) is correct.

B. (ii) government-created monopolies.

The marginal product of any factor of production depends on
A. the quantity of the factor used
B. the price of the final good
C. the demand for the final good
D. All of the above are correct

A. the quantity of the factor used

Which of the following statements is correct?
A. When the price of a shirt falls, the quantity of shirts demanded falls.
B. When the price of a shirt falls, the quantity of shirts demanded rises.
C. When the price of a shirt falls, the quantity of shirts supplied rises.
D. When the price of a shirt falls, the demand for shirts falls.

B. When the price of a shirt falls, the quantity of shirts demanded rises.

Since most of the products sold in a competitive market are the same,
A. there will be few sellers in the market
B. there will be few buyers in the market
C. only a few buyers will have market power
D. the sellers will not be willing to cut the market price

D. the sellers will not be willing to cut the market price

Willie sells equipments for fishing in a competitive market. If his equipments sell for $100 each and the ATC per unit is $95 at the profit-maximizing output level, then in the long run
A. more firms will enter the market
B. some firms will exit from the market
C. the equilibrium market price will rise
D. ATC will fall

A. more firms will enter the market

When there is a decline in the quantity demanded across all price points, this results in the demand curve being:
A. shift leftward.
B. shift rightward.
C. move along the demand curve.
D. the demand curve has become flatter.

A. shift leftward.

Consumer surplus
A. is equal to the value to buyers - Amount paid by buyers.
B. is equal to the amount paid by buyers - Costs of buyers.
C. is equal to the value to sellers - Costs of sellers.
D. is equal to the value to sellers - Willingness to pay of sellers.

A. is equal to the value to buyers - Amount paid by buyers.

In the short run, rent control causes the quantity supplied
A. and quantity demanded to fall
B. to fall and quantity demanded to rise
C. to rise and quantity demanded to fall
D. and quantity demanded to rise

B. to fall and quantity demanded to rise

The demand for a good or service is determined by
A. the buyers.
B. the government.
C. the sellers.
D. All of the three parties mentioned.

A. the buyers.

When buyers and sellers both are price takers, then
A. Boths have no influence on market price.
B. Boths have some influence on market price but that influence is limited.
C. buyers will be able to find prices lower than those determined in the market.
D. sellers will find it difficult to sell all they want to sell at the market price.

A. Boths have no influence on market price.

Which of the following is always correct for a monopoly firm?
A. P = MR
B. P = AR
C. P = TR
D. MR = MC

D. MR = MC

Farmer John sell wheat to a retailer in his hometown. If the wheat market is a competitive market, Mr. John will optimize his profit by choosing one of the following
A. To produce the quantity at which AVC is minimized
B. To produce the quantity at which AFC is minimized
C. To produce the quantity at which market price is equal to Mr. John's marginal cost of production
D. To produce at the quantity at which market price exceeds Mr. John's marginal cost of production

C. To produce the quantity at which market price is equal to Mr. John's marginal cost of production

Which of the following market in which the highest output would be produced?
A. perfect competition
B. monopolistic competition
C. oligopoly
D. monopoly

A. perfect competition

Total surplus is equal to
A. Consumer surplus + Producer surplus
B. Amount received by sellers + Cost to sellers
C. Value to buyers + Amount paid by buyers
D. Value to buyers + Amount paid by Sellers

A. Consumer surplus + Producer surplus

During Christmas holiday season, Vincom retailers often place a high price on merchandise on weekends and discount the price during the week. What do you call this price strategy?
A. oligopoly
B. price discrimination
C. compensating differential
D. marginal cost pricing

B. price discrimination

Suppose that a binding rent control law is repealed in San Francisco. As a result, we would expect the total number of units rented in the city to
A. increase
B. decrease
C. remain unchanged
D. decrease, then increase

A. increase

When a monopolist decide to sell its product at different prices, then the pricing strategy is
A. distribution pricing
B. quality-adjusted pricing
C. arbitrage
D. price discrimination

D. price discrimination

People oppose to advertising said that advertising
A. creates demand for products that consumers otherwise do not want or need
B. lowers barriers to entry into a market because new firms can more easily enter
C. increases competition by providing information about prices
D. encourages monopoly by raising entry barriers

A. creates demand for products that consumers otherwise do not want or need

Policymakers use taxes
A. to raise revenue for public purposes but not to influence market outcomes
B. when they realize that price controls alone are insufficient to correct market inequities
C. both to raise revenue for public purposes and to influence market outcomes
D. only in those markets in which the burden of the tax falls clearly on the sellers

C. both to raise revenue for public purposes and to influence market outcomes

Which of the following statements is correct?
A. If a good is a Giffen good, then the supply curve slopes down.
B. If a good is a Giffen good, then the demand curve slopes up.
C. If a good is a Giffen good, then the demand curve is horizontal.
D. If a good is a Giffen good, then there is no optimal level of consumption for the consumer.

B. If a good is a Giffen good, then the demand curve slopes up.

When firms in a competitive market are unable to recoup all of their production costs due to market conditions, then
A. the firms will suffer long-run economic losses
B. the firms will suffer short-run economic losses
C. some firms will exit the market, causing prices to rise until the remaining firms can cover their total production costs
D. All of the above are correct

D. All of the above are correct

Diminishing marginal product affects the shape of the production function in what way?
A. The slope of the production function decreases as the quantity of input increases
B. The production function becomes steeper as the quantity of input increases
C. The production function slopes downward
D. The production function is horizontal beyond a certain quantity of input

A. The slope of the production function decreases as the quantity of input increases

Market competition exists when (1) Firrms are free to set their own prices for their products: (ii) Every buyer is small in to the market, (iii) Every seller is small compared to the market.
.A (i) and (ii) only
B(i) and (iii) only
C. (ii) and (iii) only
D. (1), ii), and (iii)

C. (ii) and (iii) only

The level of output at which a firm's MR and MC curves intersect means
A TR=VC
B. TR-FC
C. TR=TC
D. profit is maximized

D. profit is maximized

If a monopoly firm sells 10 items at the price of $27/item. The firm has AFC equal to $10 and AVC equal to $12. How much is the profit?
A $5
B. $25
C. $50
D. $140

C. $50

Which of the following statements is correct?
A. The value of the marginal product curve is the labor demand curve for competitive, profit-maximizing firms
B. A competitive, profit-maximizing firm hires workers up to the point where the value of the marginal product of labor equals the wage
C. By hinng labor up to the point where the value of the marginal product of labor equals the wage, the firm is producing cing where p price equals marginal cost
D. All of the above are correct

D. All of the above are correct

Competitive firms are different from monopolies in which of the following ways? (i) Competitive firms are price takers (ii) Marginal revenue for a competitive firm equals price, while marginal revenue for a monopoly is less than the price, (iii) Monopolies must lower their price in order to sell more while competitive firms do not have to do so.
A. (i) and (ii) only
B. (ii) and (iii) only
C. (i) and (iii) only
D. (i), (ii), and (iii)

D. (i), (ii), and (iii)

Ann and Ben are the only two demanders of coconut jelly. Each month, when the price is $10 per, Ann buys six portions and Ben buys four portions he buys four portions. If the price is $15Ann buys four portions and Ben buys two portions. Which of the following points is belong to the market demand curve?
A quantity demanded = 10; price = $20
B. quantity demanded = 20; price = $10
C. quantity demanded = 10; price = $10
D. quantity demanded = 20; price = $20

C. quantity demanded = 10; price = $10