In the long run, a monopolistically competitive firm's price equals
A) its average total cost and its marginal cost.
B) its average total cost but not its marginal cost.
C) its marginal cost but not its average total cost.
D) neither marginal cost nor its average total cost.
Ques. 2Marginal utility theory predicts that
A) when the price of a good rises, the quantity demanded of that good decreases.
B) if the price of one good rises, the demand for a substitute good increases.
C) if income increases, the demand for a normal good increases.
D) All of the above answers are correct because all are predictions of marginal utility theory.
Ques. 3The labor supply curve has a
A) positive slope always.
B) negative slope if the income effect is greater than the substitution effect.
C) positive slope if the income effect is greater than the substitution effect.
D) negative slope always.
Ques. 4China's State Council has encouraged more spending to improve transportation links and other infrastructure.... It will also step up its spending on vocational training and other educational programs for adults.
www.nytimes.
com, Keith Bradsher, October 19, 2008 Suppose that capital goods are on the vertical axis while consumption goods are on the horizontal axis of China's PPF. As a result of enacting the policies, China's PPF will A) shift outward.
B) shift inward.
C) rotate outward.
D) become flatter.
Ques. 5Which of the following is always a violation of the antitrust law?
A) price fixing among competitors
B) resale price maintenance
C) tying arrangements
D) predatory pricing
Ques. 6The largest share of the U.S. private economy is
A) in manufacturing.
B) competitive or monopolistically competitive.
C) oligopolistic.
D) monopolistic.
Ques. 7What is the relationship between money growth and inflation across countries? Does your answer support the quantity theory of money?
What will be an ideal response?
Ques. 8Which household characteristic has the largest effect on household income distribution?
A) the size of the household
B) the age of householders
C) the race of household members
D) the level of educational attainment of household members
Ques. 9In the above figure, if D2 is the original demand curve for a normal good and income decreases, which price and quantity might result?
A) point a, with price P2 and quantity Q2
B) point b, with price P1 and quantity Q1
C) point c, with price P3 and quantity Q3
D) point d, with price P1 and quantity Q3
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