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Question 1 options:
A. A competitive firm
B. If a firm is making an economic profit, then
C. Along a downward-sloping monopoly demand curve,
D. If, in the short run, a perfectly competitive firm is producing at a point where the total cost is greater than total revenue, then the firm should
E. For a perfectly competitive firm, the demand curve is
F. A firm in a(n) industry will have the most elastic demand curve
G. If the demand curve of a monopolist is in the inelastic range, then
H. Monopolistic competition and oligopoly are examples of
I. Under which market structure do firms face the flattest (most elastic) demand curve?
J. At the point of long-run equilibrium for a perfectly competitive firm,
4. Decisions made âat the marginâ entail a choice based upon_____________ of a decision.a. the additional benefitsb. the total costsc. comparing the total benefits and costsd. comparing the additional benefits and costs5. 100 units of Good X are available but individuals desire 500units. ______________ will determine who attains Good X, and whodoes not.a. A rationing deviceb. Opportunity Costc. Utilityd. Natural Selection6. Individuals will continue consuming so long as:a. The price of a good continues to decreaseb. The marginal costs of consuming are outweighed by the marginalbenefitsc. The individual seeks additional utilityd. The individual is willing and able8. If the cross-price elasticity of two goods is positive, thenthose two goods area. substitutes.b. complements.c. normal goods.d. inferior goods.11. The basic reason most supply curves are upward sloping isthat:a. More firms are in the market, therefore more goods areproduced.b. Because more quantity is being demanded, suppliers raise theprice.c. Producers face higher opportunity costs when producing higherlevels of quantity, so they must receive a higher price.d. Producers seek to maximize total revenue.18. When the price of bubble gum is $0.60, the quantity demanded is500 packs per day. When the price falls to $0.50, the quantitydemanded increases to 900. The demand for gum would beconsidered:a. inelastic.b. elastic.c. unit elastic.d. perfectly inelastic.20. Inefficient Production implies which of the following:a. it is impossible to produce more of one good without producingless of anotherb. there are too few resourcesc. there are too many resourcesd. it is possible to produce more of one good without producingless of another21. Workers at a bicycle assembly plant currently make minimumwage. If the federal government increases the minimum wage by $1.00an hour it is likely that thea. demand for bicycle assembly workers will increase.b. supply of bicycles will shift to the right.c. supply of bicycles will shift to the left.d. firm must increase output to maintain profit levels.24. Suppose at a price of $5 and at a price of $9, John purchases40 units of good X. Given this information, we know that Johnâsdemand for good X isa. perfectly elastic at all prices.b. inelastic at all prices.c. unit elastic between the prices of $5 and $9.d. perfectly elastic between the prices of $5 and $9.e. perfectly inelastic between the prices of $5 and $9.25. If the price of good A decreases by 10 percent and the quantitydemanded of good B decreases by 10 percent, this is evidence that Aand B area. substitute goods.b. complement goods.c. inferior goods.d. normal goods.e. not related.6. For an individual to achieve consumer equilibrium when consumingtwo goods, A and B, the individual must satisfy the followingcondition:a. TUA = TUBb. TUA/PA = TUB/PBc. MUA = MUBd. MUA/PA = MUB/PBe. MUA/PB = MUB/PA7. Which of the following statements is correct regarding a firm'sdecision making?a. The decision to shut down and the decision to exit are bothshort-run decisions.b. The decision to shut down and the decision to exit are bothlong-run decisions.c. The decision to shut down is a short-run decision, whereas thedecision to exit is a long-run decision.d. The decision to exit is a short-run decision, whereas thedecision to shut down is a long-run decision.Table 1Output Total Cost0 $201 $302 $413 $514 $655 $756 $847 $10513. Refer to Table 1. The marginal cost of producing the fifth unitof output isa. $55.00b. $15.00c. $9.00d. $10.0021. A perfectly competitive firm can produce its current level ofoutput at an average total cost of $10 and a marginal cost of $8.If the market price of the product is currently $8, what should thefirm do?a. The firm should definitely shut down since average total costexceeds price.b. The firm should shut down if average variable cost is $8 orgreater, but the firm should continue to produce the current levelof output if average variable cost is less than $8.c. The firm should increase production in order to increaseprofit.d. The firm should continue to produce, but it should decreaseproduction in order to increase profit.24. In the long run all costs are variable. Thus, aprofit-maximizing firm may exit:a. When Price < Average Total Costb. When Price > Average Total Costc. When Average Revenue > Average Fixed Costd. When Average Revenue > Marginal Cost25. Marginal cost tells us thea. value of all resources used in a production process.b. marginal increment to profitability when price isconstant.c. amount by which total cost rises when output is increased by oneunit.d. amount by which output rises when labor is increased by oneunit.26. For a perfectly competitive firm:a. marginal revenue is equal to price.b. price is equal to marginal cost at the output level thatmaximizes profit.c. selling an additional unit of the good it produces increasestotal revenue by the price of the good.d. a and be. a, b, and c