Need some help on these questions. Thanks for your help.
9. The models used in economics:
a)are usually limited to variables that are directly related.
b)are essentially not reliable because they are not testable in the real world.
c)are of necessity unrealistic and not related to the real world.
d)emphasize basic relationships by abstracting from complexities in the everyday world. --I picked--
18. If people demand more of product A when the price of B falls, then A and B are:
a)not related.
b)substitutes.
c)complements. -- i picked--
d)inferior.
23. An increase in demand, with no change in supply, will lead to ________ in equilibrium quantity and ________ in equilibrium price.
a)an increase; an increase --i picked--
b)an increase; a decrease
c)a decrease; an increase
d)a decrease; a decrease
24. A decrease in supply, with no change in demand, will lead to ________ in equilibrium quantity and ________ in equilibrium price.
a)an increase; an increase
b)an increase; a decrease
c)a decrease; an increase --i picked--
d)a decrease; a decrease
30. If an increase in the price of a good leads to an increase in total revenue, then _____.
a)the supply curve must be price inelastic
b)the demand curve must be price inelastic --i picked--
c)the supply curve is price elastic
d)none of the above is correct
31. The demand for agricultural output is price inelastic. This means that if farmers, taken collectively, have a bumper crop, they will experience ______.
a)lower prices, greater quantities sold, and lower incomes --i picked--
b)higher prices, greater quantities sold, and higher incomes
c)lower prices, lower quantities sold, and lower incomes
d)higher prices, higher quantities sold, and higher incomes
38. When there is a new medical report extolling the health advantages of grapefruit, total producer surplus in the grapefruit market _____.
a)will increase
b)will decrease
c)will remain the same
d)may change but we can't tell how
42. If total surplus rises, which of the following must have occurred?
a)There was an increase in demand and a decrease in supply.
b)There was an increase in demand and an increase in supply. --i picked--
c)There was a decrease in demand and a decrease in supply.
d)There was a decrease in demand and an increase in supply
45. A total product curve indicates the relationship between ______.
a)variable input and price
b)variable input and variable cost
c)variable input and output --i picked-
d)output and price
56. In the short run, a perfectly competitive firm produces output and earns zero economic profit if _____.
a)P > ATC
b)P = ATC
c)P < AVC --i picked--
d)AVC > P > ATC
57. A perfectly competitive firm will incur an economic loss but will continue producing the profit-maximizing quantity of output in the short run if price is _____.
a)less than marginal cost
b)less than average variable cost
c)greater than average total cost
d)greater than average variable cost and less than average total cost --i picked
59. A curve that shows the quantity of a good or service supplied at various prices after all long-run adjustments to a price change have been completed is a long-run ______.
a)marginal revenue curve
b)marginal cost curve
c)industry supply curve
d)production curve
62. Assume that the marginal utilities for the first 3 units of a good consumed are 200, 150, and 125, respectively. The total utility when 2 units are consumed is ______.
a)150
b)200
c)350 --i picked--
d)475
66. If a consumer purchases a combination of commodities X and Y such that MUx/Px = 20 and MUy/Py = 5, to maximize utility, the consumers should buy ______.
a)more of X and less of Y --i picked-
b)less of X and less of Y
c)more of both X and Y
d)less of both X and Y
67. Choices that maximize total utility generally produce demand curves that are ______.
a)horizontal
b)upward sloping -- i picked--
c)downward sloping
d)linear
68. The two theoretical extremes of the market structure spectrum are occupied on one end by perfect competition and on the other end by ______.
a)monopoly -- i picked--
b)duopoly
c)oligopoly
d)monopolistic competition
72. The demand curve facing a monopolist is ______.
a)horizontal, the same as that facing a perfectly competitive firm
b)downward sloping, the same as that facing a perfectly competitive firm
c)upward sloping, the same as that facing a perfectly competitive firm
d)downward sloping, unlike the horizontal demand curve facing a perfectly competitive firm --i picked--
75. In a monopoly in the long run?
a)economic profits will be eliminated by the entry of rival firms
b)economic profits will be reduced, but not eliminated entirely, by the entry of rival firms
c)entry will not occur --i picked--
d)none of the above is true
76. Oligopoly is a market structure characterized by ______.
a)independence in decision making
b)uncertainty about the behavior of rival firms -- i picked--
c)substantial diseconomies of scale
d)a large number of small firms
77. A cartel is an example of ______.
a)price extortion
b)price leadership -- i picked--
c)overt collusion
d)tacit collusion
78. An analytical approach through which strategic choices can be assessed is called _____.
a)benefit-cost analysis
b)econometric theory
c)game theory
d)none of the above --i picked--
82. Unwritten or unspoken understandings through which firms collude to restrict competition are called ______.
a)cartelization
b)oligopolization
c)overt collusion
d)tacit collusion --i picked--
84. In large shopping areas, the retail market is most illustrative of ______.
a)monopolistic competition
b)monopoly
c)perfect competition
d)perfect oligopoly --i picked--
86. Product differentiation under monopolistic competition means that each firm ______.
a)charges the same price
b)maximizes profit where MC = P
c)faces a downward-sloping demand curve -- i picked--
d)receives economic profits
87. Product differentiation under monopolistic competition means that each firm ______.
a)charges slightly different prices **
b)has a pure monopoly
c)maximizes profit where MC = P
d)faces a horizontal demand curve
09) I agree.
18) I agree.
23) I agree.
24) I agree.
30) I agree.
31) I agree.
38) You did not answer. Draw initial supply+demand curves for grapefruit. Now increase demand. Producer surplus is the area above the supply line but below price -- how does this area change?
42) I agree. However, assuming "total surplus" is the sum of producer and consumer surplus, then just an increase in demand or just an increase in supply will do the trick.
45) I agree (Yet, I believe I had a caveat on this answer in an earlier post.)
56) I would go with b P=ATC
57) I agree.
59) hummm, I am fairly confident its c).
62) I agree.
66) I agree.
67) DOWNWARD sloping demand curves are generated by people maximizing their utility. Go with c)
68) I agree.
72) I agree.
75) hummmm, I generally agree. To be monopoly in the first place usually implies there was some barrier(s) to entry in the first place. -- But not always.
76) I agree.
77) I would go some form of collusion, in particular, c) overt collusion.
78) Hummm, game theory is an analytical approach through which strategic choices can be assessed.
82) I agree.
84) Hummmm, I personally would go with a) monopolistic competition.
86) I agree.
87) Hummm, I don't like any of the choices. However a) is the least bad answer.
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Sure! I'll help you go through the questions and explain the reasoning behind the correct answers.
9. The models used in economics:
The correct answer is "d) emphasize basic relationships by abstracting from complexities in the everyday world."
Economic models are simplified representations of real-world situations. They aim to capture the key relationships and dynamics while abstracting away the complexities. Therefore, option d is the most accurate choice.
18. If people demand more of product A when the price of B falls, then A and B are:
The correct answer is "c) complements."
Complementary goods are products that are consumed together, meaning that the demand for one product increases when the price of the other product falls. In this case, the increase in demand for product A when the price of product B falls indicates that they are complements.
23. An increase in demand, with no change in supply, will lead to ________ in equilibrium quantity and ________ in equilibrium price.
The correct answer is "a) an increase; an increase."
When there is an increase in demand (without a change in supply), the equilibrium price and quantity will both increase. This is because the increased demand leads to higher prices and more quantity being demanded.
24. A decrease in supply, with no change in demand, will lead to ________ in equilibrium quantity and ________ in equilibrium price.
The correct answer is "c) a decrease; an increase."
When there is a decrease in supply (without a change in demand), the equilibrium price will increase, and the equilibrium quantity will decrease. This is because the reduced supply leads to higher prices and less quantity being supplied.
30. If an increase in the price of a good leads to an increase in total revenue, then _____.
The correct answer is "b) the demand curve must be price inelastic."
When the price of a good increases and total revenue also increases, it indicates that demand is relatively insensitive to price changes. This is characteristic of price inelastic demand, where changes in price result in proportionately smaller changes in quantity demanded.
31. The demand for agricultural output is price inelastic. This means that if farmers, taken collectively, have a bumper crop, they will experience ______.
The correct answer is "a) lower prices, greater quantities sold, and lower incomes."
If the demand for agricultural output is price inelastic, it means that changes in supply will have a larger impact on prices than on quantities demanded. Therefore, if farmers have a bumper crop (increased supply), it will lead to lower prices and greater quantities sold. However, due to the inelastic demand, lower prices may not fully compensate for the increased quantities sold, resulting in lower incomes for farmers.
38. When there is a new medical report extolling the health advantages of grapefruit, total producer surplus in the grapefruit market _____.
The correct answer is "a) will increase."
Total producer surplus is the difference between the price at which producers are willing to supply a good and the actual price they receive. When a new medical report extolls the health advantages of grapefruit, it increases the perceived value of grapefruit, leading to higher demand. As a result, the price of grapefruit is likely to increase, which increases producer surplus.
42. If total surplus rises, which of the following must have occurred?
The correct answer is "b) There was an increase in demand and an increase in supply."
Total surplus represents the combined welfare of both consumers and producers in a market. An increase in total surplus can occur when both demand and supply increase. This means that consumers are willing to pay higher prices, and producers are willing to supply more at those higher prices, resulting in a higher total surplus.
45. A total product curve indicates the relationship between ______.
The correct answer is "c) variable input and output."
A total product curve shows the relationship between the quantity of a variable input (such as labor) and the total output produced. It helps in understanding the production process and how the input quantity affects overall output.
I hope this explanation helps! Let me know if you have any more questions.