Question 1

When market trades in water occur, we can assume that

Accepted Answer

A)  the party releasing water is the loser. 
B)  the party buying water is paying too much. 
C)  the trade in something as important as water is immoral. 
D)  the signals and incentives flowing from the trades help many in that water market, not just the buyer and seller directly. 
A)  the party releasing water is the loser. 
B)  the party buying water is paying too much. 
C)  the trade in something as important as water is immoral. 
D)  the signals and incentives flowing from the trades help many in that water market, not just the buyer and seller directly.

Question 2

Use the figure to answer the following question(s).
Figure 10-9  
-What is the maximum economic profit this firm depicted in Figure 10-9 will be able to earn?

Accepted Answer

A)  zero profit 
B)  $200 profit 
C)  $400 profit 
D)  $600 profit 
A)  zero profit 
B)  $200 profit 
C)  $400 profit 
D)  $600 profit

Question 3

Tombstones are produced in a competitive price-searcher market. One producer, Rolling Stones, sells 20 tombstones a week at a price of $500 each. Its average total cost is $600. From this information, we can conclude

Accepted Answer

A)  new tombstone firms will want to enter. 
B)  this producer is losing $2,000 a week. 
C)  this producer is making an economic profit of $400. 
D)  this producer is setting MR = MC. 
E)  this producer should increase production. 
A)  new tombstone firms will want to enter. 
B)  this producer is losing $2,000 a week. 
C)  this producer is making an economic profit of $400. 
D)  this producer is setting MR = MC. 
E)  this producer should increase production.

Question 4

If a profit-maximizing restaurant is going to increase its revenues by charging senior citizens (persons age 65 and over) lower prices than other customers,

Accepted Answer

A)  the demand of senior citizens for the services of the restaurant must be inelastic. 
B)  senior citizens must have lower incomes than other potential customers. 
C)  the demand of senior citizens for the services of the restaurant must be elastic. 
D)  senior citizens must have higher incomes than other potential customers. 
E)  other customers must enjoy food more than senior citizens. 
A)  the demand of senior citizens for the services of the restaurant must be inelastic. 
B)  senior citizens must have lower incomes than other potential customers. 
C)  the demand of senior citizens for the services of the restaurant must be elastic. 
D)  senior citizens must have higher incomes than other potential customers. 
E)  other customers must enjoy food more than senior citizens.

Question 5

A private owner of a resource has a strong incentive to

Accepted Answer

A)  conserve the resource for the future, particularly if it is expected to increase in value. 
B)  use the resource today even if its value is expected to increase substantially in the future. 
C)  use the resource in ways that impose harm on others. 
D)  ignore the wishes of others when deciding how to use the resource. 
A)  conserve the resource for the future, particularly if it is expected to increase in value. 
B)  use the resource today even if its value is expected to increase substantially in the future. 
C)  use the resource in ways that impose harm on others. 
D)  ignore the wishes of others when deciding how to use the resource.

Question 6

Proved reserves of tin have declined since 2000, but the price of tin has fluctuated for the past six decades, with no obvious upward or downward trend. This indicates that

Accepted Answer

A)  the world will run out of tin in a few years because the proved reserves have fallen. 
B)  short-term rises in demand and/or declines in the supply of tin have occurred over time, but there is no reason to worry about running out of this resource in the foreseeable future. 
C)  the demand for tin has been rising and the world will run out of tin in the future unless there is a reversal of this trend. 
D)  the market price of tin will rise as miners discover more tin. 
A)  the world will run out of tin in a few years because the proved reserves have fallen. 
B)  short-term rises in demand and/or declines in the supply of tin have occurred over time, but there is no reason to worry about running out of this resource in the foreseeable future. 
C)  the demand for tin has been rising and the world will run out of tin in the future unless there is a reversal of this trend. 
D)  the market price of tin will rise as miners discover more tin.

Question 7

The overall trend in resource prices has been

Accepted Answer

A)  upward. 
B)  downward. 
C)  constant. 
D)  increasing exponentially. 
A)  upward. 
B)  downward. 
C)  constant. 
D)  increasing exponentially.

Question 8

What happens to a resource as it becomes scarcer?

Accepted Answer

A)  The price rises and this increases the future supply relative to demand. 
B)  The price rises and this increases the future demand relative to supply. 
C)  The price falls and this increases the future supply relative to demand. 
D)  The price falls and this increases the future demand relative to supply. 
A)  The price rises and this increases the future supply relative to demand. 
B)  The price rises and this increases the future demand relative to supply. 
C)  The price falls and this increases the future supply relative to demand. 
D)  The price falls and this increases the future demand relative to supply.

Question 9

Use the figure to answer the following question(s).
Figure 10-5  
-Given the cost and demand conditions depicted in Figure 10-5 for the competitive price-searcher firm, what is the price that the firm should charge if it wants to maximize its profit?

Accepted Answer

A)  20 
B)  30 
C)  40 
D)  50 
A)  20 
B)  30 
C)  40 
D)  50

Question 10

In both price-taker and competitive price-searcher markets, when an increase in market demand disrupts a long-run equilibrium, it will lead to

Accepted Answer

A)  higher short-run prices and long-run profits. 
B)  higher short-run prices, short-run profits, and the entry of additional firms into the market. 
C)  higher short-run prices and the exit of firms from the market due to economies of scale. 
D)  no change in prices in the short run, but new firms will enter in the long run. 
A)  higher short-run prices and long-run profits. 
B)  higher short-run prices, short-run profits, and the entry of additional firms into the market. 
C)  higher short-run prices and the exit of firms from the market due to economies of scale. 
D)  no change in prices in the short run, but new firms will enter in the long run.

Question 11

If a contestable market has only one seller, which of the following will keep the seller from producing inefficiently and charging a price that generates long-run economic profits?

Accepted Answer

A)  government regulations 
B)  low costs of entry into and exit from the market 
C)  substantial economies of scale that provide a competitive advantage to large firms in such markets 
D)  the threat of a government takeover of the firms in these markets 
A)  government regulations 
B)  low costs of entry into and exit from the market 
C)  substantial economies of scale that provide a competitive advantage to large firms in such markets 
D)  the threat of a government takeover of the firms in these markets

Question 12

A major fruit juice manufacturer failed in its attempt to engage in price discrimination between students and all other consumers. What is the most likely explanation for this failure?

Accepted Answer

A)  There was nothing to prevent the students from reselling the fruit juice to other consumers. 
B)  The two groups of consumers have different demand elasticities for fruit juice. 
C)  The cost of producing the product is relatively high. 
D)  Market demand for fruit juice is inelastic. 
A)  There was nothing to prevent the students from reselling the fruit juice to other consumers. 
B)  The two groups of consumers have different demand elasticities for fruit juice. 
C)  The cost of producing the product is relatively high. 
D)  Market demand for fruit juice is inelastic.

Question 13

According to water resource economists

Accepted Answer

A)  water is seldom in short supply anywhere in the world. 
B)  we are not running out of water, but specific places do run short of water, given the status of their water supply arrangements and ease (or lack of) transferability of water among users. 
C)  the world is running out of water, just as it is running out of accessible oil. 
D)  there is no workable way to make water markets function properly, because in the end, we can't make more water the way we can make more bread or automobiles. 
A)  water is seldom in short supply anywhere in the world. 
B)  we are not running out of water, but specific places do run short of water, given the status of their water supply arrangements and ease (or lack of) transferability of water among users. 
C)  the world is running out of water, just as it is running out of accessible oil. 
D)  there is no workable way to make water markets function properly, because in the end, we can't make more water the way we can make more bread or automobiles.

Question 14

Price discrimination refers to a system of pricing

Accepted Answer

A)  based on buyer income rather than buyer demand conditions, so the poor pay more than the rich. 
B)  that is always more profitable than simple "single-price" pricing. 
C)  that forces customers who require more service to pay higher prices. 
D)  where consumer groups with a more elastic demand for the product are charged lower prices. 
A)  based on buyer income rather than buyer demand conditions, so the poor pay more than the rich. 
B)  that is always more profitable than simple "single-price" pricing. 
C)  that forces customers who require more service to pay higher prices. 
D)  where consumer groups with a more elastic demand for the product are charged lower prices.

Question 15

What role do losses play in a competitive price-searcher market?

Accepted Answer

A)  They penalize a firm for producing a differentiated product. 
B)  They signal that more resources are needed in a particular market. 
C)  They show firms that barriers to entry are high. 
D)  They send a message that more value would be created if the resources were used to produce other goods. 
A)  They penalize a firm for producing a differentiated product. 
B)  They signal that more resources are needed in a particular market. 
C)  They show firms that barriers to entry are high. 
D)  They send a message that more value would be created if the resources were used to produce other goods.

Question 16

Which of the following statements about entrepreneurs is most accurate?

Accepted Answer

A)  They will prosper if they undertake projects that increase the value of the resources. 
B)  They are people who extend loans to other business decision makers. 
C)  They are managers who generally work for a salary because they are unwilling to take risks. 
D)  They will prosper if they charge prices higher than their rivals. 
A)  They will prosper if they undertake projects that increase the value of the resources. 
B)  They are people who extend loans to other business decision makers. 
C)  They are managers who generally work for a salary because they are unwilling to take risks. 
D)  They will prosper if they charge prices higher than their rivals.

Question 17

In long-run equilibrium, output is expanded to the minimum long-run average total cost by

Accepted Answer

A)  price takers but not by competitive price searchers. 
B)  competitive price searchers but not by price takers. 
C)  both competitive price searchers and price takers. 
D)  neither price takers nor competitive price searchers. 
A)  price takers but not by competitive price searchers. 
B)  competitive price searchers but not by price takers. 
C)  both competitive price searchers and price takers. 
D)  neither price takers nor competitive price searchers.

Question 18

A firm that uses price discrimination to enhance its net revenues will

Accepted Answer

A)  expand output as long as price exceeds average total costs. 
B)  expand output as long as average total costs are declining. 
C)  charge a higher price to consumers with a more elastic demand for the firm's product. 
D)  charge a lower price to consumers with a more elastic demand for the firm's product. 
A)  expand output as long as price exceeds average total costs. 
B)  expand output as long as average total costs are declining. 
C)  charge a higher price to consumers with a more elastic demand for the firm's product. 
D)  charge a lower price to consumers with a more elastic demand for the firm's product.

Question 19

Economic analysis suggest that in a competitive market economy, when an entrepreneur has made a large profit,

Accepted Answer

A)  consumer benefits must have been reduced by at least the amount of the profit. 
B)  other producers have lost profits of the same size. 
C)  economic progress for society as a whole has normally been enhanced. 
D)  luck or chance, rather than productive activity, has nearly always been the largest factor. 
A)  consumer benefits must have been reduced by at least the amount of the profit. 
B)  other producers have lost profits of the same size. 
C)  economic progress for society as a whole has normally been enhanced. 
D)  luck or chance, rather than productive activity, has nearly always been the largest factor.

Question 20

Losses are important to a competitive price-searcher market (industry) because they send a message to the market participants that

Accepted Answer

A)  more resources should be devoted to a particular industry. 
B)  resources can rise in value if diverted away from that particular industry. 
C)  resources are allocated exactly as they should be. 
D)  the firms should charge lower prices. 
A)  more resources should be devoted to a particular industry. 
B)  resources can rise in value if diverted away from that particular industry. 
C)  resources are allocated exactly as they should be. 
D)  the firms should charge lower prices.

When market trades in water occur, we can assume that

Use the figure to answer the following question(s). Figure 10-9 -What is the maximum economic profit this firm depicted in Figure 10-9 will be able to earn?

Tombstones are produced in a competitive price-searcher market. One producer, Rolling Stones, sells 20 tombstones a week at a price of $500 each. Its average total cost is $600. From this information, we can conclude

If a profit-maximizing restaurant is going to increase its revenues by charging senior citizens (persons age 65 and over) lower prices than other customers,

A private owner of a resource has a strong incentive to

Proved reserves of tin have declined since 2000, but the price of tin has fluctuated for the past six decades, with no obvious upward or downward trend. This indicates that

The overall trend in resource prices has been

What happens to a resource as it becomes scarcer?

Use the figure to answer the following question(s). Figure 10-5 -Given the cost and demand conditions depicted in Figure 10-5 for the competitive price-searcher firm, what is the price that the firm should charge if it wants to maximize its profit?

In both price-taker and competitive price-searcher markets, when an increase in market demand disrupts a long-run equilibrium, it will lead to

If a contestable market has only one seller, which of the following will keep the seller from producing inefficiently and charging a price that generates long-run economic profits?

A major fruit juice manufacturer failed in its attempt to engage in price discrimination between students and all other consumers. What is the most likely explanation for this failure?

According to water resource economists

Price discrimination refers to a system of pricing

What role do losses play in a competitive price-searcher market?

Which of the following statements about entrepreneurs is most accurate?

In long-run equilibrium, output is expanded to the minimum long-run average total cost by

A firm that uses price discrimination to enhance its net revenues will

Economic analysis suggest that in a competitive market economy, when an entrepreneur has made a large profit,

Losses are important to a competitive price-searcher market (industry) because they send a message to the market participants that

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

When market trades in water occur, we can assume that

Use the figure to answer the following question(s). Figure 10-9 -What is the maximum economic profit this firm depicted in Figure 10-9 will be able to earn?

Tombstones are produced in a competitive price-searcher market. One producer, Rolling Stones, sells 20 tombstones a week at a price of $500 each. Its average total cost is $600. From this information, we can conclude

If a profit-maximizing restaurant is going to increase its revenues by charging senior citizens (persons age 65 and over) lower prices than other customers,

A private owner of a resource has a strong incentive to

Proved reserves of tin have declined since 2000, but the price of tin has fluctuated for the past six decades, with no obvious upward or downward trend. This indicates that

The overall trend in resource prices has been

What happens to a resource as it becomes scarcer?

Use the figure to answer the following question(s). Figure 10-5 -Given the cost and demand conditions depicted in Figure 10-5 for the competitive price-searcher firm, what is the price that the firm should charge if it wants to maximize its profit?

In both price-taker and competitive price-searcher markets, when an increase in market demand disrupts a long-run equilibrium, it will lead to

If a contestable market has only one seller, which of the following will keep the seller from producing inefficiently and charging a price that generates long-run economic profits?

A major fruit juice manufacturer failed in its attempt to engage in price discrimination between students and all other consumers. What is the most likely explanation for this failure?

According to water resource economists

Price discrimination refers to a system of pricing

What role do losses play in a competitive price-searcher market?

Which of the following statements about entrepreneurs is most accurate?

In long-run equilibrium, output is expanded to the minimum long-run average total cost by

A firm that uses price discrimination to enhance its net revenues will

Economic analysis suggest that in a competitive market economy, when an entrepreneur has made a large profit,

Losses are important to a competitive price-searcher market (industry) because they send a message to the market participants that

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