ECO401 Solved MCQ from Quiz #3
chapters 1-24
solved by Roshni <shinings09@gmail.com>
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Due to capacity constraints, the price elasticity of supply for most products is:
Select correct option:
The same in the long run and the short run.
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Greater in the long run than in the short run.
Greater in the short run than in the long run.
Too uncertain to be estimated
Select correct option:
An individual with a constant marginal utility of income will be:
Risk averse
Risk neutral
Risk loving
Not enough information.
At the equilibrium price:
Select correct option:
There will be a shortage
There will be neither a shortage nor a surplus
There will be a surplus
There are forces that cause the price to change
Because of the relationship between a perfectly competitive firm's demand curve and its marginal revenue curve, the profit maximization condition for the firm can be written as:
Select correct option:
P = MR
P = AVC
AR = MR
P = MC
In the long run, competitive firms MUST be profit maximizes, because if they do not maximize profits:
Select correct option:
They will attract new competitors.
They will not be price takers.
The profits that they do earn will only cover variable costs.
They will not survive.
If a firm pays cash to buy a building so as to have office space for its workers, the monthly opportunity cost of the building is best measured as:
Select correct option:
The price the firm paid divided by twelve.
Zero.
The rent the firm could earn if it rented the building to another firm.
The monthly mortgage payment the firm would have had to pay.
The oligopoly model that predicts that oligopoly prices will tend to be very rigid is the ______________ model.
Select correct option:
Cournot
Stackelberg
Dominant firm
kinked demand
In which market structure(s) will price exceed marginal revenue?
Select correct option:
Differentiated oligopoly and monopoly only
Standardized oligopoly and pure competition only
Monopolistic competition and monopoly only
Monopolistic competition, oligopoly, and monopoly
Feedback: Price will exceed marginal revenue in any industry in which firms face a downward-sloping demand curve. Pure competition is the only industry in which this is not the case.
An indifference curve is:
Select correct option:
A collection of market baskets that are equally desirable to the consumer.
A collection of market baskets that the consumer can buy.
A curve whose elasticity is constant for every price.
A curve which passes through the origin and includes all of the market baskets that the consumer regards as being equivalent.
If a sales tax on beer leads to reduced tax revenue, this means:
Select correct option:
Elasticity of demand is < 1.
Elasticity of demand is > 1.
Demand is upward-sloping.
Demand is perfectly inelastic.
