If a price-taking firm selling in a competitive market raises the price of its product above the ...

If a price-taking firm selling in a competitive market raises the price of its product above the market-clearing price, it will:
 a. increase its profits.
 b. maintain its profit base since the demand for the product is inelastic.
  c. be able to increase its sales.
 d. not be able to sell any output.

QUESTION 2

Which of the following results from the market system of resource allocation?
 a. Equitable distribution of resources
  b. High opportunity cost of production
  c. Excess supply of goods and services resulting in decreased profits
  d. Unequal distribution of income and wealth
  e. Allocation of the goods and services to those who need them the most

QUESTION 3

Trade between two parties is beneficial because:
 a. it ensures that the standard of living in the poorer country matches its trading partner eventually.
  b. it enables each to consume a bundle of goods that it cannot produced domestically.
  c. it has an immediate effect on an economy by increasing its production set.
  d. it allows the economy of both trading partners to grow equally.

QUESTION 4

If a firm experiences constant returns to scale throughout:
 a. the long-run average-total-cost curve is negatively sloped.
  b. the short-run average-total-cost curves are tangential to the long-run average-total-cost curve at a point on their positively sloped portion.
  c. the short-run average-total-cost curves are tangential to the long-run average-total-cost curve at their minimum points.
  d. the short-run average-total-cost curves are tangential to the long-run average-total-cost curve at a point on their negatively sloped portion.
  e. the long-run average-total-cost curve is positively sloped.

QUESTION 5

The horizontal demand curve facing an individual firm in a perfectly competitive market:
 a. violates the law of demand, which states that demand curves slope downward.
  b. is a reflection of the firm's small size relative to the total market.
 c. is maintained only with the help of high barriers to entry.
 d. is a reflection of the inelastic demand for its product.

QUESTION 6

The diagram that represents how income is distributed among members of a population is known as a(n):
 a. indifference curve.
  b. Laffer curve.
  c. Edgeworth box.
  d. Lorenz curve.
  e. Phillips curve