Reference no: EM131096093

1) Q: One reason why the quantity demanded of a good increases as its price decreases is that

Select one:

a. the lower price shifts demand to the left.
b. the lower price increase the purchasin g power of consumers, enabling them to buy more.
c. the lower price shifts demand to the right.
d. the number of consumers in the market increases.
e. the supply of substitute products increases.

2) Q: If it is now mo re profitable for farmers to produce rice than corn, we can expect

Select one:

a. the demand for wheat to increase.
b. the supply of cord to decrease.
c. the supply of corn to increase.
d. the quantity demanded of wheat to decrease.
e. the price of wheat to rise.

3) Q: If producers require higher prices to produce various quantities then

Select one:

a. quantity supplied has increased.
b. consumer incomes will decrease.
c. supply has shifted to the left.
d. supply has increased.
e. demand will decrease.

4) Q: The average variable cost curve.

Select one:

a. slopes downward at all output levels.
b. intersects the average total cost curve at its minimum.
c. is a horizontal line.
d. intersects the average total cost curve at a high output level.
e. at any output level is equal to the vertical distance between the average total cost and average fixed cost curves.

5) Q: If a firm is producing 17 units and the marginal cost of an 18th unit is P10, and the price it can receive for each unit sold is P11, then

Select one:

a. the firm should produce the 18th unit because marginal cost exceeds marginal revenue.
b. the total revenue of 18 units produced would be P180.
c. the firm should produce the 18th unit because marginal revenue exceeds marginal cost.
d. the total revenue of 17 units is P170.
e. the profit of the 18th unit produced would be P11.

6) Q: A price floor

Select one:

a. is a minimum level price for which a product can be sold.
b. is a legal price set by the government that is below the equilibrium level.
c. occurs when the market is in equilibrium.
d. causes quantity demand to exceed quantity supplied.
e. causes a shortage.

7) Q: A firm

Select one:

a. does none of the above.
b. sells products and resources.
c. buys resources and sells products.
d. buys products and sells resources.
e. buys resources and products.

8) Q: If demand decreases but supply increases, we can say that

Select one:

a. equilibrium quantity will decrease, but equilibrium price is indeterminate.
b. equilibrium price will rise, but equilibrium quantity is indet erminate.
c. we would require more information to determine the movement in price and quantity.
d. equilibrium quantity will rise, but equilibrium price is indeterminate.
e. equilibrium price will decrease, but equilibrium price is indeterminate.

9) Q: Consider the market for corn. If the price of fertilizer decreases, then we can expect

Select one:

a. the demand for corn to increase.
b. the price of corn to increase.
c. the demand for corn to decrease.
d. the supply of corn to increase.
e. the supply of corn to decrease.

10) Q: Which of the following may cause a change in demand for a product?

Select one:

a. a change in consumer incomes.
b. all of the above.
c. a decrease in the cost of producing the product.
d. a change in the profitability of producing another product.
e. change in the price of the product.

11) Q: Average total cost equals

Select one:

a. variable cost divided by the output level.
b. the change in total cost divided by the change in the output level.
c. fixed cost divided by the output level.
d. total cost divided by the output level.
e. none of the above.

12) Q: The long-run marginal cost curve

Select one:

a. is none of the above.
b. intersects the long-run average cost curve when it is downward-sloping.
c. at first is upward-sloping and then is downward-sloping.
d. intersects the long-run average cost cur ve when it is upward-sloping.
e. intersects the long-run average cost curve when it is at a minimum.

13) Q: If price is below equilibrium

Select one:

a. demand will increase.
b. demand is too low for equilibrium.
c. quantity demanded exceeds quantity supplied, and a shortage will occur.
d. quantity supplied exceeds quantity demanded, and a shortage will occur.
e. the income and substitution effects will cause the price to rise.

14) Q: If a firm wishes to maximize its profits or minimize its losses, then it should

Select one:

a. always reduce its prices as low as possible.
b. produce where marginal revenue equals marginal cost.
c. produce where marginal revenue exceeds marginal cost.
d. always increase its prices.
e. produce where marginal cost exceeds marginal revenue.

15) Q: demanded will fall by a smaller percentage.

Select one:

a. there are relatively few substitutes, few competitors, and a short time period under consideration.
b. there is a direct relationship between price and total revenue.

16) Q: The market demand curve is determined by

Select one:

a. subtracting the demand for the product from the supply of the product.
b. adding the quantity supplied by all producers at various prices.
c. subtracting supply from demand at each price.
d. adding individual demand curves.
e. adding the demand for the product and the supply of the product.

17) Q: The profit of any unit produced can be determined by

Select one:

a. adding the marginal revenue of all additional units produced.
b. adding the marginal cost of all additional units produced and subtracting from the marginal revenue of the last unit.
c. subtracting marginal revenue from marginal cost.
d. subtracting marginal revenue from price.
e. subtracting marginal cost from marginal revenue.

18) Q: When an economist says the demand for a product has increased, he or she means that

Select one:

a. the price has decreased and consumers will therefore purchase more of the product.
b. the demand curve has shifted to the left.
c. consumers are willing and able to purchase more at any given price.
d. consumers would be willing and able to pay less to receive the same quantity.
e. the product has become more scarce and consumers therefore want it more.

19) Q: The upward -sloping portion of a firm's marginal cost curve is the firm's

Select one:

a. total cost curvE.
b. marginal benefit curve
c. marginal revenue
d. total profit curvE.
e. supply curve.

20) Q: A fixed cost

Select one:

a. is any cost that does not vary with output level.
b. increases with decreases in the output level.
c. decreases with decreases in the output level.
d. decreases with increases in the output level.
e. increases with increases in the output level.

21) Q: The law of demand states that:

Select one:

a. as price decreases, demand increases.
b. there is an inverse relationship between price and quantity supplied.
c. there is a direct (positive) relationship between the price and quantity supplied.
d. as price increases, quantity demanded increases.

22) Q: If population doubles in size, what can be expected to happen to the market for automobiles?

Select one:

a. the price of automobiles will decrease.
b. people will use fewer automobiles.
c. none of the above will happen.
d. people will buy more automobiles at any given price.
e. automobile manufacturers will decrease supply.

23) Q: If a liquor store decides to raise the price of its beer in order to finance the construction of a new building, then the owner is assuming that the

Select one:

a. demand for his/her beer is elastic.
b. demand for his or her beer is unitary elastic.
c. percentage increase in the price of beer will cause an equal percentage decrease in the quantity demanded.
d. percentage increase in the price of beer will cause a greater percentage decrease in the quantity demanded.
e. percentage increase in the price of beer will cause a smaller percentage decrease in the quantity demanded.

24) Q: The cost structure of a firm includes

Select one:

a. risk cost and opportunity cost.
b. is all of the above.
c. total fixed cost, total variable cost, and total cost.
d. rises after the law of diminishing returns set in.
e. marginal cost, average fixed cost, average variable cost, and average total cost.

25) Q: If, when income rise by 5 percent, the quantity of a commodity sold rises by 10 percent, income elas ticity is

Select one:

a. -2
b. 1/2
c. -1/2
d. 2

26) Q: If the price of a product increases by 10 percent and the quantity demanded decreases by 15 percent, then

Select one:

a. the product has a unitary elastic demand.
b. the product has an elastic demand.
c. the product should raise the price further to increase total revenue.
d. total consumption expenditures have risen.
e. the product has an inelastic demand.

27) Q: A change in supply may be caused by

Select one:

a. all of the above.
b. changes in the profitability of producing other products.
c. an improvement in technology.
d. a change in the number of producers.
e. a change in the price of inputs.

28) Q: The income effect measures the effect a price change has on

Select one:

a. the relative price of other substitutable products.
b. the purchasing power of consumer incomes.
c. national income.
d. the change in demand.
e. the inflation rate.

29) Q: Short -run average costs eventually rise because of

Select one:

a. rising factor prices.
b. reduced incentives to work in large plants.
c. falling marginal and average productivity.
d. rising overhead costs.

30) Q: If a product has an inelastic demand, then

Select one:

a. none of the above.
b. as price increases, a total revenue to producers decreases.
c. there is probably a long time period under consideration.
d. an increase in the price will decrease total consumer expenditures.
e. there are probably lots of substitutes.

31) Q: Marginal Cost

Select one:

a. rises after the law of diminishing returns set in.
b. is equal to the change in total cost divided by the change in quantity.
c. is all of the above.
d. is the extra cost of producing one additional unit.
e. is equal to the change in variable cost divided by the change in quantity.

32) Q: If the consumer preferences increase for blue jeans, then

Select one:

a. all of the above.
b. people will be willing to pay a higher price to get any quantity.
c. demand will increase.
d. people will be willing to buy more at any given price.

33) Q: Assume the demand for watermelons is downward sloping. An increase in price f rom P20 per kilo to P30 per kilo

Select one:

a. will cause a smaller quantity of watermelons to be demanded.
b. will cause demand to decrease.
c. could have been caused by a decrease in quantity supplied.
d. could have been caused by an increase in supply.
e. will cause a larger quantity of watermelons to be demanded.

34) Q: The production function relates

Select one:

a. inputs to outputs.
b. cost to input
c. cost to output
d. wages to profits.

35) Q: The hypothesis of diminishing returns

Select one:

a. predicts that sooner or later the marginal product decline in the short run.
b. makes intuitive sense but has not often been confirmed empirically.
c. refers to reductions in total product that result as additional variable factors are employed.
d. applies only when all inputs are used in fixed proportions.

36) Q: If a product is in surplus supply, we can conclude that

Select one:

a. its price is too low for equilibrium
b. its price will rise.
c. quantity demanded exceeds quantity supplied.
d. consumers want to buy more than is being made available by producers.
e. its price is above equilibrium.

37) Q: If an increase in the price of product X causes a decrease in the demand for product Y, we c an conclude that

Select one:

a. the price of product Y will increase.
b. the quantity supplied of product Y will increase.
c. they are complements.
d. they are substitutes.
e. they are normal products.

38) Q: Price elasticity of demand for a commodity tends to be greater

Select one:

a. the closer substitutes there are for it.
b. the more of a necessity it is.
c. the less important it is in the budget.
d. the lower the price.

39) Q: If price elasticity of demand for a product is .5, this means

Select one:

a. a change in price changes demand by 50 percent.
b. a .5 percent change in price will cause a .5 percent change in quantity sold.
c. a 1 percent incre ase in quantity sold is associated with a 2 percent fall in price.
d. a 1 percent increase in quantity sold is associated with a .5 percent fall in price.

40) Q: If a natural disaster destroys Mindanao's fruit crop, then

Select one:

a. the supply of fruit will decrease, causing the equilibrium price to increase and the equilibrium quantity to decrease.
b. the supply of fruit will remain unchanged but the demand will decrease.
c. the price of fruit will drop because people will consume less.
d. the demand for fruit will increase.
e. the supply of fruit will decrease, causing the equilibrium price to decrease and the equilibrium quantity to increase.

41) Q: If consumer income increase, then

Select one:

a. the quantity demanded at any price will decrease.
b. the marginal utility of normal products will increase.
c. consumers will move toward a new equilibrium in the quantities of products purchased.
d. the demand for substitute products will decrease.
e. demand shifts to the right for an inferior product.