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5 Written questions

5 Matching questions

  1. A supply curve that is a vertical straight line indicates that:
  2. Josh will receive a salary of $300,000 next year. According to prospect theory:
  3. The primary force encouraging the entry of new firms into a purely competitive industry is:
  4. The fact that most medical care purchases are financed through insurance:
  5. The MR = MC rule applies:
  1. a Josh will only be happy with that salary if his cost of living has not increased.
  2. b economic profits earned by firms already in the industry.
  3. c to firms in all types of industries.
  4. d a change in price will have no effect on the quantity supplied.
  5. e increases the amount of health care consumed by reducing the price of additional units of care.

5 Multiple choice questions

  1. buyer responsiveness to price changes.
  2. utility.
  3. Alex's behavior is consistent with the endowment effect.
  4. the price elasticity of demand is 2.25.
  5. change from being monopolistic to being competitive.

5 True/False questions

  1. Under what conditions would an increase in demand lead to a lower long-run equilibrium price?and industry output will be less than the initial price and output.


  2. What do the income effect, the substitution effect, and diminishing marginal utility have in common?They all help explain the downsloping demand curve.


  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:The firms in the market are part of a decreasing-cost industry.


  4. The demand for a necessity whose cost is a small portion of one's total income is:relatively price inelastic.


  5. Anchoringcan influence decision-making with irrelevant information.