Question 1

Generally, the elasticity of demand for an energy source in the long run will be

Accepted Answer

A)  approximately equal to its elasticity of demand in the short run. 
B)  considerably more elastic than in the short run. 
C)  slightly less elastic than in the short run. 
D)  considerably less elastic than in the short run. 
A)  approximately equal to its elasticity of demand in the short run. 
B)  considerably more elastic than in the short run. 
C)  slightly less elastic than in the short run. 
D)  considerably less elastic than in the short run.

Question 2

If the construction of a bridge project creates benefits of $20 billion while the cost is $15 billion to construct, this indicates the project

Accepted Answer

A)  should be built. 
B)  should not be built. 
C)  will decrease the welfare of society. 
D)  is counter-productive. 
A)  should be built. 
B)  should not be built. 
C)  will decrease the welfare of society. 
D)  is counter-productive.

Question 3

Cecilia's Café is in a competitive price-searcher market. Cecilia's is currently producing where average total cost is at its minimum, and Cecilia's is earning a positive economic profit. In the long run we would expect Cecilia's output to

Accepted Answer

A)  decrease and average total cost to be higher. 
B)  decrease and average total cost to be lower. 
C)  remain unchanged as Cecilia's is doing the best it can. 
D)  increase and average total costs to be lower. 
A)  decrease and average total cost to be higher. 
B)  decrease and average total cost to be lower. 
C)  remain unchanged as Cecilia's is doing the best it can. 
D)  increase and average total costs to be lower.

Question 4

In the Central Utah Project, the water delivered from dams to users

Accepted Answer

A)  is very well utilized, because planners allocated water to its highest valued uses and users. 
B)  cannot generally be traded, so is often wastefully used in low-valued uses. 
C)  is often sold to water-short cities by farmers who can then enjoy a profit from the sale. 
D)  is very expensive to the users who get it. 
A)  is very well utilized, because planners allocated water to its highest valued uses and users. 
B)  cannot generally be traded, so is often wastefully used in low-valued uses. 
C)  is often sold to water-short cities by farmers who can then enjoy a profit from the sale. 
D)  is very expensive to the users who get it.

Question 5

Water supply problems are widespread, indicating that

Accepted Answer

A)  water markets can seldom work, because water Is a necessity. 
B)  property rights are frequently incomplete and not fully tradable. 
C)  water is too important to ration by price. 
D)  water markets are seldom controlled by government. 
A)  water markets can seldom work, because water Is a necessity. 
B)  property rights are frequently incomplete and not fully tradable. 
C)  water is too important to ration by price. 
D)  water markets are seldom controlled by government.

Question 6

Figure 10-1  
-Given the cost and demand conditions in Figure 10-1, what price should this competitive price-searcher firm charge in order to maximize profits?

Accepted Answer

A)  P1 
B)  P2 
C)  P3 
D)  P4 
A)  P1 
B)  P2 
C)  P3 
D)  P4

Question 7

In both price-taker and competitive price-searcher markets, the long-run market price of a good will be equal to the

Accepted Answer

A)  average total cost of producing the good. 
B)  average variable cost of producing the good. 
C)  average fixed cost of producing the good plus a normal return on that cost. 
D)  marginal revenue derived from the sale of an additional unit of the good. 
A)  average total cost of producing the good. 
B)  average variable cost of producing the good. 
C)  average fixed cost of producing the good plus a normal return on that cost. 
D)  marginal revenue derived from the sale of an additional unit of the good.

Question 8

Assume a competitive price-searcher firm is earning an economic profit. The marginal revenue from selling an additional unit is $30 and the marginal cost of producing that additional unit is $23. The firm should

Accepted Answer

A)  change neither its price nor its output level 
B)  reduce its price and increase its output level 
C)  increase its price and reduce its output level 
D)  reduce both its price and its output level 
E)  increase both its price and its output level 
A)  change neither its price nor its output level 
B)  reduce its price and increase its output level 
C)  increase its price and reduce its output level 
D)  reduce both its price and its output level 
E)  increase both its price and its output level

Question 9

The strategy underlying price discrimination is to

Accepted Answer

A)  charge higher prices to customers who have better access to substitutes. 
B)  charge everyone the same price but limit the quantity they are allowed to buy. 
C)  increase total revenue by charging higher prices to those with the most inelastic demand for the product and lower prices to those with the most elastic demand. 
D)  reduce per-unit cost to the firm by charging higher prices to those with the most inelastic demand and lower prices to those with the most elastic demand. 
A)  charge higher prices to customers who have better access to substitutes. 
B)  charge everyone the same price but limit the quantity they are allowed to buy. 
C)  increase total revenue by charging higher prices to those with the most inelastic demand for the product and lower prices to those with the most elastic demand. 
D)  reduce per-unit cost to the firm by charging higher prices to those with the most inelastic demand and lower prices to those with the most elastic demand.

Question 10

Even though firms in competitive price-searcher markets do not produce at minimum ATC, competitive price-searcher markets may still be consistent with economic efficiency because

Accepted Answer

A)  strict government regulations force the firms in these markets to keep their costs low. 
B)  they provide consumers with a greater diversity of products. 
C)  they encourage more advertising in both price-searcher and price-taker markets. 
D)  special legal protections for price searchers make it possible for them to more efficiently use resources. 
A)  strict government regulations force the firms in these markets to keep their costs low. 
B)  they provide consumers with a greater diversity of products. 
C)  they encourage more advertising in both price-searcher and price-taker markets. 
D)  special legal protections for price searchers make it possible for them to more efficiently use resources.

Question 11

In the petroleum industry, proved reserves are

Accepted Answer

A)  evidence that uncertainty is not a problem in the industry. 
B)  inevitably growing smaller over time. 
C)  the same thing as the current supply of petroleum. 
D)  resources recoverable at current prices and technology. 
A)  evidence that uncertainty is not a problem in the industry. 
B)  inevitably growing smaller over time. 
C)  the same thing as the current supply of petroleum. 
D)  resources recoverable at current prices and technology.

Question 12

Figure 10-8  
-Figure 10-8 presents the demand, marginal revenue, and cost curves for a typical firm in a market. This figure illustrates

Accepted Answer

A)  short-run equilibrium in a competitive price-taker market. 
B)  long-run equilibrium in a competitive price-taker market. 
C)  short-run equilibrium in a competitive price-searcher market. 
D)  long-run equilibrium in a competitive price-searcher market. 
A)  short-run equilibrium in a competitive price-taker market. 
B)  long-run equilibrium in a competitive price-taker market. 
C)  short-run equilibrium in a competitive price-searcher market. 
D)  long-run equilibrium in a competitive price-searcher market.

Generally, the elasticity of demand for an energy source in the long run will be

If the construction of a bridge project creates benefits of $20 billion while the cost is $15 billion to construct, this indicates the project

Cecilia's Café is in a competitive price-searcher market. Cecilia's is currently producing where average total cost is at its minimum, and Cecilia's is earning a positive economic profit. In the long run we would expect Cecilia's output to

In the Central Utah Project, the water delivered from dams to users

Water supply problems are widespread, indicating that

Figure 10-1 -Given the cost and demand conditions in Figure 10-1, what price should this competitive price-searcher firm charge in order to maximize profits?

In both price-taker and competitive price-searcher markets, the long-run market price of a good will be equal to the

Assume a competitive price-searcher firm is earning an economic profit. The marginal revenue from selling an additional unit is $30 and the marginal cost of producing that additional unit is $23. The firm should

The strategy underlying price discrimination is to

Even though firms in competitive price-searcher markets do not produce at minimum ATC, competitive price-searcher markets may still be consistent with economic efficiency because

In the petroleum industry, proved reserves are

Figure 10-8 -Figure 10-8 presents the demand, marginal revenue, and cost curves for a typical firm in a market. This figure illustrates

The Economic Approach

Some Tools of the Economist

Demand, Supply, and the Market Process

Supply and Demand: Applications and Extensions

Difficult Cases for the Market, and the Role of Government

The Economics of Political Action

Consumer Choice and Elasticity

Costs and the Supply of Goods

Price Takers and the Competitive Process

Price-Searcher Markets With High Entry Barriers

The Supply of and Demand for Productive Resources

Earnings, Productivity, and the Job Market

Investment, the Capital Market, and the Wealth of Nations

Income Inequality and Poverty

Gaining From International Trade

Filters

Exam 10: Price-Searcher Markets With Low Entry Barriers

Generally, the elasticity of demand for an energy source in the long run will be

If the construction of a bridge project creates benefits of $20 billion while the cost is $15 billion to construct, this indicates the project

Cecilia's Café is in a competitive price-searcher market. Cecilia's is currently producing where average total cost is at its minimum, and Cecilia's is earning a positive economic profit. In the long run we would expect Cecilia's output to

In the Central Utah Project, the water delivered from dams to users

Water supply problems are widespread, indicating that

Figure 10-1 -Given the cost and demand conditions in Figure 10-1, what price should this competitive price-searcher firm charge in order to maximize profits?

In both price-taker and competitive price-searcher markets, the long-run market price of a good will be equal to the

Assume a competitive price-searcher firm is earning an economic profit. The marginal revenue from selling an additional unit is $30 and the marginal cost of producing that additional unit is $23. The firm should

The strategy underlying price discrimination is to

Even though firms in competitive price-searcher markets do not produce at minimum ATC, competitive price-searcher markets may still be consistent with economic efficiency because

In the petroleum industry, proved reserves are

Figure 10-8 -Figure 10-8 presents the demand, marginal revenue, and cost curves for a typical firm in a market. This figure illustrates

The Economic Approach

Some Tools of the Economist

Demand, Supply, and the Market Process

Supply and Demand: Applications and Extensions

Difficult Cases for the Market, and the Role of Government

The Economics of Political Action

Consumer Choice and Elasticity

Costs and the Supply of Goods

Price Takers and the Competitive Process

Price-Searcher Markets With High Entry Barriers

The Supply of and Demand for Productive Resources

Earnings, Productivity, and the Job Market

Investment, the Capital Market, and the Wealth of Nations

Income Inequality and Poverty

Gaining From International Trade

Filters