All things equal, the price elasticity of supply:

All things equal, the price elasticity of supply:
 a. will be greater in the short run than in the long run.
  b. will be greater in the long run than in the short run.
  c. is the same for the short run and the long run.
  d. approaches zero in the long run.

QUESTION 2

If a firm is operating at a loss in the short run and finds that its price is greater than average variable cost, then in the short run:
 a. it should produce where MR = MC.
  b. it should produce zero output.
  c. it should go out of business.
  d. total revenue is less than total variable costs.
  e. total revenue is greater than total costs.

QUESTION 3

As the period for firms to expand output is lengthened, the elasticity of the market supply curve will:
 a. approach zero.
  b. increase.
  c. decrease.
  d. remain the same since time does not affect the elasticity of market supply.

QUESTION 4

The neighborhood ice cream shop finds that when it charges 3 per ice cream cone, its total revenues are 90,000 . It has total variable costs of 30,000 and total fixed costs of 40,000 . From this we can infer the:
 a. shop should be moved because the rent is too high.
  b. price is less than average total cost.
  c. economic profits are 20,000.
  d. shop will be closed in the long run.
  e. shop sells 10,000 ice cream cones.

QUESTION 5

Suppose that the quantity of apples sold increases by 30 percent after the price of pears increases by 15 percent. What is the coefficient of cross elasticity of demand?
 a. 3.0.
  b. 1.5.
  c. 0.2.
  d. 2.0.
  e. 0.3.

QUESTION 6

Suppose the price of a product is less than its average variable cost. When the firm's fixed obligations are completely ended, it will now most likely:
 a. make an economic profit.
  b. go out of business.
  c. expand to a bigger operation.
  d. continue to be shut down.
  e. break even.

QUESTION 7

In order to prove that Dr. Pepper and 7-Up are substitutes, the FTC should test the ____ and get a ____.
 a. price elasticity of demand; number less than 1
  b. income elasticity; positive number
  c. price elasticity; negative number
  d. price elasticity of demand; number greater than 1
  e. cross-price elasticity; positive number

QUESTION 8

If a firm shuts down in the short run, it will:
 a. incur losses equal to its fixed costs.
  b. produce at the output level where MC = MR.
  c. reduce its losses to zero.
  d. do this because P > AVC.
  e. have total revenue greater than total fixed costs.

QUESTION 9

Computers and software programs are:
 a. inferior goods.
  b. complementary goods.
  c. goods with a cross-price elasticity of demand of 0.
  d. substitute goods.
  e. perfectly elastic goods.