Economics and True False

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Question 2 (0.5/0.5)

Exhibit 2–4 Production possibilities curve data

 | A| B| C| D| E| F|
Capital goods| 150| 140| 120| 90| 50| 0|
Consumer goods| 0| 20| 40| 60| 80| 100|
| | | | |
| |

In Exhibit 2-4, the concept of increasing opportunity costs is represented by the fact that:

a) Greater amounts of capital goods must be sacrificed to produce each additional unit of consumption goods.

Question 4 (0.5/0.5)

As shown in Exhibit 8-3, in order to maximise its profit, what price should GeneTech charge for it’s vaccine?

a) $35 per dose

Question 5 (0.5/0.5)

A demand curve for the Steel Porcupines’ concert tickets would show the:

a) Number of tickets that will be purchased at various prices

Question 6 (0.5/0.5)

A free ride is a person who:

a) Receives benefits from someone else’s action but does not pay for them.

Question 8 (0.5/0.5)
A point inside a production possibilities curve reflects:
a) Less than full use of resources and technology

Question 9 (0.5/0.5)
According to the law of supply, there is a direct relationship between the quantity supplied and: a) The price of the good
Question 10 (0.5/0.5)
As a result of a kinked demand curve, the price:
a) Settles at the kink
Question 11 (0/0.5)
As output increases,
a) ATC rises at and then falls
b) AFC rises at first and then falls
c) AFC declines
Question 12 (0.5/0.5)
Assuming that bus travel is an inferior good, a decrease in consumer income, other things being equal, will cause: a) A rightward shift in the demand curve for bus travel
Question 13 (0.5/0.5)
Assuming that hamburgers and hot dogs are substitutes, an increase in the price of hamburgers, other things being equal, results in a: a) Rightward shift in the demand curve for hot dogs
Question 15 (0/0.5)
Avital and Joshua each have their own business selling lemonade in front of their houses. When they each charge 25 cents per glass, their total revenues are equal. However, when they each charge 40 cents per glass, Avital’s revenues are bigger than Joshua’s revenues. This is because: a) There is a market failure

b) Joshua faces a more elastic demand curve
c) Avital faces a more elastic demand curve
Question 16 (0.5/0.5)
Because a competitive firm is a price taker, it faces a demand curve that is: a) Perfectly elastic
Question 17 (0.5/0.5)
Economic profit equals accounting profit minus:
a) Implicit costs
Question 18 (0.5/0.5)
If a competitive firm is losing money, it should:
a) Shut down if its losses are greater than total fixed costs

Question 19 (0.5/0.5)
A monopolist earning economic profit in the short run determines that, at its present level of output, marginal revenue is $23 and marginal cost is $30. Which of the following should the firm do to increase profit? a) Raise price and lower output

Question 21 (0.5/0.5)
A perfectly elastic demand curve has a price elasticity of demand coefficient of: a) Infinity
Question 22 (0.5/0.5)
If an excise tax is placed on a product that has a perfectly inelastic demand, then: a) The entire tax will be paid by the consumer

Question 23 (0/0.5)
If cars and petrol are complements, then their cross-elasticity coefficient will be: a) Strictly greater than one
b) Negative
Question 24 (0.5/0.5)
If the price elasticity of demand is computed for two products and product A measures 0.79 and product B measures 1.6, then: a) Product B is more price elastic than product A
Question 25 (0.5/0.5)
In the long run in monopolistic competition:
a) Economic profits are zero

Question 26 (0.5/0.5)
In the short run, if a perfectly competitive firm is producing at a price above average total cost, its economic profit must be: a) Positive
Question 27 (0.5/0.5)
Marginal revenue is the change in:
a) Total revenue resulting from a one unit change in output Question 28 (0.5/0.5)
One of the...
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