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5 Written questions

5 Matching questions

  1. The ability of a good or service to satisfy wants is called:
  2. A supply curve that is a vertical straight line indicates that:
  3. 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:
  4. In the short run a purely competitive firm will always make an economic profit if:
  5. The MR = MC rule applies:
  1. a P > ATC.
  2. b a change in price will have no effect on the quantity supplied.
  3. c utility.
  4. d to firms in all types of industries.
  5. e and industry output will be less than the initial price and output.

5 Multiple choice questions

  1. buyer responsiveness to price changes.
  2. oligopoly
  3. Alex's behavior is consistent with the endowment effect.
  4. They all help explain the downsloping demand curve.
  5. The firms in the market are part of a decreasing-cost industry.

5 True/False questions

  1. Because of "mental accounting:"people isolate purchases and sometimes make irrational decisions.


  2. The demand for autos is likely to be:to firms in all types of industries.


  3. The primary force encouraging the entry of new firms into a purely competitive industry is:economic profits earned by firms already in the industry.


  4. 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.


  5. If a firm can sell 3,000 units of product A at $10 per unit and 5,000 at $8, then:both allocative efficiency and productive efficiency are being achieved.


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