1. Improvements in technology for producing all goods must result in
(A) an inward shift in the production possibilities curve
(B) an outward shift in the production possibilities curve
(C) a flatter production possibilities curve
(D) a steeper production possibilities curve
(E) greater unemployment of labor
2. The quantity of peanuts supplied increased from 40 tons per week to 60 tons per week when the price of peanuts increased from $4 per ton to
$5 per ton. The price elasticity of supply for peanuts over this price range is
(C) unit elastic
(D) perfectly elastic
(E) perfectly inelastic
3. Which of the following ...view middle of the document...
(D) The quantity demanded would increase.
(E) The supply of the good would increase.
7. Which of the following must be true if a firm is experiencing economies of scale?
(A) All costs are explicit.
(B) Long-run average total cost decreases as the firm’s output increases.
(C) Economic profits decrease as the firm’s output increases.
(D) Long-run average total cost remains constant as the firm’s output decreases.
(E) Proportionate increases in inputs result in less-than-proportionate increases in output.
8. Compared to a perfectly competitive industry with the same demand and cost curves, a monopoly’s price and output will be which of the following?
| Price | Output |
(A) | The same | Higher |
(B) | Higher | The same |
(C) | Higher | Lower |
(D) | Lower | The same |
(E) | Lower | Higher |
9. If the demand for a good is perfectly price inelastic in the short run and the supply curve is upward sloping, imposing a sales tax on the good will
(A) leave the price paid by consumers unchanged
(B) decrease the after-tax revenues received by suppliers
(C) increase the after-tax revenues received by suppliers
(D) not change the after-tax revenues received by suppliers
(E) not change the total expenditures by consumers on the good
10. The characteristic of oligopolistic firms that makes them different from all other types of firms is that oligopolistic firms
(A) are regulated by a state agency or federal agency
(B) consider each other’s decisions
(C) advertise their products
(D) produce differentiated products
(E) produce identical products
11. For the firm shown in the graph above, the short-run, profit-maximizing strategy would be to set output at
(A) Q1, price at P1, and suffer a loss
(B) Q1, price at P3, and earn an economic profit
(C) Q1, price at P3, and earn only a normal profit
(D) Q2, price at P2, and earn an economic profit
(E) Q2, price at P2, and earn only a normal profit
12. Which of the following will tend to make the demand for a product more elastic?
(A) New firms which produce similar products enter the industry.
(B) A change in taste and preferences makes the product more desirable.
(C) The product is necessary for use with a complement.
(D) Production of the product is protected by a patent.
(E) Production cost of the product decreases.
13. In a perfectly competitive labor market, an increase in an effective minimum wage will result in
(A) an increase in the supply of workers
(B) a decrease in the supply of workers
(C) a decrease in the demand for workers
(D) more workers being hired
(E) fewer workers being hired
14. Which of the following taxes contributes most to decreasing inequality in the distribution of income?
(A) Progressive income taxes
(B) Sales taxes
(C) Proportional income taxes
(D) Excise taxes
(E) Import tariffs on...