In a perfectly competitive market, a permanent increase in demand initially brings a higher price, economic
A) loss, and entry into the market.
B) loss, and exit from the market.
C) profit, and entry into the market.
D) profit, and exit from the market.
Ques. 2The cost of a variable input, such as the wage paid to workers, decreases. This decrease shifts the
A) total fixed cost curve downward.
B) marginal product of labor curve downward.
C) average variable cost curve downward.
D) marginal product of labor curve upward.
Ques. 3Because a subsidy raises marginal benefit, it can be used to eliminate the deadweight loss from overproduction.
Indicate whether the statement is true or false
Ques. 4Consider the monopsony in the above figure. The monopsony will hire ________ hours per week.
A) 200
B) 400
C) 600
D) None of the above answers is correct.
Ques. 5If income increases from 50,000 to 60,000 while the demand for a good increases from 100 units to 125 units, what is the income elasticity of demand? Is the good a normal good or an inferior good?
What will be an ideal response?
Ques. 6A textbook publisher is in monopolistic competition. The firm can sell no books at 100 a book, but for each 10 cut in price, the quantity of books it can sell increases by 20 books a day.
The firm's average variable cost and marginal cost is a constant 20 per book. What is the publisher's profit-maximizing level of output? A) 60 books per day
B) 80 books per day
C) 100 books per day
D) 120 books per day
Ques. 7For a common resource, the marginal social cost of the resource is ________ the marginal private cost.
A) greater than
B) equal to
C) less than
D) not comparable to
Ques. 8A price discriminating monopolist
A) produces more output than that produced by a single-price monopolist.
B) has a lower marginal cost than that incurred by a single-price monopolist.
C) makes a smaller economic profit than that earned by the single-price monopolist.
D) makes zero economic profit in the long run.
Ques. 9The used car market without warranties suffers from
A) perfect competition.
B) oligopoly.
C) adverse selection and moral hazard.
D) excessive signaling.
Ques. 10A demand curve is also a willingness-and-ability-to-pay curve.
Indicate whether the statement is true or false
Ques. 11Discrimination by customers creates a wage differential between two groups by creating a difference in the two groups' perceived
A) supply of labor.
B) value of marginal product.
C) marginal cost of labor.
D) minimum wage.
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