Question 1

A change in the distribution of income that leaves total income constant will not shift the market demand curve for a product providing

Accepted Answer

A) everyone has an income elasticity of demand of zero for the product. 
B) everyone has the same income elasticity of demand for the product. 
C) individuals have differing income elasticities for the product,but the average income elasticity for income gainers is equal to the average income elasticity for income losers. 
D) any of these conditions occur. 
A) everyone has an income elasticity of demand of zero for the product. 
B) everyone has the same income elasticity of demand for the product. 
C) individuals have differing income elasticities for the product,but the average income elasticity for income gainers is equal to the average income elasticity for income losers. 
D) any of these conditions occur.

Question 2

When prices drop in response to a decline in demand for an increasing cost industry

Accepted Answer

A) producer surplus will increase but rents may decrease. 
B) rent earned by elastically supplied inputs will decline by more than rent earned by inelastically supplied inputs. 
C) rent earned by elastically supplied inputs will decline by less than rent earned by inelastically supplied inputs. 
D) both producer surplus and rents will increase. 
A) producer surplus will increase but rents may decrease. 
B) rent earned by elastically supplied inputs will decline by more than rent earned by inelastically supplied inputs. 
C) rent earned by elastically supplied inputs will decline by less than rent earned by inelastically supplied inputs. 
D) both producer surplus and rents will increase.

Question 3

One example of Ricardian rent is

Accepted Answer

A) rent paid to landlords under price controls. 
B) the difference between the price of a highly demanded unique piece of artwork and the opportunity cost of maintaining it. 
C) the amount paid to a seller above the equilibrium price of tourist class tickets in order to receive higher quality seats in first class. 
D) the price rise of wool from a disease among sheep. 
A) rent paid to landlords under price controls. 
B) the difference between the price of a highly demanded unique piece of artwork and the opportunity cost of maintaining it. 
C) the amount paid to a seller above the equilibrium price of tourist class tickets in order to receive higher quality seats in first class. 
D) the price rise of wool from a disease among sheep.

Question 4

Long-run elasticity of supply is defined as

Accepted Answer

A) percentage change in quantity demanded in the long run divided by percentage change in price. 
B) percentage change in price divided by percentage change in quantity demanded in the long run 
C) percentage change in quantity supplied in the long run divided by percentage change in price. 
D) percentage change in price divided by percentage change in quantity demanded in the long run. 
A) percentage change in quantity demanded in the long run divided by percentage change in price. 
B) percentage change in price divided by percentage change in quantity demanded in the long run 
C) percentage change in quantity supplied in the long run divided by percentage change in price. 
D) percentage change in price divided by percentage change in quantity demanded in the long run.

Question 5

A demand curve will shift out for any of the following reasons except

Accepted Answer

A) preference for a good increases. 
B) price of a substitute falls. 
C) income rises. 
D) price of a complement falls. 
A) preference for a good increases. 
B) price of a substitute falls. 
C) income rises. 
D) price of a complement falls.

Question 6

Per-unit transaction costs

Accepted Answer

A) may cause the demand and supply curves to shift either inward or outward depending on the value obtained from transaction agents. 
B) refer only to the commission paid to a third-party for each transaction made. 
C) are absorbed by the party seeking the transaction. 
D) have the same effect on behavior as do lump-sum transaction costs; the difference in terminology is purely definitional. 
A) may cause the demand and supply curves to shift either inward or outward depending on the value obtained from transaction agents. 
B) refer only to the commission paid to a third-party for each transaction made. 
C) are absorbed by the party seeking the transaction. 
D) have the same effect on behavior as do lump-sum transaction costs; the difference in terminology is purely definitional.

Question 7

Firms in long-run equilibrium in a perfectly competitive industry will produce at the low points of their average total cost curves because

Accepted Answer

A) free entry implies that long-run profits will be zero no matter how much each firm produces. 
B) firms seek maximum profits and to do so they must choose to produce where average costs are minimized. 
C) firms maximize profits and free entry implies that maximum profits will be zero. 
D) firms in the industry desire to operate efficiently. 
A) free entry implies that long-run profits will be zero no matter how much each firm produces. 
B) firms seek maximum profits and to do so they must choose to produce where average costs are minimized. 
C) firms maximize profits and free entry implies that maximum profits will be zero. 
D) firms in the industry desire to operate efficiently.

Question 8

An increase in the price of good x will be accompanied by

Accepted Answer

A) a shift in the market demand curve for good x. 
B) a shift in the market demand curve for good y (a substitute for good x). 
C) a movement along the market demand curve for good x. 
D) a shift in the market demand curve for good y (a substitute for good x)and a movement along the market demand curve for good x. 
A) a shift in the market demand curve for good x. 
B) a shift in the market demand curve for good y (a substitute for good x). 
C) a movement along the market demand curve for good x. 
D) a shift in the market demand curve for good y (a substitute for good x)and a movement along the market demand curve for good x.

Question 9

The excess burden of a tax is

Accepted Answer

A) the amount by which the price of a good increases. 
B) the loss of consumer and producer surplus that is not transferred elsewhere. 
C) The amount by which a person's after-tax income decreases as a result of the new tax. 
D) the welfare costs to firms forced to leave the market due to an inward shift of the demand curve. 
A) the amount by which the price of a good increases. 
B) the loss of consumer and producer surplus that is not transferred elsewhere. 
C) The amount by which a person's after-tax income decreases as a result of the new tax. 
D) the welfare costs to firms forced to leave the market due to an inward shift of the demand curve.

Question 10

In the long run,the greater burden of a specific tax will usually be absorbed by

Accepted Answer

A) consumers. 
B) the party -- consumers or producers -- with the more elastic demand/supply curve. 
C) the party with the least elastic demand/supply curve. 
D) shareholders and employees of the firm in the form of reduced dividends and wages. 
A) consumers. 
B) the party -- consumers or producers -- with the more elastic demand/supply curve. 
C) the party with the least elastic demand/supply curve. 
D) shareholders and employees of the firm in the form of reduced dividends and wages.

Question 11

Under perfect competition,if an industry is characterized by positive economic profits in the short run

Accepted Answer

A) firms will leave the market in the long run and the short-run supply curve will shift outward. 
B) firms will enter the market in the long run and the short-run supply curve will shift outward. 
C) firms will enter the market in the long run and the short-run supply curve will shift inward. 
D) firms will leave the market in the long run and the short-run supply curve will shift inward. 
A) firms will leave the market in the long run and the short-run supply curve will shift outward. 
B) firms will enter the market in the long run and the short-run supply curve will shift outward. 
C) firms will enter the market in the long run and the short-run supply curve will shift inward. 
D) firms will leave the market in the long run and the short-run supply curve will shift inward.

A change in the distribution of income that leaves total income constant will not shift the market demand curve for a product providing

When prices drop in response to a decline in demand for an increasing cost industry

One example of Ricardian rent is

Long-run elasticity of supply is defined as

A demand curve will shift out for any of the following reasons except

Per-unit transaction costs

Firms in long-run equilibrium in a perfectly competitive industry will produce at the low points of their average total cost curves because

An increase in the price of good x will be accompanied by

The excess burden of a tax is

In the long run,the greater burden of a specific tax will usually be absorbed by

Under perfect competition,if an industry is characterized by positive economic profits in the short run

Preferences and Utility

Utility Maximization and Choice

Income and Substitution Effects

Demand Relationships Among Goods

Uncertainty and Information

Strategy and Game Theory

Production Functions

Cost Functions

Profit Maximization

General Equilibrium and Welfare

Monopoly

Imperfect Competition

Labor Markets

Capital and Time

Asymmetric Information

Externalities and Public Goods

Filters

Exam 10: The Partial Equilibrium Competitive Model

A change in the distribution of income that leaves total income constant will not shift the market demand curve for a product providing

When prices drop in response to a decline in demand for an increasing cost industry

One example of Ricardian rent is

Long-run elasticity of supply is defined as

A demand curve will shift out for any of the following reasons except

Per-unit transaction costs

Firms in long-run equilibrium in a perfectly competitive industry will produce at the low points of their average total cost curves because

An increase in the price of good x will be accompanied by

The excess burden of a tax is

In the long run,the greater burden of a specific tax will usually be absorbed by

Under perfect competition,if an industry is characterized by positive economic profits in the short run

Preferences and Utility

Utility Maximization and Choice

Income and Substitution Effects

Demand Relationships Among Goods

Uncertainty and Information

Strategy and Game Theory

Production Functions

Cost Functions

Profit Maximization

General Equilibrium and Welfare

Monopoly

Imperfect Competition

Labor Markets

Capital and Time

Asymmetric Information

Externalities and Public Goods

Filters