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Week I Quiz Results/Answers ECO561
1. Revenue increases when
* producer surplus increases
2. An increase in the price of an inelastic good
* increases revenues

3. Price elasticity of Demand increases when
* people become less price sensitive over time
4. The purpose of a market in a market system is to
* bring buyers and sellers into contact
5. By specializing in the production of one good, a company is able to benefit from economies of scale which increases its revenue. Which of the following is an attribute of specialization? * Saving time by allowing a worker to focus on one task

6. The market system promotes progress by
* providing incentive for technological advances
7. Productive efficiency is achieved when
* the best technology is used
8. The market is said to be in equilibrium when
* neither a shortage nor a surplus exists
9. The market will move to a higher equilibrium price if
* the increase in demand is greater than the increase in supply 10. The intersection of supply and demand will be at a lower equilibrium price but a higher equilibrium quantity if * demand is constant and supply increases

11. When a price ceiling occurs
* the market price will be lower than the equilibrium price 12. Because the goals of firms, entrepreneurs, and workers have different incentives, which of the following principles applies? * Self-interest

Week 2 Quiz Results/Answers ECO561
1. Purely competitive firms increase total revenue by
* increasing production
(To increase revenue, firms look to increase price or quantity, as price multiplied by quantity equals total revenue. Purely competitive firms can sell as much as they want at the market price. Adding additional units of the product does not result in a change in the market price. Therefore, since purely competitive firms do not influence price, they increase total revenue by increasing quantity). 2. What are two ways for a competitive firm to determine...
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