Question 1

Which of the following is not an assumption of perfect competition

Accepted Answer

A) perfect information 
B) many buyers and sellers 
C) each product has a unique quality 
D) freedom of entry and exit 
A) perfect information 
B) many buyers and sellers 
C) each product has a unique quality 
D) freedom of entry and exit C

Question 2

If an increase in the price of one good leads to a decrease in demand for another, the two goods are

Accepted Answer

A) complements 
B) substitutes 
C) inferior goods 
D) marginal goods 
A) complements 
B) substitutes 
C) inferior goods 
D) marginal goods A

Question 3

At a utility maximum

Accepted Answer

A) the budget line is tangent to the indifference curve 
B) (MUx/MUy) = Px/Py 
C) MUx/Px = MUy/Py 
D) all of the above 
E) none of the above 
A) the budget line is tangent to the indifference curve 
B) (MUx/MUy) = Px/Py 
C) MUx/Px = MUy/Py 
D) all of the above 
E) none of the above D

Question 4

Let PD=100-1/2QD be the demand curve and PS= 20+1/2QS be the supply curve.What is the equilibrium quantity?

Accepted Answer

A) Q=80 
B) Q=100. 
C) Q=60 
D) Q=100 
A) Q=80 
B) Q=100. 
C) Q=60 
D) Q=100

Question 5

If supply is P= 20+1/2QS and P = 50, the quantity is ___ and the producer surplus is ___

Accepted Answer

A) Q = 50, PS = 750 
B) Q = 60, PS = 900 
C) Q = 70, PS = 400 
D) Q = 60, PS = 1800 
A) Q = 50, PS = 750 
B) Q = 60, PS = 900 
C) Q = 70, PS = 400 
D) Q = 60, PS = 1800

Question 6

Let PD=100-1/2QD be the demand curve and PS= 20+1/2QS be the supply curve.Which of the following is the equilibrium price?

Accepted Answer

A) P=80 
B) P=100 
C) P=60 
D) P=120 
A) P=80 
B) P=100 
C) P=60 
D) P=120

Question 7

If an increase in income leads to an increase in the demand for noodles, noodles must be

Accepted Answer

A) an inferior good 
B) a normal good 
C) a luxury good 
D) a substitute good 
A) an inferior good 
B) a normal good 
C) a luxury good 
D) a substitute good

Question 8

Consumer Surplus is equal to

Accepted Answer

A) total value - total spending 
B) the net benefits of a market to consumers 
C) the area under the demand curve but above the price 
D) all of the above 
A) total value - total spending 
B) the net benefits of a market to consumers 
C) the area under the demand curve but above the price 
D) all of the above

Question 9

An indifference curve displays

Accepted Answer

A) a set of quantities that provide different levels of utility 
B) a set of quantities that the person can afford 
C) a set of quantities among which the person is indifferent 
D) a set of prices that define a person's utility 
A) a set of quantities that provide different levels of utility 
B) a set of quantities that the person can afford 
C) a set of quantities among which the person is indifferent 
D) a set of prices that define a person's utility

Question 10

In Figure 2-24, if a good is inferior and income falls, which of the following will result?

Accepted Answer

A) a shift from D1 to D3 
B) a shift from S1 to S3 
C) a shift from D1 to D2 
D) a shift from S1 to S2 
A) a shift from D1 to D3 
B) a shift from S1 to S3 
C) a shift from D1 to D2 
D) a shift from S1 to S2

Question 11

Lynn owns a small ballet supply store.He currently spends $80,000 per year on inventory, rent, and labor, and collects $120,000 in revenue.He could still be earning $20,000 as a dancer.His economic profit is

Accepted Answer

A) $120,000 
B) $40,000 
C) $20,000 
D) $60,000 
A) $120,000 
B) $40,000 
C) $20,000 
D) $60,000

Question 12

In Figure 2-24, if a new process reduces the cost of manufacturing this good, what would be the expected result?

Accepted Answer

A) a shift from D1 to D3 
B) a shift from S1 to S3 
C) a shift from D1 to D2 
D) a shift from S1 to S2 
A) a shift from D1 to D3 
B) a shift from S1 to S3 
C) a shift from D1 to D2 
D) a shift from S1 to S2

Question 13

If gasoline falls from $4 per gallon to $3 and the quantity demanded rises from 3 million gallons to 4 million, what is the arc elasticity of demand?

Accepted Answer

A) 0 
B) ¾ 
C) 4/3 
D) 1 
A) 0 
B) ¾ 
C) 4/3 
D) 1

Question 14

The basic assumptions for preferences used in utility functions include all of the following EXCEPT

Accepted Answer

A) preferences are variable 
B) preferences are transitive 
C) preferences are complete 
D) marginal utilities are generally positive 
A) preferences are variable 
B) preferences are transitive 
C) preferences are complete 
D) marginal utilities are generally positive

Question 15

The maximum a person is willing to pay for the first unit of a good is called

Accepted Answer

A) maximum utility 
B) marginal utility 
C) marginal value 
D) total value 
A) maximum utility 
B) marginal utility 
C) marginal value 
D) total value

Question 16

The formula for the slope of a budget line (with Y on the vertical axis) is

Accepted Answer

A) ∆x/∆y 
B) -x/y 
C) I/Py 
D) -Px/Py 
A) ∆x/∆y 
B) -x/y 
C) I/Py 
D) -Px/Py

Which of the following is not an assumption of perfect competition

If an increase in the price of one good leads to a decrease in demand for another, the two goods are

At a utility maximum

Let P_D=100-1/2Q_D be the demand curve and P_S= 20+1/2Q_S be the supply curve.What is the equilibrium quantity?

If supply is P= 20+1/2Q_Sand P = 50, the quantity is _ and the producer surplus is _

Let P_D=100-1/2Q_D be the demand curve and P_S= 20+1/2Q_S be the supply curve.Which of the following is the equilibrium price?

If an increase in income leads to an increase in the demand for noodles, noodles must be

Consumer Surplus is equal to

An indifference curve displays

In Figure 2-24, if a good is inferior and income falls, which of the following will result?

Lynn owns a small ballet supply store.He currently spends $80,000 per year on inventory, rent, and labor, and collects $120,000 in revenue.He could still be earning $20,000 as a dancer.His economic profit is

In Figure 2-24, if a new process reduces the cost of manufacturing this good, what would be the expected result?

If gasoline falls from $4 per gallon to $3 and the quantity demanded rises from 3 million gallons to 4 million, what is the arc elasticity of demand?

The basic assumptions for preferences used in utility functions include all of the following EXCEPT

The maximum a person is willing to pay for the first unit of a good is called

The formula for the slope of a budget line (with Y on the vertical axis) is

The Meaning of Policy Analysis

Ethics for Policy Analysts

Efficiency and Imperfect Markets

Efficiency and the Role of Government

Benefit-Cost Analysis

Net Benefits Over Time and Present Value

Choosing a Discount Rate

Risk and Uncertainty

Life, Health, and Health Care

Economic Impact Analysis

Urban Transportation

Pollution Control Policy

Poverty and Income Support Policies

Policies for the Working Poor: Training, Worker Subsidies and the Minimum Wage

Filters

Exam 2: A Review of Markets and Rational Behavior

Which of the following is not an assumption of perfect competition

If an increase in the price of one good leads to a decrease in demand for another, the two goods are

At a utility maximum

Let PD=100-1/2QD be the demand curve and PS= 20+1/2QS be the supply curve.What is the equilibrium quantity?

If supply is P= 20+1/2QS and P = 50, the quantity is ___ and the producer surplus is ___

Let PD=100-1/2QD be the demand curve and PS= 20+1/2QS be the supply curve.Which of the following is the equilibrium price?

If an increase in income leads to an increase in the demand for noodles, noodles must be

Consumer Surplus is equal to

An indifference curve displays

In Figure 2-24, if a good is inferior and income falls, which of the following will result?

Lynn owns a small ballet supply store.He currently spends $80,000 per year on inventory, rent, and labor, and collects $120,000 in revenue.He could still be earning $20,000 as a dancer.His economic profit is

In Figure 2-24, if a new process reduces the cost of manufacturing this good, what would be the expected result?

If gasoline falls from $4 per gallon to $3 and the quantity demanded rises from 3 million gallons to 4 million, what is the arc elasticity of demand?

The basic assumptions for preferences used in utility functions include all of the following EXCEPT

The maximum a person is willing to pay for the first unit of a good is called

The formula for the slope of a budget line (with Y on the vertical axis) is

The Meaning of Policy Analysis

Ethics for Policy Analysts

Efficiency and Imperfect Markets

Efficiency and the Role of Government

Benefit-Cost Analysis

Net Benefits Over Time and Present Value

Choosing a Discount Rate

Risk and Uncertainty

Life, Health, and Health Care

Economic Impact Analysis

Urban Transportation

Pollution Control Policy

Poverty and Income Support Policies

Policies for the Working Poor: Training, Worker Subsidies and the Minimum Wage

Filters

Let P_D=100-1/2Q_D be the demand curve and P_S= 20+1/2Q_S be the supply curve.What is the equilibrium quantity?

If supply is P= 20+1/2Q_Sand P = 50, the quantity is _ and the producer surplus is _

Let P_D=100-1/2Q_D be the demand curve and P_S= 20+1/2Q_S be the supply curve.Which of the following is the equilibrium price?