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| 1 | |
Suppose the market price of lobster suddenly increases substantially. We can expect that most lobstermen will: |
| | A) | spend fewer hours catching lobster and supply fewer lobsters. |
| | B) | spend more hours catching lobster and supply more lobsters. |
| | C) | not change the number of hours they spend catching lobster. |
| | D) | there is no telling what lobsterman will do. |
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| 2 | |
To derive the market supply curve from individual supply curves, one should: |
| | A) | take the maximum quantity of each supply curve as the market quantity supplied at each price. |
| | B) | sum the curves vertically, adding individual prices at each quantity supplied. |
| | C) | sum the curves horizontally, adding individual quantities supplied at each price. |
| | D) | take the supply curve that is the highest up as the market supply curve. |
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| 3 | |
Use the following diagram, representing two individual supply curves, to answer the following question. <![CDATA[<a onClick="window.open('/olcweb/cgi/pluginpop.cgi?it=jpg::::/sites/dl/free/007723183x/597569/image18.jpg','popWin', 'width=NaN,height=NaN,resizable,scrollbars');" href="#"><img valign="absmiddle" height="16" width="16" border="0" src="/olcweb/styles/shared/linkicons/image.gif"> (18.0K)</a>]]>
If Anne and Nick are the only suppliers in the market, the market quantity supplied at $3 and $8 respectively equal: |
| | A) | 25 and 50. |
| | B) | 15 and 10. |
| | C) | 6 and 24. |
| | D) | 15 and 30. |
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| 4 | |
All of the following are characteristics of perfectly competitive markets except: |
| | A) | there are a large number of firms. |
| | B) | productive resources are mobile. |
| | C) | all firms produce a differentiated product. |
| | D) | buyers and sellers are well informed. |
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| 5 | |
In a firm's production planning horizon, the "long-run" refers to |
| | A) | a period of one year or more. |
| | B) | the period during which all of the firm's inputs can be varied. |
| | C) | the period during which at least some of the firm's inputs are fixed. |
| | D) | the amount of time it takes a firm to double production. |
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| 6 | |
Assume Firm A has half the fixed costs of Firm B, but they have the same variable costs and total revenue for all quantities. Which of the following statements is true? |
| | A) | Firm A will produce more than Firm B. |
| | B) | Firm A will have double the profits of Firm B at every quantity. |
| | C) | Firm A will produce the same quantity as Firm B. |
| | D) | Firm A will produce less than Firm B. |
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| 7 | |
Suppose a barber shop that has fixed cost equal to $900/month and total costs equal to $4,000/month. This shop will continue to operate in the short run as long its total revenue is greater than: |
| | A) | $4,000/month. |
| | B) | $900/month. |
| | C) | $4,900/month. |
| | D) | $3,100/month. |
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| 8 | |
Assume a firm's average total cost equals $80 and average variable cost equals $70 at the current level of production. If the marginal cost of producing the next unit equals $75, then: |
| | A) | average total cost will fall and average variable cost will rise. |
| | B) | average total cost will fall and average variable cost will fall. |
| | C) | average total cost will rise and average variable cost will fall. |
| | D) | average total cost will rise and average variable cost will rise. |
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| 9 | |
Use the following diagram representing a perfectly competitive firm to answer the following question.
 <![CDATA[<a onClick="window.open('/olcweb/cgi/pluginpop.cgi?it=jpg::::/sites/dl/free/007723183x/597572/image5.jpg','popWin', 'width=NaN,height=NaN,resizable,scrollbars');" href="#"><img valign="absmiddle" height="16" width="16" border="0" src="/olcweb/styles/shared/linkicons/image.gif"> (24.0K)</a>]]>
Refer to the diagram above. The profit maximizing quantity for this firm equals: |
| | A) | 1000 |
| | B) | 700 |
| | C) | 550 |
| | D) | 400 |
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| 10 | |
The total amount of producer surplus in a market is given by: |
| | A) | the cumulative sum of the differences between the market price and producers' marginal costs. |
| | B) | the amount by which all consumers combined costs exceed the market price. |
| | C) | the area under the supply curve for all quantities sold. |
| | D) | both a. and c. |
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