All the questions below are mutliple choice questions with only one answer

Q1. Consumers who gain the highest marginal benefit from a good supplied by a perfectly price-discriminating producer will

A. pay the least

B. pay the most

C. pay the same as the good’s other consumers

D. be unable to purchase the good

E. consume all the available units of the good

Q2. Every choice requires a sacrificed or foregone best alternative. Economists call this the

A. fixed cost

B. accounting cost

C. normative cost

D. positive cost

E. opportunity cost

Q3. Which of the following would cause the demand curve for milk to shift to the right? Assume it is a normal good.

A. The number of people who cannot drink milk increases.

B. A major economic downturn lowers the average household income.

C. The price of one of its substitutes goes down.

D. A significant number of people move into the market.

E. News of a new technology in the milking process makes consumers expect prices to lower soon.

Q4. Private businesses and consumers know that a resource will be spoiled if the whole society does not limit everyone’s use of it. However, individuals are privately incentivized to increase their own use of it before it is spoiled and no longer available. This describes

A. a common pool good used efficiently

B. the primary reason some goods are publicly provided

C. the tragedy of the commons

D. a good that is made artificially scarce

E. one cause of a natural monopoly

Q5. A market in which individuals outside of the market transaction are bearing some of the costs of production represents a ________ and will result in ________ than the socially optimal quantity.

A. negative externality; less

B. negative externality; more

C. positive externality; more

D. positive externality; less

E. natural monopoly; less

Q6. In the context of oligopoly, which of the following describes a situation in which no firm can improve its outcome by independently changing its course of action?

A. Price collusion

B. Prisoner’s dilemma

C. Nash equilibrium

D. Dominant strategy

E. Game theory

Q7. Which of the following scenarios would produce the highest market concentration?

A. An industry with a very low minimum efficient scale

B. An industry with many firms operating with efficient scale

C. An industry with some firms operating with diseconomies of scale

D. An industry where no firm has achieved maximum efficient scale

E. An industry with a very high minimum efficient scale

Q8. In long-run equilibrium, the marginal social cost equals the marginal private cost, and the marginal social benefit equals the marginal private benefit. This describes which of the following markets?

A. Oligopoly with no externalities

B. Monopoly with perfect information

C. Perfect competition with externalities

D. Perfect competition with asymmetric information

E. Perfect competition with no externalities

Q9. Which of the following is a basic question that must be answered in resource allocation?

A. How much education should workers have?

B. What goods and services should be produced?

C. What is a fair price for a particular good or service?

D. How much should a good or service cost the consumer?

E. What sort of technology should be used to produce goods?

Q10. Which of the following policies would be most likely to have the effect of increasing income inequality?

A. Increasing the interest rate on bank loans

B. Switching from a regressive tax system to a progressive tax system

C. Lowering taxes on income from interest earned on investments

D. Increasing the nation’s per capita income

E. Taxing inheritance and using the revenue to provide college scholarships

Q11. A firm is earning negative economic profit of $5,000. If its total revenue is $7,000 and its implicit costs are $3,000, what must its explicit costs be?

A. $8,000

B. $9,000

C. $10,000

D. $12,000

E. Indeterminate

Q12. A firm operates in a perfectly competitive market. Its marginal cost is equal to its marginal revenue. It is incurring economic losses. Based on this information, which of the following is true?

A. An increase in output will decrease the firm’s economic losses.

B. A decrease in output will decrease the firm’s economic losses.

C. Any change in output will fail to result in positive economic profits.

D. An increase in price will decrease the firm’s economic losses.

E. The firm’s marginal revenue exceeds its output’s average total cost.

Q13. What is true of a firm’s production if it operates in a perfectly competitive market with short-run economic profits?

A. Marginal revenue = demand = marginal cost > average total cost

B. Marginal revenue = marginal cost = average fixed cost

C. Average total cost = price = average variable cost

D. Marginal cost < Marginal revenue

E. Price = marginal cost = average total cost

Q14. Tan Limited sells its product in a market that is characterized by a few sellers, selling differentiated products. Each seller influences the behavior of the other sellers. What type of market does Tan operate in?

A. Perfectly competitive market

B. Monopoly market

C. Oligopoly market

D. Monopsony market

E. Monopolistic competition

Q15. Company Alpha produces its product in a perfectly competitive market that is in long-run equilibrium. What will happen if it lowers its price while increasing its output?

A. It will increase revenue but increase costs by the same amount.

B. It will incur economic losses.

C. It will take business from its competitors, increasing its revenue and profit.

D. It will begin to develop market power, making its market imperfectly competitive.

E. Its producer surplus will increase but consumer surplus will decrease by a greater amount.

Q16. What will happen to the market supply curve of gadgets if a new gadget producer enters the market?

A. It will not change.

B. It will become more elastic.

C. There is insufficient data to determine.

D. It will shift right at every price with more output supplied.

E. It will shift left at every price with less output supplied.

Q17. If an increase in a product’s price increases the total revenue businesses collect, what must be true?

A. Exchange is in the elastic part of the demand curve for its product.

B. Exchange is in the inelastic part of the demand curve for its product.

C. The firm is charging too much.

D. The market is not perfectly competitive.

E. The product’s elasticity coefficient must be greater than one for this range.

Q18. What is the price elasticity of supply for a good that sees a 4% increase in quantity supplied for a 2% increase in price?

A. 0.5

B. 1

C. 2

D. 8

E. 16

Q19. Which of the following is correct about a monopsonistic market?

A. Resources are efficiently allocated.

B. There is one supplier and many buyers.

C. The monopsony has the same quantity transacted as in a perfectly competitive market.

D. The supply curve is horizontal and is equal to the average cost of labor.

E. Purchase of an additional item increases the price of the item and of the existing items being purchased.

Q20. At 120 units of output, a monopolistically competitive firm’s demand is $12, marginal revenue is $8, its marginal cost is $8, and its average total cost is $12. Based on this, which of the following is true?

A. The firm will produce more than 120 units of output.

B. The firm will produce fewer than 120 units of output.

C. The firm is earning normal profit at its profit-maximizing quantity.

D. The firm will earn $960 in profit.

E. The firm will earn $480 in profit.

Q21. In the short run, a price-taking firm decides to produce zero units of output. Which of the following must have been the case?

A. The market price was less than the firm’s average variable cost.

B. The firm was earning normal profits in the short run but projected economic losses in the long run.

C. The firm’s average total cost was higher than its average revenue.

D. The market price was between the firm’s average variable cost and average total cost.

E. The market price was equal to the firm’s average total cost.

Q22. If a country, individual, or business can produce one unit of output using the fewest resources relative to all other producers of the same output, then it must have ________ in that good.

A. an absolute advantage

B. superior human capital

C. a comparative advantage

D. achieved allocative efficiency

E. achieved productive efficiency

Q23. Economic theory teaches that a consumer’s quantity demanded may not change in response to a lower price when

A. consumers are not always rational

B. not all consumers seek to maximize their utility per dollar

C. their demand may be perfectly inelastic

D. they do not consider the lower price an incentive to consume

E. their demand may be perfectly elastic

Q24. Assume that all cell phone company workers are less productive because of a decline in human capital. How does this affect the demand for labor in the telecommunications industry?

A. The market labor demand curve shifts to the left.

B. The quantity demanded of labor shifts to the left.

C. The market labor demand curve shifts to the right.

D. The slope of the market labor demand curve increases.

E. The slope of the market labor demand curve decreases.

Q25. A production possibility curve would ________ if the availability of an input increased and would ________ if a lack of technology decreased production efficiency.

A. shift outward; shift inward

B. not move; shift outward

C. not move; not move

D. shift outward; shift outward

E. shift inward; shift inward

Q26. Besides raising revenue, what is the most likely goal of a government that enacts a per-unit tax?

A. To increase market competition

B. To correct for a positive externality

C. To correct for a negative externality

D. To encourage production of private goods

E. To increase profit and encourage production

Q27. If a good is heavily imported, what could that country’s government do to increase domestic production?

A. Introduce an export tariff

B. Remove an import quota

C. Raise income taxes

D. Introduce an import tariff

E. Increase the average global price for the good

Q28. A perfectly competitive market will not produce the socially optimal quantity in long-run equilibrium if

A. there are external costs or benefits along with unclear property rights

B. there is no government intervention

C. the government institutes a lump-sum tax or lump-sum subsidy

D. the individual firms have achieved minimum efficient scale

E. there is perfectly symmetric information

Q29. Which of the following describes a situation where the marginal social cost is greater than the marginal private cost at equilibrium?

A. Oligopoly

B. Monopoly

C. Positive externality

D. Allocative efficiency

E. Market inefficiency

Q30. Assume that the government imposes a price ceiling below the current equilibrium price for a product. Which of the following will happen?

A. The product’s demand will increase.

B. There will be no impact because the price ceiling is not binding.

C. There will be surplus of the product.

D. There will be a shortage of the product.

E. Suppliers will enter the market.

Q31. In the short run, a firm’s total cost is $150 if it does not produce any units of output. Its variable cost is $5 per unit. If the firm produces 5 units, variable costs are ________, while total costs are ________.

A. $5; $50

B. $5; $70

C. $10

D. $25; $175

E. $25; $775

Q32. If the average income increases by 3 percent, which of the following is true of the quantity demanded for necessity goods?

A. Quantity demanded remains constant.

B. Quantity demanded decreases by 1 percent.

C. Quantity demanded increases by 1 percent.

D. Quantity demanded increases by at least 3 percent.

E. Quantity demanded decreases by at least 3 percent.

Q33. If the wage in a perfectly competitive labor market is $16 and the firm can sell all the output it wants at $2 per unit, then the marginal product of the last worker employed must be

A. 8 units

B. 14 units

C. 18 units

D. 32 units

E. indeterminate

Q34. The defining trait of a natural monopoly is

A. an insurmountable barrier to market entry

B. a patent preventing competitors from entering the market

C. a low minimum efficient scale on the product’s long-run average total cost curve

D. persistent economies of scale across the full market demand

E. allocative and productive inefficiency at the profit-maximizing quantity

Q35. The law of diminishing marginal utility pushes consumers’ willing purchase-price down for every additional unit of consumption. The law of diminishing marginal returns pushes marginal costs up for firms and increases the price they must charge to make normal profits. These two phenomena are illustrated most clearly by which model?

A. Supply and demand

B. Circular flow

C. Production possibility curve

D. Total utility

E. Production function

Q36. Which of the following would be considered a factor of production?

A. Fresh popcorn

B. A family portrait

C. Raw steel

D. A fountain drink

E. A parent playing with her child

Q37. What would be the effect of a decrease in government taxes on a good’s supply curve, ceteris paribus?

A. No change

B. A shift to the left

C. A shift to the right

D. A decrease in price

E. A decrease in quantity supplied

Q38. Which of the following, ceteris paribus, would lead to an increase in quantity consumed and a decrease in price?

A. A lump-sum tax

B. A per-unit tax

C. A binding price floor

D. A decrease in income tax

E. A per-unit subsidy

The rest of the questions are attached below…..