Post Chapter Quizes

question

Which of the following would explain an increase in the price of a good and a decrease in the amount of the good bought and sold?
a. An increase in the supply of the good.
b. A decrease in the supply of the good.
c. A decrease in the demand for the good.
d. An increase in the demand for the good.

answer

b. A decrease in the supply of the good.

question

Which of the following events would increase producer surplus?
a. Sellers' costs stay the same and the price of the good increases.
b. Sellers' costs increase and the price of the good stays the same.
c. Sellers' costs increase and the price of the good decreases.
d. All of the above are correct.

answer

a. Sellers' costs stay the same and the price of the good increases.

question

If price rises, what happens to the demand for a product?

answer

It does not change.

question

If there is a decrease in demand for lettuce, we would expect?

answer

both the price and quantity sold to decrease.

question

For a typical product, a decrease in consumer income will cause the market demand for the product to?

answer

decrease, which is a shift to the left of the demand curve.

question

The law of comparative advantage implies that a nation, individual, or region should produce those economic goods for which it?

answer

is a low opportunity cost producer.

question

Suppose an economy produces only two goods, computers and TVs. If the economy operates at a point on its production possibilities curve, it can produce more computers only if?

answer

it produces fewer TVs.

question

The law of comparative advantage explains which of the following?
a. Specialization and exchange will make it possible for trading partners to expand their combined output.
b. Larger firms will have lower per unit costs than smaller firms.
c. An increase in the price of a good will lead to an expansion in the quantity supplied by business firms.
d. There will be an inverse relationship between the price of a product and the quantity of it that will be demanded.

answer

a. Specialization and exchange will make it possible for trading partners to expand their combined output.

question

Which of the following most accurately states the economic significance of exchange?
a. Exchange reduces value since it consumes resources without adding to the physical supply of goods.
b. Exchange creates value by moving goods from parties who value them less to parties who value them more.
c. Production of physical goods creates value; exchange merely redistributes this value.
d. Physical goods have value because they exist; exchange can neither increase nor decrease their value.

answer

b. Exchange creates value by moving goods from parties who value them less to parties who value them more.

question

Which of the following is your opportunity cost of attending a football game?
a. The highest valued alternative forgone because of the time and money required to attend the game.
b. The price of the ticket.
c. The subjective value of the disappointment you will feel if your team loses.
d. The monetary cost of the drinks and food you purchase at the game.

answer

a. The highest valued alternative forgone because of the time and money required to attend the game.

question

What is the most fundamental concept in economics?

answer

Changes in incentives influence behavior in a predictable way--people will be less likely to choose an option as it becomes more expensive.

question

Suppose an airline company has several empty seats on a flight and the full price of an air ticket is $700 while the marginal cost per passenger is $200. The flight leaves in one hour. Which of the following actions will be the best profitable way to to ensure the remaining seats are sold?

answer

Charge a stand-by passenger more than $200.

question

Why are people willing to pay more for a diamond than for a bottle of water?

answer

The marginal benefit of an extra diamond far exceeds the marginal benefit of an extra bottle of water.

question

"There is no such thing as a free lunch." This statement best reflects which of the following statements?
a. Consumers are unwilling to pay for a good unless it provides them with value.
b. An opportunity cost is always present when scarce resources are used to produce a good.
c. The value of a good to consumers will decrease as they have more of it.
d. It generally requires enormous effort to search out the best place to eat lunch.

answer

b. An opportunity cost is always present when scarce resources are used to produce a good.

question

Harry, a wheat farmer, is deciding whether or not to add fertilizer to his crops. If he adds 1 pound of fertilizer per acre, the value of the resulting crops rises from $80 to $100 per acre. According to marginal analysis, Harry should add fertilizer if it costs less than how much?

answer

$20 per pound.

question

"Government failure" exists when political decision-makers choose actions that?

answer

conflict with efficient allocation of resources.

question

Suppose external benefits are present in a market which results in the actual market price of $34 and market output of 126 units. How does this outcome compare to the efficient, ideal equilibrium?

answer

The efficient outcome would be greater than 126 units.

question

Which of the following is true because of the free-rider problem?
a. The federal government spends too much on national defense.
b. Fireworks displays have become increasingly dangerous.
c. Poverty has increased.
d. Competitive markets will tend to undersupply public goods.

answer

d. Competitive markets will tend to undersupply public goods.

question

Which of the following best explains why making automobiles completely safe is not efficient?
a. After some level of safety is reached, making cars even safer will not be worth the additional cost.
b. Economic efficiency suggests that automobiles should be made as safe as humanly possible.
c. The benefit from additional automobile safety will generally rise as automobiles are made safer, more than offsetting the opportunity cost involved.
d. Because human life is priceless, automobile safety generally doesn't matter.

answer

a. After some level of safety is reached, making cars even safer will not be worth the additional cost

question

When do markets fail to allocate resources efficiently?

answer

When property rights are poorly enforced or not well established.

question

Consider two goods--one that generates external benefits and another that generates external costs. A competitive market economy would tend to produce?

answer

too little of the good that generates external benefits and too much of the good that generates external costs.

question

As a general rule, if pollution costs are external, firms will produce?

answer

too much of a polluting good.

question

The Laffer curve indicates that?

answer

when tax rates are high, an increase in tax rates is likely to a decrease in tax revenues.

question

Which of the following will most likely occur when government price controls fix the price of a good above market equilibrium?
a. Consumers will buy more than they would at the market equilibrium price.
b. Waiting lines to buy the good will develop.
c. The quality of the good will deteriorate.
d.. A surplus of the good will develop.

answer

d. A surplus of the good will develop.

question

The presence of price controls in a market usually indicates which of the following?
a. An insufficient quantity of a good or service was being produced in that market to meet the public's need.
b. Policymakers believed that the price that prevailed in that market in the absence of price controls was unfair to buyers or sellers.
c. Policymakers correctly believed that, in that market, price controls would generate no inequities of their own.
d. The usual forces of supply and demand were not able to establish an equilibrium price in that market.

answer

b. Policymakers believed that the price that prevailed in that market in the absence of price controls was unfair to buyers or sellers.

question

Which of the following statements about resource markets is correct?
a. New licensing requirements that substantially lowered the number of plumbers would likely lead to an increase in the wage rate of plumbers.
b. An increase in the demand for newly constructed homes would lead to a reduction in the price of lumber.
c. An increase in the number of students choosing to major in marketing would likely lead to an increase in the wage earned by marketing graduates.
d. A new law allowing nurses to offer patients some of the medical services that are currently only available through doctors would increase the wage rate earned by doctors.

answer

a. New licensing requirements that substantially lowered the number of plumbers would likely lead to an increase in the wage rate of plumbers.

question

The actual benefit of a government subsidy is determined primarily by?

answer

the elasticities of demand and supply.

question

When will a subsidy on a product generate more actual benefit for consumers (and less for producers)?

answer

When the supply of the product is relatively elastic.

question

A tax on the buyers of coffee will result in which one of the following?
a. An increase in the price of coffee paid by buyers, an increase in the net price of coffee received by sellers, and an increase in the equilibrium quantity of coffee.
b. An increase in the price of coffee paid by buyers, a decrease in the net price of coffee received by sellers, and a decrease in the equilibrium quantity of coffee.
c. A decrease in the price of coffee paid by buyers, an increase in the net price of coffee received by sellers, and a decrease in the equilibrium quantity of coffee.
d. An increase in the price of coffee paid by buyers, a decrease in the net price of coffee received by sellers, and an increase in the equilibrium quantity of coffee.

answer

b. An increase in the price of coffee paid by buyers, a decrease in the net price of coffee received by sellers, and a decrease in the equilibrium quantity of coffee.

question

A tax imposed on a market tends to lead to which of the following?
a. A reduction in formal market activity because it increases work incentives.
b. An increase in formal market activity because it decreases prices.
c. A reduction activity in the underground economy because people are afraid of being connected with tax fraud.
d. A reduction in formal market activity because it lowers the return on such activity.

answer

d. A reduction in formal market activity because it lowers the return on such activity.

question

Which of the following is true when the conditions in a competitive price-taker market are such that the firms are consistently unable to cover their production costs?
a. All firms will go out of business since consumers will not pay prices that enable firms to cover their production costs.
b. Some firms will exit from the industry, and market price will rise until the remaining firms can earn the normal rate of return.
c. Resource prices will increase, competition will decline, and eventually the firms in the industry will earn monopoly profit.
d. The firms will suffer short-run economic losses that will be exactly offset by long-run economic profits.

answer

b. Some firms will exit from the industry, and market price will rise until the remaining firms can earn the normal rate of return.

question

If an amusement park that is highly profitable during the summer months is unable to cover its variable costs during the winter months, what would be the profit maximizing strategy to implement?

answer

Operate during the summer but shut down during the winter months.

question

The owners of a firm are earning economic profit if?

answer

they are earning a return on their capital that is higher than what can generally be earned in other markets.

question

Which of the following factors is least likely to be a barrier limiting the entry of potential competitors into a market?
a. legally enforced patent rights
b. licensing
a. legally enforced patent rights
b. licensing
c. an inelastic demand for a product
d. control over an essential resource

answer

c. an inelastic demand for a product

question

A profit-maximizing monopolist will continue expanding output as long as?

answer

marginal revenue exceeds marginal cost.

question

Why is it difficult to predict the behavior of oligopolistic firms?

answer

Firms in oligopolistic industries react to each other's behavior in many ways.

question

A monopolist will maximize profits by?

answer

producing the output where marginal revenue equals marginal cost.

question

Which of the following usually happens when a single firm has control over the market supply of a resource that is essential to the production of a good?
a. Diseconomies of scale are the usual cause.
b. Economies of scale are usually important.
c. Monopoly is frequently the result.
d. Competition for the resource makes monopoly almost impossible

answer

c. Monopoly is frequently the result.

question

Which of the following is a unique characteristic of the oligopolistic market structure?
a. low barriers to entry
b. mutual interdependence among firms in demand, and thus, in price decisions
c. a large number of firms producing highly differentiated products that are complements to each other
d. product differentiation among the products produced by individual firms

answer

b. mutual interdependence among firms in demand, and thus, in price decisions

question

Long-run equilibrium in a competitive price-searcher market requires which of the following?
a. Price must equal to marginal cost.
b. The demand curve needs to be tangent to the average cost curve.
c. The quantity produced must be at the point where average cost is at a minimum.
d. The demand curve intersects the average cost curve.

answer

b. The demand curve needs to be tangent to the average cost curve.

question

Which of the following is a necessary condition for price discrimination to be profitable?
a. All consumers must have an identical demand for the product.
b. Groups of consumers with different demand elasticities must be easily distinguishable.
c. It must be possible for buyers to resell the product at a low cost.
d. The market demand for the product must be highly elastic.

answer

b. Groups of consumers with different demand elasticities must be easily distinguishable.

question

Suppose that competitive price-searcher firms are earning positive profits. In the transition from this initial situation to a long-run equilibrium,?

answer

each existing firm experiences a decrease in demand for its product.

question

If a firm in a competitive price-searcher market finds that its marginal cost exceeds its marginal revenue at the current rate of output, what would be the profit maximizing action?

answer

Raise the price of the product and reduce its output.

question

A firm in a competitive price-searcher market can raise its price without losing all of its customers. Why?

answer

Because of product differentiation.

question

Which of the following is a necessary condition for price discrimination to be profitable?
a. All consumers must have identical preferences.
b. It must be easy to distinguish consumer groups with differing responses to higher prices.
c. The seller must face a horizontal demand curve for its product in at least one part of the market.
d. Both b and c are correct.

answer

b. It must be easy to distinguish consumer groups with differing responses to higher prices.

1 of 45

question

answer

b. A decrease in the supply of the good.

question

answer

a. Sellers' costs stay the same and the price of the good increases.

question

If price rises, what happens to the demand for a product?

answer

It does not change.

question

If there is a decrease in demand for lettuce, we would expect?

answer

both the price and quantity sold to decrease.

question

For a typical product, a decrease in consumer income will cause the market demand for the product to?

answer

decrease, which is a shift to the left of the demand curve.

question

The law of comparative advantage implies that a nation, individual, or region should produce those economic goods for which it?

answer

is a low opportunity cost producer.

question

Suppose an economy produces only two goods, computers and TVs. If the economy operates at a point on its production possibilities curve, it can produce more computers only if?

answer

it produces fewer TVs.

question

answer

a. Specialization and exchange will make it possible for trading partners to expand their combined output.

question

answer

b. Exchange creates value by moving goods from parties who value them less to parties who value them more.

question

answer

a. The highest valued alternative forgone because of the time and money required to attend the game.

question

What is the most fundamental concept in economics?

answer

Changes in incentives influence behavior in a predictable way--people will be less likely to choose an option as it becomes more expensive.

question

answer

Charge a stand-by passenger more than $200.

question

Why are people willing to pay more for a diamond than for a bottle of water?

answer

The marginal benefit of an extra diamond far exceeds the marginal benefit of an extra bottle of water.

question

answer

b. An opportunity cost is always present when scarce resources are used to produce a good.

question

answer

$20 per pound.

question

"Government failure" exists when political decision-makers choose actions that?

answer

conflict with efficient allocation of resources.

question

Suppose external benefits are present in a market which results in the actual market price of $34 and market output of 126 units. How does this outcome compare to the efficient, ideal equilibrium?

answer

The efficient outcome would be greater than 126 units.

question

answer

d. Competitive markets will tend to undersupply public goods.

question

answer

a. After some level of safety is reached, making cars even safer will not be worth the additional cost

question

When do markets fail to allocate resources efficiently?

answer

When property rights are poorly enforced or not well established.

question

Consider two goods--one that generates external benefits and another that generates external costs. A competitive market economy would tend to produce?

answer

too little of the good that generates external benefits and too much of the good that generates external costs.

question

As a general rule, if pollution costs are external, firms will produce?

answer

too much of a polluting good.

question

The Laffer curve indicates that?

answer

when tax rates are high, an increase in tax rates is likely to a decrease in tax revenues.

question

answer

d. A surplus of the good will develop.

question

answer

b. Policymakers believed that the price that prevailed in that market in the absence of price controls was unfair to buyers or sellers.

question

answer

a. New licensing requirements that substantially lowered the number of plumbers would likely lead to an increase in the wage rate of plumbers.

question

The actual benefit of a government subsidy is determined primarily by?

answer

the elasticities of demand and supply.

question

When will a subsidy on a product generate more actual benefit for consumers (and less for producers)?

answer

When the supply of the product is relatively elastic.

question

answer

b. An increase in the price of coffee paid by buyers, a decrease in the net price of coffee received by sellers, and a decrease in the equilibrium quantity of coffee.

question

answer

d. A reduction in formal market activity because it lowers the return on such activity.

question

answer

b. Some firms will exit from the industry, and market price will rise until the remaining firms can earn the normal rate of return.

question

If an amusement park that is highly profitable during the summer months is unable to cover its variable costs during the winter months, what would be the profit maximizing strategy to implement?

answer

Operate during the summer but shut down during the winter months.

question

The owners of a firm are earning economic profit if?

answer

they are earning a return on their capital that is higher than what can generally be earned in other markets.

question

answer

c. an inelastic demand for a product

question

A profit-maximizing monopolist will continue expanding output as long as?

answer

marginal revenue exceeds marginal cost.

question

Why is it difficult to predict the behavior of oligopolistic firms?

answer

Firms in oligopolistic industries react to each other's behavior in many ways.

question

A monopolist will maximize profits by?

answer

producing the output where marginal revenue equals marginal cost.

question

answer

c. Monopoly is frequently the result.

question

answer

b. mutual interdependence among firms in demand, and thus, in price decisions

question

answer

b. The demand curve needs to be tangent to the average cost curve.

question

answer

b. Groups of consumers with different demand elasticities must be easily distinguishable.

question

Suppose that competitive price-searcher firms are earning positive profits. In the transition from this initial situation to a long-run equilibrium,?

answer

each existing firm experiences a decrease in demand for its product.

question

If a firm in a competitive price-searcher market finds that its marginal cost exceeds its marginal revenue at the current rate of output, what would be the profit maximizing action?

answer

Raise the price of the product and reduce its output.

question

A firm in a competitive price-searcher market can raise its price without losing all of its customers. Why?

answer

Because of product differentiation.

question

answer

b. It must be easy to distinguish consumer groups with differing responses to higher prices.

Continue to order Get a quote

Post Chapter Quizes

Recent Posts

Recent Comments

Calculate the price of your order

Our guarantees

Money-back guarantee

Zero-plagiarism guarantee

Free-revision policy

Privacy policy

Fair-cooperation guarantee