In a pure exchange market:
a. resources are owned only by the government.
b. resources are owned by few people.
c. people trade money for goods that are produced in the domestic economy.
d. there is no production and people trade money for goods that already exist.
QUESTION 2In a perfectly competitive industry, the price of good A is 2 . If a firm in this industry decides to increase its price to 2.50, it will:
a. realize an increase in profit of 0.50 per unit output.
b. be able to increase the quantity sold of good A.
c. be unable to sell any quantity of good A that is produced.
d. lose some of its customers in the market.
e. experience a decrease in profit of 0.50 per unit output.
QUESTION 3Assume a perfectly competitive firm sells its output for 150 per unit. At its current 2,000 units of output, marginal cost is 180 and increasing, and average variable cost is 160 . Assuming it wants to maximize its profits, it should:
a. increase output.
b. decrease output, but not shut down.
c. maintain its current output rate.
d. shut down.
QUESTION 4Suppose the adoption of a new software reduces the marginal cost of publishing books. For a given demand curve for books, this will be represented by:
a. an upward movement along the supply curve of books.
b. a downward movement along the supply curve of books.
c. an upward shift in the supply curve of books.
d. a downward shift in the supply curve of books.
QUESTION 5Unemployment insurance programs provide benefits to permanently unemployed people.
a. True
b. False
Indicate whether the statement is true or false
QUESTION 6A(n) ____ is a price taker.
a. monopoly firm
b. oligopoly firm
c. perfectly competitive firm
d. monopolistically competitive firm
e. duopoly firm
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