Question 1

Given generally elastic demand and supply curves for an industry, an INCREASE in supply will (all other things being equal):

Accepted Answer

A)  lower price but not change quantity demanded. 
B)  increase price and increase quantity demanded. 
C)  increase price and decrease quantity demanded. 
D)  lower price and increase quantity demanded. 
E)  not change anything else. 
A)  lower price but not change quantity demanded. 
B)  increase price and increase quantity demanded. 
C)  increase price and decrease quantity demanded. 
D)  lower price and increase quantity demanded. 
E)  not change anything else.

Question 2

Most demand curves are upward-sloping--to the right.

Accepted Answer

A) True 
 B)False

Question 3

"Consumer surplus" means that:

Accepted Answer

A)  consumers just get their money's worth in any transaction. 
B)  consumers don't consume all the products they buy. 
C)  the price consumers have to pay is more than the value to them. 
D)  some consumers get more than their money's worth because they would be willing to pay more than the equilibrium price if they had to. 
E)  there are more consumers than products to satisfy them. 
A)  consumers just get their money's worth in any transaction. 
B)  consumers don't consume all the products they buy. 
C)  the price consumers have to pay is more than the value to them. 
D)  some consumers get more than their money's worth because they would be willing to pay more than the equilibrium price if they had to. 
E)  there are more consumers than products to satisfy them.

Question 4

A firm in pure competition will:

Accepted Answer

A)  advertise its product to tell potential customers about its unique product. 
B)  be able to set its own price level. 
C)  have to accept the going price. 
D)  be able to increase its total revenue only by lowering its price. 
E)  All of these alternatives are correct. 
A)  advertise its product to tell potential customers about its unique product. 
B)  be able to set its own price level. 
C)  have to accept the going price. 
D)  be able to increase its total revenue only by lowering its price. 
E)  All of these alternatives are correct.

Question 5

In the following table, select the quantity interval in which demand is elastic. $$\begin{array} { c c } 
\text { PRICE } & \text { QUANTITY (UNITS) } \
\$ 40 & 10 \
30 & 16 \
20 & 22 \
15 & 28 \
10 & 40 \
5 & 60
\end{array}$$

Accepted Answer

A)  28-40 units 
B)  40-60 units 
C)  10-16 units 
D)  16-22 units 
E)  22-28 units 
A)  28-40 units 
B)  40-60 units 
C)  10-16 units 
D)  16-22 units 
E)  22-28 units

Question 6

Economists usually assume that customers have a fairly definite set of preferences.

Accepted Answer

A) True 
 B)False

Question 7

Which of the following statements about the competitive environment is TRUE?

Accepted Answer

A)  In monopolistic competition a seller has a down-sloping demand curve due to the lack of any substitute products. 
B)  In pure competition, an individual firm is usually faced with a very inelastic demand curve. 
C)  Firms in oligopoly should avoid price cutting. 
D)  The industry demand curve in oligopoly is usually horizontal. 
E)  All of these statements about the competitive environment are TRUE. 
A)  In monopolistic competition a seller has a down-sloping demand curve due to the lack of any substitute products. 
B)  In pure competition, an individual firm is usually faced with a very inelastic demand curve. 
C)  Firms in oligopoly should avoid price cutting. 
D)  The industry demand curve in oligopoly is usually horizontal. 
E)  All of these statements about the competitive environment are TRUE.

Question 8

A supply curve:

Accepted Answer

A)  shows the quantity of products that would be demanded at various possible prices. 
B)  is generally up-sloping from left to right. 
C)  is not affected by suppliers' costs. 
D)  generally slopes in the same direction as the demand curve. 
E)  All of these alternatives are correct. 
A)  shows the quantity of products that would be demanded at various possible prices. 
B)  is generally up-sloping from left to right. 
C)  is not affected by suppliers' costs. 
D)  generally slopes in the same direction as the demand curve. 
E)  All of these alternatives are correct.

Question 9

Rico Hardware is an industrial supply firm that sells standard screws, bolts, and other small hardware items to construction companies. Rico competes with many similar firms nationwide and sells its merchandise at "the going rate." Rico seems to be operating in an environment that is close to:

Accepted Answer

A)  pure competition. 
B)  monopoly. 
C)  monopolistic competition. 
D)  oligopoly. 
A)  pure competition. 
B)  monopoly. 
C)  monopolistic competition. 
D)  oligopoly.

Question 10

If a firm lowered the price of its product, the "law of diminishing demand" says that the quantity demanded would decrease.

Accepted Answer

A) True 
 B)False

Question 11

Which of the following statements about elasticity of supply is TRUE?

Accepted Answer

A)  A product's elasticity of supply is calculated directly from its elasticity of demand. 
B)  In the long run, the supply curve for most products is highly inelastic. 
C)  If a product's demand curve is inelastic, then its supply curve also must be inelastic. 
D)  In the very short run (after the growing season has begun), the supply curve for most agricultural products is highly inelastic. 
E)  All of these statements about elasticity of supply are TRUE. 
A)  A product's elasticity of supply is calculated directly from its elasticity of demand. 
B)  In the long run, the supply curve for most products is highly inelastic. 
C)  If a product's demand curve is inelastic, then its supply curve also must be inelastic. 
D)  In the very short run (after the growing season has begun), the supply curve for most agricultural products is highly inelastic. 
E)  All of these statements about elasticity of supply are TRUE.

Question 12

A market situation with homogeneous products, many informed buyers and sellers, and ease of entry is a ______________ market situation.

Accepted Answer

A)  oligopoly 
B)  monopolistic competition 
C)  monopoly 
D)  pure competition 
E)  None of these is a good answer 
A)  oligopoly 
B)  monopolistic competition 
C)  monopoly 
D)  pure competition 
E)  None of these is a good answer

Question 13

Tara Whitehall is responsible for price setting at her firm. The last time she raised her price, competitors left their prices at the lower level and she lost customers. Now she wants to increase her market share with a lower price, but she is concerned that her competitors will "follow" her to the lower price level. Whitehall is probably operating in an environment of:

Accepted Answer

A)  oligopoly. 
B)  pure competition. 
C)  monopoly. 
D)  monopolistic competition. 
A)  oligopoly. 
B)  pure competition. 
C)  monopoly. 
D)  monopolistic competition.

Question 14

The "equilibrium point" is where:

Accepted Answer

A)  the quantity and price sellers are willing to offer equal the quantity and price that buyers are willing to accept. 
B)  the quantity demanded equals its cost. 
C)  the market price is at its minimum. 
D)  the elasticity of demand equals the elasticity of supply. 
E)  the market price is at its maximum. 
A)  the quantity and price sellers are willing to offer equal the quantity and price that buyers are willing to accept. 
B)  the quantity demanded equals its cost. 
C)  the market price is at its minimum. 
D)  the elasticity of demand equals the elasticity of supply. 
E)  the market price is at its maximum.

Question 15

In pure competition situations, each seller usually has a lot of control over his price because of the lack of competitive substitutes.

Accepted Answer

A) True 
 B)False

Question 16

Which of the following products would have the MOST ELASTIC demand?

Accepted Answer

A)  Water supplied by a local utility company 
B)  A Minolta automatic camera 
C)  A new home which has not yet been built 
D)  Mercedes automobile 
E)  An individual farmer's wheat 
A)  Water supplied by a local utility company 
B)  A Minolta automatic camera 
C)  A new home which has not yet been built 
D)  Mercedes automobile 
E)  An individual farmer's wheat

Question 17

Most customers want more products than they can afford to buy.

Accepted Answer

A) True 
 B)False

Question 18

Oligopoly conditions develop when a market has homogeneous products, a fairly inelastic industry demand curve, and relatively few sellers.

Accepted Answer

A) True 
 B)False

Question 19

If a firm's total revenue DECREASES when the price of its product is reduced from $80 to $40, the demand for this product between these two prices is:

Accepted Answer

A)  unitary elastic. 
B)  inelastic. 
C)  elastic. 
D)  Cannot tell from what is given. 
A)  unitary elastic. 
B)  inelastic. 
C)  elastic. 
D)  Cannot tell from what is given.

Question 20

Which of the following is MOST likely to be competing in monopolistic competition?

Accepted Answer

A)  a soybean farmer 
B)  a steel producer 
C)  a restaurant 
D)  an oil producer 
E)  an electric utility company 
A)  a soybean farmer 
B)  a steel producer 
C)  a restaurant 
D)  an oil producer 
E)  an electric utility company

Given generally elastic demand and supply curves for an industry, an INCREASE in supply will (all other things being equal):

Most demand curves are upward-sloping--to the right.

"Consumer surplus" means that:

A firm in pure competition will:

In the following table, select the quantity interval in which demand is elastic. PRICE QUANTITY (UNITS) \ 40 10 30 16 20 22 15 28 10 40 5 60

Economists usually assume that customers have a fairly definite set of preferences.

Which of the following statements about the competitive environment is TRUE?

A supply curve:

Rico Hardware is an industrial supply firm that sells standard screws, bolts, and other small hardware items to construction companies. Rico competes with many similar firms nationwide and sells its merchandise at "the going rate." Rico seems to be operating in an environment that is close to:

If a firm lowered the price of its product, the "law of diminishing demand" says that the quantity demanded would decrease.

Which of the following statements about elasticity of supply is TRUE?

A market situation with homogeneous products, many informed buyers and sellers, and ease of entry is a ______________ market situation.

The "equilibrium point" is where:

In pure competition situations, each seller usually has a lot of control over his price because of the lack of competitive substitutes.

Which of the following products would have the MOST ELASTIC demand?

Most customers want more products than they can afford to buy.

Oligopoly conditions develop when a market has homogeneous products, a fairly inelastic industry demand curve, and relatively few sellers.

If a firm's total revenue DECREASES when the price of its product is reduced from $80 to $40, the demand for this product between these two prices is:

Which of the following is MOST likely to be competing in monopolistic competition?

Marketing39s Value to Consumers, Firms, and Society

Marketing Strategy Planning

Evaluating Opportunities in the Changing Marketing Environment

Focusing Marketing Strategy With Segmentation and Positioning

Final Consumers and Their Buying Behavior

Business and Organizational Customers and Their Buying Behavior

Improving Decisions With Marketing Information

Elements of Product Planning for Goods and Services

Product Management and New-Product Development

Place and Development of Channel Systems

Distribution Customer Service and Logistics

Retailers, Wholesalers, and Their Strategy Planning

Promotion - Introduction to Integrated Marketing Communications

Personal Selling and Customer Service

Advertising, Publicity, and Sales Promotion

Pricing Objectives and Policies

Price Setting in the Business World

Ethical Marketing in a Consumer-Oriented World: Appraisal and Challenges

Marketing Arithmetic

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Exam 19: Economics Fundamentals

Given generally elastic demand and supply curves for an industry, an INCREASE in supply will (all other things being equal):

Most demand curves are upward-sloping--to the right.

"Consumer surplus" means that:

A firm in pure competition will:

In the following table, select the quantity interval in which demand is elastic. PRICE QUANTITY (UNITS) \ 40 10 30 16 20 22 15 28 10 40 5 60

Economists usually assume that customers have a fairly definite set of preferences.

Which of the following statements about the competitive environment is TRUE?

A supply curve:

Rico Hardware is an industrial supply firm that sells standard screws, bolts, and other small hardware items to construction companies. Rico competes with many similar firms nationwide and sells its merchandise at "the going rate." Rico seems to be operating in an environment that is close to:

If a firm lowered the price of its product, the "law of diminishing demand" says that the quantity demanded would decrease.

Which of the following statements about elasticity of supply is TRUE?

A market situation with homogeneous products, many informed buyers and sellers, and ease of entry is a ______________ market situation.

The "equilibrium point" is where:

In pure competition situations, each seller usually has a lot of control over his price because of the lack of competitive substitutes.

Which of the following products would have the MOST ELASTIC demand?

Most customers want more products than they can afford to buy.

Oligopoly conditions develop when a market has homogeneous products, a fairly inelastic industry demand curve, and relatively few sellers.

If a firm's total revenue DECREASES when the price of its product is reduced from $80 to $40, the demand for this product between these two prices is:

Which of the following is MOST likely to be competing in monopolistic competition?

Marketing39s Value to Consumers, Firms, and Society

Marketing Strategy Planning

Evaluating Opportunities in the Changing Marketing Environment

Focusing Marketing Strategy With Segmentation and Positioning

Final Consumers and Their Buying Behavior

Business and Organizational Customers and Their Buying Behavior

Improving Decisions With Marketing Information

Elements of Product Planning for Goods and Services

Product Management and New-Product Development

Place and Development of Channel Systems

Distribution Customer Service and Logistics

Retailers, Wholesalers, and Their Strategy Planning

Promotion - Introduction to Integrated Marketing Communications

Personal Selling and Customer Service

Advertising, Publicity, and Sales Promotion

Pricing Objectives and Policies

Price Setting in the Business World

Ethical Marketing in a Consumer-Oriented World: Appraisal and Challenges

Marketing Arithmetic

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