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5 Written Questions

5 Matching Questions

  1. (Last Word) When patents on new medications expire, the market for those drugs:
  2. The primary force encouraging the entry of new firms into a purely competitive industry is:
  3. The ability of a good or service to satisfy wants is called:
  4. Under what conditions would an increase in demand lead to a lower long-run equilibrium price?
  5. Suppose a purely competitive, increasing-cost industry is in long-run equilibrium. Now assume that a decrease in consumer demand occurs. After all resulting adjustments have been completed, the new equilibrium price:
  1. a change from being monopolistic to being competitive.
  2. b and industry output will be less than the initial price and output.
  3. c economic profits earned by firms already in the industry.
  4. d The firms in the market are part of a decreasing-cost industry.
  5. e utility.

5 Multiple Choice Questions

  1. straight, upsloping line.
  2. the price elasticity of demand is 2.25.
  3. people isolate purchases and sometimes make irrational decisions.
  4. diminishing marginal utility.
  5. P = MC.

5 True/False Questions

  1. Anchoringcan influence decision-making with irrelevant information.


  2. The price elasticity of demand coefficient measures:demand is elastic at high prices.


  3. Josh will receive a salary of $300,000 next year. According to prospect theory:Josh will only be happy with that salary if his cost of living has not increased.


  4. The MR = MC rule applies:to firms in all types of industries.


  5. If the demand for farm products is price inelastic, a good harvest will cause farm revenues to:less price elastic than the demand for Honda Accords.


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