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production technology
B)
consumption decisions
CORRECT
A)
B)
TRUE
FALSE
B)the quantity of other goods sacrificed to get another unit of that good
C)
D)
B)
TRUE
FALSE
governments intervene
governments plan production
C)
governments interfere
INCORRECT Positive economics studies objective explanations of the workings of the economy
A)
B)
FALSE
B)
C)
1
0
TRUE
opinions, facts
A)
B)
1
1
1
2
A)
B)
1
3
TRUE
FALSE
1
4
1
5
A)
B)
1
6
FALSE
A)
B)
C)
1
7
TRUE
A)
B)
C)
D)
1
8
To find the percentage change in a number, divide the absolute change by the original
INCORRECT number and multiply by 100
A)
TRUE
B)
1
9
FALSE
If your income during one year is 10,000 and the following year it is 12,000, then it
INCORRECT has grown by
A)
20%
B)
C)
D)
2
0
12%
16%
A)
2%
CORRECT
1
A)
2
2
B)
C)
D)
If the diagram of a line shows that lower values on the vertical scale are associated
INCORRECT with higher values on the horizontal scale, this is an example of _____________
A)
a nonlinear relationship
B)
D)
2
3
a scatter diagram
a negative linear relationship
When we know the quantity of a product that buyers wish to purchase at each
INCORRECT possible price, we know
A)
Demand
B)
C)
D)
CORRECT
Supply
Excess demand
Excess supply
Supply is the quantity of a good sellers wish to sell each time the market opens
4
A)
TRUE
B)
2
5
FALSE
The equilibrium price clears the market; it is the price at which ________ _________
INCORRECT
A)
B)
Everything is sold
2
6
c and d
2
7
2
8
A)
TRUE
B)
2
9
FALSE
A)
B)
incomes
3
0
tastes
A)
technology
B)
input costs
C)
government regulation
D)
3
1
A)
TRUE
B)
3
2
If a price increase of good A increases the quantity demanded of good B, then good B
INCORRECT is a
A)
B)
substitute good
complementary good
C)
D)
3
3
FALSE
bargain
inferior good
An increase in consumer income will increase demand for a _______ but decrease
INCORRECT demand for a _________
A)
B)
C)
D)
3
4
Price ceilings are imposed increase price above the free market equilibrium price
CORRECT
A)
TRUE
B)
CORRECT
FALSE
D)
INCORRECT
inelastic, increase
B)
elastic, increase
C)
elastic, decrease
D)
a change in price
The cross-price elasticity of demand measures how the quantity demanded of one
good is related to consumer income
A)
TRUE
B)
INCORRECT
Positive cross-elasticities suggest that goods are _________ and negative crosselasticities that goods are __________
A)
substitutes, inferior
B)
normal, complements
C)
substitutes, complements
D)
normal, inferior
INCORRECT A measurement showing how quantity demanded varies with income is the
A)
B)
FALSE
CORRECT
C)
D)
CORRECT
If your income doubles and the prices of the goods you buy double, then your demand
for these goods will likely ________
A)
increase
B)
not change
C)
decrease
D)
CORRECT
Any price change can be decomposed into an income effect and a complementary
effect
A)
B)
CORRECT
shift
TRUE
FALSE
The income effect of a price increase of a normal good is to __________ of that good
and the substitution effect is to _______ of that good
A) increase quantity demanded, reduce quantity demanded
B) increase quantity demanded, increase quantity demanded
C) reduce quantity demanded, reduce quantity demanded
D) reduce quantity demanded, increase quantity demanded
1
0
A)
B)
C)What the student could have earned in the best job available by not
studying
D) What the student will earn after graduation
1
1
A)
B)
Status
Prestige
C)
D)
1
2
Self-esteem
The extra utility from consuming one more unit of a good is called
INCORRECT
A)
B)
C)
D)
1
3
Utility
Marginal utility
Additional utility
Surplus utility
Bonus utility
Adding up the quantities demanded of a good by different people facing the same
INCORRECT price gives us the
A)
Supply curve
B)
Demand curve
D)
1
4
A)
B)
C)
D)
1
5
pay, make
charge, earn
minimize, maximize
The increase in total cost when one more unit is produced is known as
INCORRECT
A)
B)
marginal cost
opportunity cost
C)
D)
1
6
incur, desire
limited cost
average cost
A)
1
7
A)
B)
1
8
CORRECT
If a firm is producing a level of output where marginal cost is greater than marginal
revenue, it should increase output to maximise profits
A)
B)
1
9
TRUE
FALSE
If a firm's wage costs increase this will cause __________ and ________
INCORRECT
A)
2
0
A)
B)
reduces, increases
C)
increases, increases
D)
2
1
reduces, reduces
increases, reduces
A)
B)
2
2
TRUE
FALSE
A firm that breaks even after all economic costs are paid is earning
CORRECT
A)
B)
C)
D)
Economic profit
Accounting profit
Normal profit
Supernormal profit
2
3
A)
Economic profit
B)
Accounting profit
C)
D)
2
4
Normal profit
Supernormal profit
A)
B)
Your Results:
The correct answer for each question is indicated by a
output is maximized
B)
C)there is no way to make a given output using less of one input and no more
of the other inputs
D)
INCORRECT
A period of time long enough for the firm to adjust all production inputs is described
as the long run
A)
B)
TRUE
FALSE
INCORRECT If a long run average cost curve is falling from left to right this is an example of
A)
B)
C)
D)
INCORRECT
If a firm is not operating at the output necessary to achieve all scale economies, it has
not achieved its
A)
Efficient scale
INCORRECT
B)
C)
D)
When average cost is falling marginal cost is __________ and when average cost is
rising marginal cost is __________
A) greater than average cost, greater than average cost
B) less than average cost, greater than average cost
C) less than average cost, less than average cost
D) greater than average cost, less than average cost
B)
INCORRECT Short run average total costs are equal to the sum of _________ and __________
A)
B)
C)
D) short run average variable costs, short run average fixed costs
INCORRECT
The short run marginal cost curve cuts the short run total cost curve and short run
average variable cost curve ______________
A)
B)
C)
D)
1
0
CORRECT
Given a long run average cost curve, every point represents a tangency with the
lowest point of a short run average cost curve for a fixed plant size
A)
B)
1
1
TRUE
FALSE
Holding all factors constant except one and increasing a variable factor is expected to
INCORRECT lead to steadily decreasing marginal product of that factor. This is an example of
A)
B)
C)
D)
1
2
1
3
A)
B)
1
4
profit is zero
CORRECT
Is a price taker
C)
D)
For a competitive firm, its short run supply curve is ________ and its long run supply
curve is __________
A)
SMC, LMC
B)
C)
D)
1
5
A)
B)
a standard product
C)
D)
perfect information
E)
1
6
CORRECT
If there are short run excess profits in a competitive industry, in the long run they will
disappear because of new entrants
A)
TRUE
B)
1
7
A)
horizontal
B)
C)
vertical
downward sloping
D)
1
8
FALSE
fairly elastic
A)
B)
C)
Your Results:
The correct answer for each question is indicated by a
CORRECT
The supply rule of the profit maximising monopolist is different from that of a
competitive firm
A)
B)
CORRECT
CORRECT
TRUE
FALSE
A)
B)
C)
D)
A discriminating monopolist will charge a higher price to groups with elastic demand
A)
TRUE
B)
B)
C)
D)
research
cost-saving
C)
technical advance
D)
FALSE
monopolistic competition
B)
C)
D)
oligopoly
monopoly
unfair competition
INCORRECT A natural monopoly has a declining ________ over a large range of output
INCORRECT
A)
B)
C)
D)
CORRECT
C)
D)
1
0
TRUE
FALSE
A)The oligopolist believes that competitors will match output increases but not
output reductions
B)The oligopolist believes that competitors will match price increases but not
output reductions
C)The oligopolist believes that competitors will match price cuts but not price
rises
D)The oligopolist believes that competitors will match price increases but not
output increases
1
1
A)
B)
1
2
TRUE
FALSE
C)
D)
1
3
A)
B)
C)
1
4
A)
a winning strategy
B)
a losing strategy
1
5
A)
TRUE
B)
FALSE
Your Results:
The correct answer for each question is indicated by a
CORRECT
The substitution effect of a rise in the price of labour will ___________ the
quantity of labour and the output effect will __________ it
A)
B)
C)
D)
increase, increase
increase, reduce
reduce, reduce
reduce, increase
CORRECT
A)
B)
INCORRECT
TRUE
FALSE
INCORRECT
CORRECT
supply of labour
TRUE
B)
INCORRECT
FALSE
A)
B)
C)
INCORRECT
A)
C)
INCORRECT
education
INCORRECT
A)
TRUE
B)
1
0
FALSE
A)
regional variation
B)
C)
unionization
relative danger
D)
1
1
skills
A)
2
A)
B)
course fees
C)
1
3
1
4
C)
D)
A)
quarter
B)
third
C)
D)
1
5
INCORRECT
half
three-quarters
Unions achieve a higher wage differential the more _______________ and the
more ___________
A)inelastic the demand for labour, they can restrict the supply of labour
B) members they have, aggressive they behave
C) the economy is growing, people prefer leisure
D) the productivity s growing, vacancies exist
1
6
A)
B)
1
7
TRUE
FALSE
Women and non-whites on average receive lower incomes than white men because
INCORRECT
educational disadvantage
1
8
CORRECT
In the UK, in recent years, union membership has _________ and days of work
lost because of strikes has __________
A)
B)
grown, declined
declined, declined
C)
declined, grown
D)
1
9
grown, grown
A)
2
0
2
1
A)
B)
C)
D)
productive investment
C)
D)
2
2
inventories
A)
B)
2
3
dwellings
C)
D)
A)
B)
its depreciation
2
4
2
5
C)
D)
The demand for capital services is derived from a falling MRPK schedule
CORRECT
A)
B)
2
6
INCORRECT
A)
variable, technology
B)
fixed, expectations
D)
INCORRECT
FALSE
In the short run, the supply of capital is ____________ and in the long run will
depend on ____________
C)
2
7
TRUE
If workers get a real wage increase this will likely _______________ and
____________
A)encourage the use of more capital in the long run, reduce demand for all
inputs
B) encourage the use of more capital, increase demand for all inputs
C) encourage the use of less capital, reduce demand for all inputs
D) encourage the use of less capital, reduce demand for all inputs
2
8
The supply of land is normally greater in the long run than in the short run
CORRECT
A)
B)
2
9
TRUE
FALSE
A)
B)
C)
3
0
INCORRECT
A)
3
1
INCORRECT
A)
B)
3
2
employees
the population
C)
D)
A)
B)
3
3
INCORRECT
TRUE
FALSE
The transfer earnings of a factor are the payments received in excess of its
opportunity cost.
A)
B)
TRUE
FALSE