5 Written questions
5 Matching questions
- The price elasticity of demand coefficient measures:
- Because of "mental accounting:"
- If a firm can sell 3,000 units of product A at $10 per unit and 5,000 at $8, then:
- For a linear demand curve:
- The MR = MC rule applies:
- a to firms in all types of industries.
- b buyer responsiveness to price changes.
- c demand is elastic at high prices.
- d the price elasticity of demand is 2.25.
- e people isolate purchases and sometimes make irrational decisions.
5 Multiple choice questions
- a change in price will have no effect on the quantity supplied.
- Josh will only be happy with that salary if his cost of living has not increased.
- both allocative efficiency and productive efficiency are being achieved.
- They all help explain the downsloping demand curve.
5 True/False questions
The primary force encouraging the entry of new firms into a purely competitive industry is: → economic profits earned by firms already in the industry.
Alex was willing to pay $50 for the new World Cup soccer ball. When he received it as a gift, he was willing to sell it, but for no less than $80. According to behavioral economists: → Alex's behavior is consistent with the endowment effect.
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.
Allocative efficiency is achieved when the production of a good occurs where: → P = MC.
The process by which new firms and new products replace existing dominant firms and products is called: → buyer responsiveness to price changes.