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Microeconomics multiple choice

Terms in this set (21)

Consider the following pairs of goods. For which of the two goods would you expect the demand to be more price elastic? 1) Water or diamonds 2) Insulin or Ibuprofen 3) food in general or bagels 4) bus rides during the next two weeks or bus rides during the next two years
Diamonds; ibuprofen; bagels; bus rides during the next two years
The minimum wage, if it is binding, lowers the incomes of
only those workers who become unemployed
If a small percentage increase in the price of a good greatly reduces the quantity demanded for that good, the demand for that good is
price elastic
Which of the following statements regarding the circular-flow diagram is true
the factors of production are owned by households
Using the midpoint method, at a price of $16, what is the income elasticity of demand when income rises from$500 to $1,000?
1.00
Suppose each of the following events listed below has an impact on the market for bicycles. Which of the following will shift the equilibrium left
the wage of workers employed in bicycle factory increase
A demand curve reflects each of the following except the
ability of buyers to obtain the quantity they desire
when there is a technological advance in the pork industry, consumer surplus in that market will
increase
If the cross-price elasticity between two goods is negative, the two goods are likely to be
complements
A binding price ceiling creates
a shortage
When a good is taxed
both buyers and sellers of the good are made worse off
monopolistic is an
inefficient market structure because there is dead-weight loss
for each of the following characteristics, which one describes a monopolistic firm?
a, b, and c; earns economic profit in the long run, has marginal revenue less than price, sole seller of a product without close substitutes
which of the following statements is correct?
all of the above; average total cost is falling when marginal cost is below it and rising when marginal cost is above it, the cost of producing an extra unit of output is marginal cost, a cost that does not depend on the quantity produced is a fixed cost
in which of the following market structures can firms earn economic profits in the long run?
monopoly
Which of the following statements concerning the competitive market is correct
all of the above; if a firm in a competitive market doubles its output, its total revenue would double, a competitive firm's short run supply curve is the portion of the firm's marginal cost curve that lies above its average-variable-cost curve, a competitive firm's long run supply curve is the portion of the firm's marginal-cost curve that lies above its average-total-cost curve
which of the following goods are likely to be sold in a monopolistic market?
electricity
the firm's efficient scale is the quantity of output that minimizes
average fixed cost
In perfect competition as well as in a monopoly
marginal revenue is equal to marginal cost for each firm
One assumption that distinguishes short-run cost analysis from long-run cost analysis for a profit-maximizing firm is that in the short run
the size of the factory is fixed
Which of the following statements is correct for both a monopolistic and a perfectly competitive firm?
i) the firm maximizes profits by equating marginal revenue with marginal cost
ii) the firm maximizes profits by equating price with marginal cost
iii) demand equals marginal revenue
iv) average revenue equals price
i) and iv) only
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