哈伯德英文版微观经济学练习c14

Microeconomics - Testbank 1 (Hubbard/O'Brien) Chapter 14 Monopoly and Antitrust Policy1) A monopoly is a seller of a product:A) w ith many substitutes.B) without a close substitute.C) w ith a perfectly inelastic demand.D) w ithout a a well-defined demand curve.Answer: BDiff: 1 Page Ref: 4442) A monopolist is a seller who:A) h as to consider the actions of other sellers.B) i s small relative to the market.C) c an ignore the threat of competition from other firms.D) a ll of the above.Answer: CDiff: 2 Page Ref: 4453) T he demand curve for the monopolist's product is:A) t he market demand for the product.B) m ore elastic than the market demand for the product.C) m ore inelastic than the market demand for the product.D) u ndefined.Answer: ADiff: 2 Page Ref: 4514) T o sell more output, the monopolist:A) o nly has to produce more.B) h as to lower the product's price.C) m ust lower production costs.D) h as to advertise the product extensively.Answer: BDiff: 2 Page Ref: 4525) T o keep a monopoly a firm must have:A) a perfectly inelastic demand.B) a n insurmountable barrier to entry.C) m arginal revenue equal to demand.D) a ll of the above.Answer: BDiff: 2 Page Ref: 4456) A local electricity-generating company has a monopoly that is protected by a barrier to entrythat takes the form of:A) c ontrol of a key raw material.B) n etwork externalities.C) e conomies of scale.D) n one of the above.Answer: CDiff: 2 Page Ref: 4507) A patent or copyright is a barrier to entry based on:A) o wnership of a key necessary raw material.B) l arge economies of scale as output increases.C) g overnment action to protect one producer.D) w idespread network externalities in supply of the good or service.Answer: CDiff: 2 Page Ref: 4458) A public franchise is:A) o wnership of a key necessary raw material.B) g overnment ownership and operation of a legal monopoly.C) g overnment designation that a private firm is the only legal producer of a good orservice.D) a n unregulated monopoly necessary for the public good.Answer: CDiff: 2 Page Ref: 4459) A public enterprise is:A) a ny private business that is not-for-profit.B) g overnment ownership and operation of a legal monopoly.C) g overnment designation that a private firm is the only legal producer of a good orservice.D) a n unregulated monopoly necessary for the public good.Answer: BDiff: 2 Page Ref: 44510) A United States government patent lasts:A) f orever.B) 50 years.C) 20 years.D) 7 years.Answer: CDiff: 2 Page Ref: 44611) G overnments grant patents to encourage:A) r esearch and development on new products.B) c ompetition.C) l ow prices.D) a ll of the above.Answer: ADiff: 2 Page Ref: 44612) G overnments grant patents to:A) c ompensate firms for research and development costs.B) e ncourage competition.C) e ncourage low prices.D) a ll of the above.Answer: ADiff: 2 Page Ref: 44613) P atent protection is of vital importance for:A) f urniture producers.B) s oftware firms.C) p harmaceutical firms.D) a uto makers.Answer: CDiff: 2 Page Ref: 44614) O wnership of a key resource is important in:A) a luminum production.B) n ickel production.C) p rofession sports.D) a ll of these.Answer: DDiff: 1 Page Ref: 44715) A network externality is:A) h aving a network of suppliers and buyers for a good or service.B) h aving lobbyists to advocate a public franchise.C) a good or service whose usefulness increases with the number of people using it.D) a good or service that requires connection to a network for it to be useful.Answer: CDiff: 2 Page Ref: 44816) A virtuous cycle is:A) u sing lobbyists to petition Congress to grant a public franchise.B) u sing monopoly profits to create new products for additional monopoly profits.C) a ttracting enough buyers initially to increase a product's usefulness to attract morebuyers.D) a ttracting enough sales to gain economies of scale.Answer: CDiff: 2 Page Ref: 44917) F or a natural monopoly to exist:A) a firm must continually buy up rivals.B) a firm's long run average cost curve must exhibit diseconomies of scale.C) a firm's long run average cost curve must exhibit economies of scale.D) a firm must have a patent.Answer: CDiff: 2 Page Ref: 44918) A natural monopoly is characterized by:A) l arge marginal costs relative to fixed costs.B) s mall fixed costs relative to variable costs.C) l arge fixed costs relative to variable costs.D) f ixed costs that are equal to variable costs.Answer: CDiff: 2 Page Ref: 45019) A monopolist's profit maximizing price and output is:A) w here average total cost are smallest.B) w here total costs are the smallest relative to price.C) w here marginal revenue equals marginal cost and charging the price on marketdemand for that output.D) w here price is as high as possible.Answer: CDiff: 3 Page Ref: 45320) A monopoly:A) a lways earns a profit.B) i s a price taker.C) m ust lower price to sell more of its product.D) a ll of the above.Answer: CDiff: 2 Page Ref: 45221) I f a monopolist's price is $50 a unit and its marginal cost is $25, then:A) t o maximize profit the firm should increase output.B) t o maximize profit the firm should decrease output.C) t o maximize profit the firm should continue to produce the output it is producing.D) n ot enough information is given to say say what the firm should do to maximize profit.Answer: DDiff: 3 Page Ref: 45322) I f a monopolist's marginal revenue is $35 a unit and its marginal cost is $25, then:A) t o maximize profit the firm should increase output.B) t o maximize profit the firm should decrease output.C) t o maximize profit the firm should continue to produce the output it is producing.D) n ot enough information is given to say say what the firm should do to maximize profit.Answer: ADiff: 2 Page Ref: 45323) I f a monopolist's marginal revenue is $15 a unit and its marginal cost is $25, then:A) t o maximize profit the firm should increase output.B) t o maximize profit the firm should decrease output.C) t o maximize profit the firm should continue to produce the output it is producing.D) n ot enough information is given to say say what the firm should do to maximize profit.Answer: BDiff: 2 Page Ref: 45324) I f a monopolist's marginal revenue is $25 a unit and its marginal cost is $25, then:A) t o maximize profit the firm should increase output.B) t o maximize profit the firm should decrease output.C) t o maximize profit the firm should continue to produce the output it is producing.D) n ot enough information is given to say say what the firm should do to maximize profit.Answer: CDiff: 2 Page Ref: 45325) I f a monopolist's price is $50 at the output where marginal revenue equals marginal cost andaverage total cost is $43, then:A) t he firms average profit is $50.B) t he firms average profit is $43.C) t he firms average profit is $7.D) N ot enough information is given to answer the question.Answer: CDiff: 2 Page Ref: 45426) I f a monopolist's price is $50 at 63 units of output and marginal revenue equals marginal costand average total cost equals $43, then the firm's total profit is:A) $3,150.B) $2,709.C) $441.D) $7.Answer: CDiff: 3 Page Ref: 454Refer to Figure 14.1 for the questions above.Figure 14.127) T o profit maximize the firm in figure 14.1 will produce:A) Q1.B) Q2.C) Q3.D) Q4.Answer: BDiff: 3 Page Ref: 45328) T he profit maximize price for the firm in figure 14.1 is:A) P1.B) P2.C) P3.D) P4.Answer: CDiff: 3 Page Ref: 45329) I f average total costs are ATC1, the firm in figure 14.1 will:A) s uffer a loss.B) b reak even.C) m ake a profit.D) f ace competition.Answer: CDiff: 3 Page Ref: 45330) I f average total costs are ATC2, the firm in figure 14.1 will:A) s uffer a loss.B) b reak even.C) m ake a profit.D) f ace competition.Answer: BDiff: 3 Page Ref: 45331) I f average total costs are ATC3, the firm in figure 14.1 will:A) s uffer a loss.B) b reak even.C) m ake a profit.D) f ace competition.Answer: ADiff: 3 Page Ref: 45332) I n figure 14.1, the difference between the monopoly output and the competitive output is:A) Q2-Q1.B) Q3-Q1.C) Q3-Q2.D) Q4-Q2.Answer: CDiff: 3 Page Ref: 45633) E conomic efficiency in a market occurs when:A) c onsumer surplus is maximized.B) p roducer surplus is maximized.C) c onsumer surplus plus producer surplus is maximized.D) p rice is as low as possible.Answer: CDiff: 2 Page Ref: 45734) A profit maximizing monopolist's price is:A) e qual to what the price would be if the mononoplist's industry were competitive.B) less than what the price would be if the mononoplist's industry were competitive.C) g reater than what the price would be if the mononoplist's industry were competitive.D) n ot consistently related to price if the market were competitive.Answer: CDiff: 2 Page Ref: 45635) O utput under a monopoly is:A) e qual to what output would be if the industry were competitive.B) l ess than what output would be if the industry were competitive.C) g reater than what output would be if the industry were competitive.D) h as no consistent relationship to what output would be if the industry were competitive.Answer: BDiff: 2 Page Ref: 45636) C ompared to perfect competition, under monopoly:A) c onsumer surplus is unchanged because price and output is the same.B) c onsumer surplus is decreased because price is higher and output is lower.C) c onsumer surplus is increased because price is higher and output is the same.D) c onsumer surplus is eliminated.Answer: BDiff: 2 Page Ref: 45737) C ompared to perfect competition, a monopoly:A) i ncreases consumer surplus.B) c auses a deadweight welfare loss.C) i ncreases total surplus.D) a ll of the above.Answer: BDiff: 2 Page Ref: 45738) C ompared to perfect competition, with monopoly:A) c onsumer surplus is reduced.B) o utput is reduced.C) t otal surplus is reduced.D) a ll of the above.Answer: DDiff: 2 Page Ref: 45739) R elative to a perfectly competitive market, monopoly result in:A) a gain in producer surplus is equal to the gain in consumer surplus.B) a gain in producer surplus is equal to the loss in consumer surplus.C) a gain in producer surplus is less than the loss in consumer surplus.D) N one of these occur.Answer: CDiff: 2 Page Ref: 45740) M arket power is:A) c onsumers ability to determine what is produced or consumer sovereignty.B) a firm being able to advertise its product and succeed in selling more output.C) t he ability of a firm to sell at a lower price than rival sellers.D) t he ability of a firm to charge a price higher than marginal cost.Answer: DDiff: 2 Page Ref: 45741) T he type of firms that do not have market power are:A) p erfectly competitive.B) m onopolistically competitive.C) o ligopoly.D) m onopolies.Answer: ADiff: 1 Page Ref: 45742) M arket power in the U.S. causes:A) m any people to be poor.B) a small loss of economic efficiency.C) g reater pollution than there otherwise would be.D) m any firms to be driven out of business.Answer: BDiff: 2 Page Ref: 45843) T he size of a deadweight loss in a market is reduced by:A) g overnment legislating a ceiling price.B) g overnment legislating a price floor.C) m arket price being close to marginal cost.D) a ll of the above.Answer: CDiff: 2 Page Ref: 45844) A market economy benefits from market power:A) i f the majority of the population are entrepreneurs.B) i f firms with market power do research and development with the profits earned.C) i f market power gets so bad the government creates public enterprises.D) u nder no circumstances.Answer: BDiff: 2 Page Ref: 45845) I f a firm has market power and has earned monopoly profits for some time, JosephSchumpeter would predict:A) t he government will eventually have to control these firms.B) t he public will get fed up and refuse to buy those products.C) n ew products will drive older products and firms with market power out of the market.D) a ll of the above.Answer: CDiff: 2 Page Ref: 45846) T he first federal law passed to control monopolies was the:A) C ellar-Kefauver Act.B) C layton Act.C) F ederal Trade Commission Act.D) S herman Act.Answer: DDiff: 1 Page Ref: 45947) T he"trust" in antitrust refers to:A) c itizens who do not trust the government to deal with market power.B) a board of trustees that had collusive control over different companies.C) t he type of governmental control in antitrust laws.D) t he trust collusive firms have that each member will live by the agreement.Answer: BDiff: 2 Page Ref: 45948) T he Sherman Act prohibited:A) m arginal cost pricing.B) s etting price above marginal cost.C) c ollusive price agreements among rival sellers.D) s elling below average total cost.Answer: CDiff: 1 Page Ref: 45949) S hortly after the passage of the Sherman Act and a narrow Supreme Court interpretation ofthe Act:A) s etting price equal to marginal cost became the only way to avoid prosecution.B) a ll industries became perfectly competitive.C) a wave of mergers took place.D) t echnological change slowed.Answer: CDiff: 2 Page Ref: 45950) T he Clayton Act prohibited:A) a ll vertical mergers.B) a ll horizontal mergers.C) a ny merger if its effect was to substantially lessen competition or create a monopoly.D) a ll conglomerate mergers.Answer: CDiff: 1 Page Ref: 45951) T he Federal Trade Commission Act:A) g ave the FTC full power to regulate mergers.B) c losed the loopholes in the Sherman and Clayton Acts.C) d ivided enforcement of antitrust laws between the FTC and the Department of Justice.D) p rohibited charging buyers different prices if the result would reduce competition.Answer: CDiff: 2 Page Ref: 45952) I f Ford Motor Company and General Motors were to merge, it would be an example of a:A) v ertical merger.B) h orizontal merger.C) c onglomerate merger.D) n one of the above.Answer: BDiff: 1 Page Ref: 46053) I f U.S. Steel and General Motors merged, this would be an example of a:A) v ertical merger.B) h orizontal merger.C) c onglomerate merger.D) n one of the above.Answer: ADiff: 1 Page Ref: 46054) W hen a proposed merger between two companies is being reviewed by the government, therelevant market is defined by:A) w hether or not there are close substitutes for the products of the two firms.B) h ow elastic the demand is for each firm's product.C) c ounting the number of firms that are producing the same product.D) h ow much advertising is done in the industry.Answer: ADiff: 2 Page Ref: 46255) A Herfindahl-Hirschman Index is calculated by:A) s umming the amount of sales by the four largest firms and dividing by total industrysales.B) d ividing the number of firms wanting to merge by the total number in the industry.C) s umming the squares of the market shares of each firm in the industry.D) s umming the advertising expenditure of the firms that want to merge by total industryadvertising expenditures.Answer: CDiff: 2 Page Ref: 46256) N atural monopolies in the United States are generally regulated by:A) F ederal Trade Commission.B) D epartment of Justice.C) l ocal or state regulatory commissions.D) t he Department of Commerce.Answer: CDiff: 1 Page Ref: 46457) I f a natural monopoly regulatory commission set a price where marginal cost is equal todemand:A) t he firm would earn monopoly profits.B) E conomic efficiency would not be achieved.C) t he firm would incur a loss.D) t he firm would break even.Answer: CDiff: 2 Page Ref: 464Refer to Figure 14.2 for the questions below.Figure 14.258) T he firm in figure 14.2 wants to produce:A) Q1.B) Q2.C) Q3.D) Q4.Answer: BDiff: 3 Page Ref: 46459) W here the firm in figure 14.2 wants to produce, the market clearing price is:A) P1.B) P2.C) P3.D) P4.Answer: CDiff: 3 Page Ref: 46460) T he most the firm in figure 14.2 can be regulated to produce is:A) Q1.B) Q2.C) Q3.D) Q4.Answer: CDiff: 3 Page Ref: 46461) I f the firm in figure 14.2 produces what it wants, it will:A) m ake a profit.B) s uffer a loss.C) b reak even.D) f ace entry.Answer: ADiff: 3 Page Ref: 46462) I f the firm in figure 14.2 is regulated to produce as much as possible, it will:A) m ake a profit.B) s uffer a loss.C) b reak even.D) f ace entry.Answer: CDiff: 3 Page Ref: 46463) A possible advantage of a horizontal merger for the economy is:A) t he merging firms could avoid losses.B) e conomies of scale and possibly lower prices.C) m ore competition in the industry.D) m ore corporate income tax revenue for the government.Answer: BDiff: 2 Page Ref: 46164) E conomic efficiency requires that a natural monopoly's price be:A) e qual to average total cost where it intersects demand.B) e qual to marginal cost where it intersects demand.C) e qual to average variable cost where it intersects demand.D) e qual to the price the natural monopolist wants.Answer: BDiff: 2 Page Ref: 46465) T he price strategy to regulate a natural monopoly to produce as much as possible is to setprice:A) e qual to average total cost where it intersects demand.B) e qual to marginal cost where it intersects demand.C) e qual to average variable cost where it intersects demand.D) e qual to the price the natural monopolist wants.Answer: ADiff: 2 Page Ref: 46466) W hat is a monopoly?Answer: A firm that is the only seller of a good or service with no close substitutes.Diff: 1 Page Ref: 44467) W hat is an example of a government barrier to entry?Answer: A patent or copyright.Diff: 1 Page Ref: 44568) W hat is a network externality barrier to entry?Answer: Where a good's demand depends on how many other consumers are using it.Diff: 2 Page Ref: 44869) W hat gives rise to a natural monopoly?Answer: Continuing economies of scale as a firm gets larger.Diff: 2 Page Ref: 44970) W hat is a public franchise?Answer: When a government allows only one legal provider of a good or service.Diff: 2 Page Ref: 44771) W hat is a public enterprise?Answer: When a government provides certain services directly to consumers.Diff: 2 Page Ref: 44772) H ow does an unregulated monopoly choose the profit maximizing output?Answer: By producing where marginal revenue equals marginal cost.Diff: 2 Page Ref: 45373) H ow does marginal revenue and average revenue for a monopolist compare?Answer: Marginal revenue is less than price which is equal to average revenue.Diff: 2 Page Ref: 45274) I s a monopolist a price taker like a perfectly competitive firm and if not, what is it?Answer: No, a monopoly is a price maker not a price taker.Diff: 2 Page Ref: 45675) W hat does a monopolist have to do to sell more units of its product?Answer: lower the priceDiff: 5 Page Ref: 45376) W hat happens to monopoly revenue when a monopolist sells more units of its product?Answer: It is good that the monopolist sells more units, but it is bad that it receives less revenue from each unit than it would have received at the higher price.Diff: 2 Page Ref: 45277) I f a monopolist's marginal revenue is $15 and its marginal cost is $10, then what should thefirm do?Answer: Produce and sell more of its product.Diff: 2 Page Ref: 45378) H ow does an unregulated profit maximizing monopoly affect economic efficiency comparedto a perfectly competitive industry?Answer: Economic efficiency is reduced because there is deadweight loss.Diff: 2 Page Ref: 45679) H ow do the price and quantity of a monopoly compare to that of a perfectly competitiveindustry?Answer: Monopolists sells a smaller quantity and the price is higher than with competition..Diff: 2 Page Ref: 45680) W hat are the two ways the government controls monopolies?Answer: Antitrust laws and local or state regulation of natural monopolies.Diff: 2 Page Ref: 45881) W hen did antitrust control begin?Answer: When the Sherman Act was passed in 1890.Diff: 1 Page Ref: 45982) W hat is a horizontal merger?Answer: A merger between firms producing in the same industry.Diff: 2 Page Ref: 46083) W hat is a vertical merger?Answer: A merger between firms at different stages of production.Diff: 2 Page Ref: 46084) I s competition always good for the economy and explain why or why not?Answer: In a natural monopoly industry, competition would result in higher costs and higher prices meaning competition may not always be good for the economy.Diff: 2 Page Ref: 46485) W hat are the rules for profit maximization for a monopoly?Answer: Produce the output where marginal revenue equals marginal cost or the last whole unit of output where marginal revenue is still greater than marginal cost and look atdemand to determine what price to charge.Diff: 2 Page Ref: 455。

Chapter 01Thinking Like an Economist Multiple Choice Questions1. Economics is best defined as the study of:A. prices and quantities.B. inflation and interest rates.C. how people make choices under the conditions of scarcity and the results of those choices.D. wages and incomes.2. Economic questions always deal with:A. financial matters.B. political matters.C. insufficient resources.D. choice in the face of limited resources.3. The range of topics or issues that fit within the definition of economics is:A. limited to market activities, e.g., buying soap.B. limited to individuals and firms.C. extremely wide, requiring only the ideas of choice and scarcity.D. very limited.4. The central concern of economics is:A. poverty.B. scarcity.C. wealth accumulation.D. overconsumption.5. The scarcity principle indicates that:A. no matter how much one has, it is never enough.B. compared to 100 years ago, individuals have less time today.C. with limited resources, having more of "this" means having less of "that."D. because tradeoffs must be made, resources are therefore scarce.6. The logical implication of the scarcity principle is that:A. one will never be satisfied with what one has.B. as wealth increases, making choices becomes less necessary.C. as wealth decreases, making choices becomes less necessary.D. choices must be made.7. If all the world's resources were to magically increase a hundredfold, then:A. the scarcity principle would still govern behavior.B. economics would no longer be relevant.C. the scarcity principle would disappear.D. tradeoffs would become unnecessary.8. The principle of scarcity applies to:A. the poor exclusively.B. all consumers.C. all firms.D. everyone—consumers, firms, governments, and nations.9. At the very least, Joe Average and Bill Gates are both identically limited by:A. their wealth.B. the 24 hours that comprise a day.C. their knowledge.D. their influence.10. Forest is a mountain man living in complete isolation in Montana. He is completely self-sufficient through hunting, fishing, and farming. He has not been in the city to buy anything in five years. One can infer:A. the scarcity principle does not apply to Forest.B. Forest is not required to make choices.C. the scarcity principle still applies because more hunting means less fishing and farming.D. Forest is very satisfied.11. The scarcity principle applies to:A. all decisions.B. only market decisions, e.g., buying a car.C. only non-market decisions, e.g., watching a sunset.D. only the poor.12. Chris has a one-hour break between classes every Wednesday. Chris can either stay at the library and study or go to the gym and work out. The decision Chris must make is:A. not an economic problem because neither one costs money.B. not an economic problem because it's an hour that is wasted no matter what Chris does.C. an economic problem because the tuition Chris pays covers both the gym and the library.D. an economic problem because Chris has only one hour during which he can study or work out.13. Josh wants to go to the football game this weekend, but he has a paper due on Monday. It will take him the whole weekend to write the paper. Josh decided to stay home and work on the paper. According to the scarcity principle, the reason Josh didn't go to the game is that:A. Josh prefers schoolwork to football games.B. writing the paper is easier than going to the game.C. Josh doesn't have enough time for writing the paper and going to the game.D. it's too expensive to go to the game.14. Whether studying the size of the U.S. economy or the number of children a couple will choose to have, the unifying concept is that wants are:A. limited, resources are limited, and thus choices must be made.B. unlimited, resources are limited, and thus choices must be made.C. unlimited, resources are limited to some but not to others, and thus some people must make choices.D. unlimited, resources are limited, and thus government needs to do more.15. The cost-benefit principle indicates that an action should be taken:A. if the total benefits exceed the total costs.B. if the average benefits exceed the average costs.C. if the net benefit (benefit minus cost) is zero.D. if the extra benefit is greater than or equal to the extra costs.16. When a person decides to pursue an activity as long as the extra benefits are at least equal to the extra costs, that person is:A. violating the cost-benefit principle.B. following the scarcity principle.C. following the cost-benefit principle.D. pursuing the activity too long.17. Choosing to study for an exam until the extra benefit (improved score) equals the extra cost (mental fatigue) is:A. not rational.B. an application of the cost-benefit principle.C. an application of the scarcity principle.D. the relevant opportunity cost.18. The scarcity principle tells us that __________, and the cost-benefit principle tells us __________.A. choices must be made; how to make the choicesB. choices must be made; that the costs can never outweigh the benefits of the choicesC. rare goods are expensive; that the costs should outweigh the benefits of the choicesD. rare goods are expensive; that the costs can never outweigh the benefits of the choices19. According to the cost-benefit principle:A. the lowest cost activity usually gives the lowest benefit.B. a person should always choose the activity with the lowest cost.C. a person should always choose the activity with the greatest benefit.D. the extra costs and benefits of an activity are more important considerations than the total costs and benefits.20. A rational person is one who:A. is reasonable.B. makes choices that are easily understood.C. possesses well-defined goals and seeks to achieve them.D. is highly cynical.21. The seventh glass of soda that Tim consumes will produce an extra benefit of 10 cents and has an extra cost of zero (Tim is eating at the cafeteria). The cost-benefit principle predicts that Tim will:A. realize he has had too much soda to drink and go home.B. drink the seventh glass and continue until the marginal benefit of drinking another glass of soda is zero.C. volunteer to empty out the fountain.D. not drink the seventh glass.22. Janie must either mow the lawn or wash clothes, earning her a benefit of $30 or $45, respectively. She dislikes both equally and they both take the same amount of time. Janie will therefore choose to _________ because the economic surplus is ________.A. mow the lawn; greaterB. wash clothes; greaterC. mow the lawn; smallerD. wash clothes; smaller23. Dean decided to play golf rather than prepare for tomorrow's exam in economics. One can infer that:A. Dean has made an irrational choice.B. Dean is doing poorly in his economics class.C. the economic surplus from playing golf exceeded the surplus from studying.D. the cost of studying was less than the cost of golfing.Larry was accepted at three different graduate schools, and must choose one. Elite U costs $50,000 per year and did not offer Larry any financial aid. Larry values attending Elite U at $60,000 per year. State College costs $30,000 per year, and offered Larry an annual $10,000 scholarship. Larry values attending State College at $40,000 per year. NoName U costs $20,000 per year, and offered Larry a full $20,000 annual scholarship. Larry values attending NoName at $15,000 per year.24. The opportunity cost of attending Elite U is:A. $50,000B. $10,000C. $20,000D. $15,00025. The opportunity cost of attending State College is:A. $30,000B. $20,000C. $15,000D. $10,00026. Larry maximizes his surplus by attending:A. Elite U, because $60,000 is greater than the benefit at the other schools.B. State College, because the difference between the benefit and cost is greatest there.C. NoName U, because Larry has a full scholarship there.D. Elite U, because the opportunity costs of attending Elite U are the lowest.27. Larry has decided to go to Elite U. Assuming that all of the values described are correct, for Larry to decide on Elite U, he must have:A. calculated his surplus from each choice and picked the one with the highest surplus.B. underestimated the benefits of attending NoName.C. miscalculated the surplus of attending Elite U.D. determined the opportunity cost of each choice and picked the one with the lowest opportunity cost.28. Jen spends her afternoon at the beach, paying $1 to rent a beach umbrella and $11 for food and drinks rather than spending an equal amount of money to go to a movie. The opportunity cost of going to the beach is:A. the $12 she spent on the umbrella, food and drinks.B. only $1 because she would have spent the money on food and drinks whether or not she went to the beach.C. the movie she missed seeing.D. the movie she missed seeing plus the $12 she spent on the umbrella, food and drinks.29. Relative to a person who earns minimum wage, a person who earns $30 per hour has:A. a lower opportunity cost of working longer hours.B. a higher opportunity cost of taking a day off.C. a lower opportunity cost of driving farther to work.D. the same opportunity cost of spending time on leisure activities.30. The opportunity cost of an activity is the value of:A. an alternative forgone.B. the next-best alternative forgone.C. the least-best alternative forgone.D. the difference between the chosen activity and the next-best alternative forgone.31. Amy is thinking about going to the movies tonight. A ticket costs $7 and she will have to cancel her dog-sitting job that pays $30. The cost of seeing the movie is:A. $7.B. $30.C. $37.D. $37 minus the benefit of seeing the movie.32. Economic surplus is:A. the benefit gained by taking an action.B. the price paid to take an action.C. the difference between the benefit gained and the cost incurred of taking an action.D. the wage someone would have to earn in order to take an action.33. The Governor of your state has cut the budget for the University and increased spending on Medicaid. This is an example of:A. the pitfalls of considering average costs instead of marginal costs.B. poor normative economic decision making.C. poor positive economic decision making.D. choice in the face of limited resources.34. Sally earned $25,000 per year before she became a mother. After she became a mother, she told her employer that her opportunity cost of working is now $50,000, and so she is not willing to work for anything less. Her decision is based on:A. the high cost of raising a child.B. her desire to save for her child's college expenses.C. her increased value to her employer.D. the value she places on spending time with her child.35. Alex received a four-year scholarship to State U. that covered tuition and fees, room and board, and books and supplies. As a result:A. attending State U. for four years is costless for Alex.B. Alex has no incentive to work hard while at State U.C. the cost of attending State U. is the amount of money Alex could have earned working for four years.D. the cost of attending State U. is the sum of the benefits Alex would have had attending each of the four other schools to which Alex had been admitted.36. Suppose Mary is willing to pay up to $15,000 for a used Ford pick-up truck, but she finds one for $12,000. Her __________ is __________.A. benefit; $12,000B. cost; $15,000C. economic surplus; $3,000D. economic surplus; $12,00037. In general, rational decision making requires one to choose the actions that yield the:A. largest total benefits.B. smallest total costs.C. smallest net benefits.D. largest economic surpluses.38. Suppose the most you would be willing to pay for a plane ticket home is $250, but you buy one online for $175. The economic surplus of buying the online ticket is:A. $175.B. $250.C. $75.D. $0.39. The use of economic models, like the cost-benefit principle, means economists believe that:A. this is exactly how people choose between alternatives.B. this is a reasonable abstraction of how people choose between alternatives.C. those who explicitly make decisions this way are smarter.D. with enough education, all people will start to explicitly make decisions this way.40. Jenna decides to see a movie that costs $7 for the ticket and has an opportunity cost of $20. After the movie, she says to one of her friends that the movie was not worth it. Apparently:A. Jenna failed to apply the cost-benefit model to her decision.B. Jenna was not rational.C. Jenna overestimated the benefits of the movie.D. Jenna underestimated the benefits of the movie.41. Most of us make sensible decisions most of the time, because:A. we know the cost-benefit principle.B. subconsciously we are weighing costs and benefits.C. most people know about the scarcity principle.D. we conduct hypothetical mental auctions when we make decisions.42. Suppose a person makes a choice that seems inconsistent with the cost-benefit principle. Which of the following statements represents the most reasonable conclusion to draw?A. The person (explicitly or implicitly) over-estimated the benefits or under-estimated the costs or both.B. The cost-benefit principle is rarely true.C. The person does not grasp how decisions should be made.D. The person is simply irrational.43. Economic models are intended to:A. apply to all examples equally well.B. eliminate differences in the way people behave.C. generalize about patterns in decision-making.D. distinguish economics students from everyone else.44. Economic models claim to be:A. reasonable abstractions of how people make choices, highlighting the most important factors.B. exact replications of the decision-making process people use.C. interesting chalkboard exercises with little applicability to the real world.D. exceptionally accurate methods of predicting nearly all behavior of everyone.45. The cost-benefit model used by economists is:A. unrealistic because it is too detailed and specific to apply to a variety of situations.B. unrealistic because everyone can think of times when he or she violated the principle.C. useful because everyone follows it all of the time.D. useful because most people follow it most of the time.46. Barry owns a clothing store in the mall and has asked two economic consultants to develop models of consumer behavior that he can use to increase sales. Barry should choose the model that:A. does not include simplifying assumptions.B. is the most detailed and complex.C. assumes that consumers apply the cost-benefit principle.D. predicts that consumers will always prefer Barry's store to the competing stores.47. Economists use abstract models because:A. every economic situation is unique, so it is impossible to make generalizations.B. every economic situation is essentially the same, so specific details are unnecessary.C. they are useful for describing general patterns of behavior.D. computers have allowed economists to develop abstract models.48. Most people make some decisions based on intuition rather than calculation. This is:A. irrational, because intuition is often wrong.B. consistent with the economic model of decision-making, because calculating costs and benefits leads to decision-making pitfalls.C. consistent with the economic model because people intuitively compare the relative costs and benefits of the choices they face.D. inconsistent with the economic model, but rational because intuition takes into account non-financial considerations.49. Moe has a big exam tomorrow. He considered studying this evening, but decided to go out with Curly instead. Since Moe always chooses rationally, it must be true that: A. the opportunity cost of studying tonight is less than the value Moe gets from spending time with Curly.B. the opportunity cost of studying tonight is equal to the value Moe gets from spending time with Curly minus the cost of earning a low grade on the exam.C. Moe gets more benefit from spending time with Curly than from studying.D. Moe gets less benefit from spending time with Curly than from studying.50. If one fails to account for implicit costs in decision making, then applying thecost-benefit rule will be flawed because:A. the benefits will be overstated.B. the costs will be understated.C. the benefits will be understated.D. the costs will be overstated.Your classmates from the University of Chicago are planning to go to Miami for spring break, and you are undecided about whether you should go with them. The round-trip airfares are $600, but you have a frequent-flyer coupon worth $500 that you could use to pay part of the airfare. All other costs for the vacation are exactly $900. The most you would be willing to pay for the trip is $1400. Your only alternative use for your frequent-flyer coupon is for your trip to Atlanta two weeks after the break to attend your sister's graduation, which your parents are forcing you to attend. The Chicago-Atlanta round-trip airfares are $450.51. If you do not use the frequent-flyer coupon to fly, should you go to Miami?A. Yes, your benefit is more than your cost.B. No, your benefit is less than your cost.C. Yes, your benefit is equal to your cost.D. No, because there are no benefits in the trip.52. What is the opportunity cost of using the coupon for the Miami trip?A. $100B. $450C. $500D. $55053. If you use the frequent-flyer coupon to fly to Atlanta, would you get any economic surplus by making the trip?A. No, there is a loss of $50.B. Yes, surplus of $350.C. Yes, surplus of $400.D. Yes, surplus of $100.54. If the Chicago-Atlanta round-trip air fare is $350, should you go to Miami?A. No, there is a loss of $50.B. No, there is a loss of $100.C. Yes, there is economic surplus of $50.D. Yes, there is economic surplus of $400.55. Pat earns $25,000 per year (after taxes), and Pat's spouse, Chris, earns $35,000 (after taxes). They have two pre-school children. Childcare for their children costs $12,000 per year. Pat has decided to stay home and take care of the children. Pat must:A. value spending time with the children by more than $25,000.B. value spending time with the children by more than $12,000.C. value spending time with the children by more than $13,000.D. value spending time with the children as much as does Chris.You paid $35 for a ticket (which is non-refundable) to see SPAM, a local rock band, in concert on Saturday. (Assume that you would not have been willing to pay any more than $35 for this concert.) Your boss called and she is looking for someone to cover a shift on Saturday at the same time as the concert. You will have to work 4 hours and she will pay you time and a half, which is $9/hr.56. Should you go to the concert instead of working Saturday?A. Yes, your benefit is more than your cost.B. No, your benefit is less than your cost.C. Yes, your benefit is equal to your cost.D. No, because there are no benefits in the concert.57. What is the opportunity cost of going to the concert?A. $1B. $9C. $35D. $3658. What is your opportunity cost, if you go to work on Saturday?A. $0B. $9C. $35D. $3659. Your economic surplus of going to work on Saturday is:A. $0B. $1C. $35D. $36Matt has decided to purchase his textbooks for the semester. His options are to purchase the books via the Internet with next day delivery to his home at a cost of $175, or to drive to campus tomorrow to buy the books at the university bookstore at a cost of $170. Last week he drove to campus to buy a concert ticket because they offered 25 percent off the regular price of $16.因为他们提供75折的正常价格16美元。

Microeconomics - Testbank 1 (Hubbard/O'Brien)Chapter 12 Monopolistic Competition: The Competitive Model in aMore Realistic Setting1) T he key characteristics of a monopolistically competitive market structure include:A) m any, small, independently acting sellers.B) a ll sellers sell a differentiated product.C) n o barriers to entry of new rivals.D) a ll of these.2) T he key characteristics of a monopolistically competitive market structure include:A) f ew sellers.B) s ellers selling similar but differentiated products.C) h igh barriers to entry .D) a ll of these.3) W hat type of demand does a monopolistically competitive firm face?A) H orizontalB) V erticalC) D ownward slopingD) U pward sloping4) I f a monopolistically competitive firm cuts its price from $10 where it sold 25 units to $9 andsells five more units of output, its marginal revenue per unit of output is:A) $270.B) $2.50C) $20.D) $4.5) I f a monopolistically competitive firm cuts its price from $10 where it sold 25 units to $9 andsells five more units of output, its marginal revenue is:A) $270.B) $2.50.C) $20.D) $4.6) M onopolistic competition has:A) m any sellers who each face a downsloping demand curve.B) a few sellers who each face a downsloping demand curve.C) o nly one seller who faces a downsloping demand curve.D) m any sellers who each face a perfectly elastic demand curve.7) T o maximize profits, a monopolistically competitive firm would produce the output where:A) p rice equals average total cost.B) m arginal revenue equals marginal cost.C) p rice equals marginal cost.D) m arginal revenue equals price.8) I f a monopolistically competitive firm is producing at an output where marginal revenue is$23 and marginal cost is $19, then to maximize profits the firm will:A) c ontinue to produce the same quantity.B) i ncrease output.C) d ecrease output.D) s hutdown.9) I f a monopolistically competitive firm is producing at an output where marginal revenue is$111.11 and marginal cost is $118, then to maximize profits the firm will:A) c ontinue to produce the same quantity.B) i ncrease output.C) d ecrease output.D) s hutdown.10) I f a monopolistically competitive firm is producing at an output where marginal revenue is$12 and marginal cost is $12., then to maximize profits this firm will:A) c ontinue to produce the same quantity.B) i ncrease output.C) d ecrease output.D) s hutdown.11) I f a monopolistically competitive firm is producing 66 units of output where marginalrevenue equals marginal cost at a price of $18 and average total cost at that output is $16.55,then its total profit is:A) $1,188.B) $1,092.30.C) $95.70.D) $1.45.12) I f a monopolistically competitive firm is producing 50 units of output where marginal costequals marginal revenue, total cost is $1,674 and total revenue is $2,000, its average profit is:A) $326.B) $40.C) $6.52.D) i mpossible to determine without additional information.13) A monopolistically competitive firm maximizing profits will produce at a price that is:A) e qual to marginal cost.B) e qual to marginal revenue.C) g reater than marginal cost.D) l ess than marginal revenue.14) A monopolistically competitive industry that earns economic profits in the short run will:A) c ontinue to earn economic profits in the long run.B) e xperience the entry of new rival firms into the industry in the long run.C) e xperience the exit of old firms out of the industry in the long run.D) e xperience a rise in demand in the long run.15) A monopolistically competitive firm that is earning profits will, in the long run, experience:A) n ew rivals entering the market.B) d emand decreases.C) d emand for the firm's product becomes more elastic.D) a ll of the above.16) A monopolistically competitive firm earning profits in the short run will find the demand forits product decreasing in the long run because:A) c ustomers have tired of the firm's product.B) c onsumers' incomes have fallen.C) s ome of its customers have switched purchases to new entrants into the market.D) i ts costs and price has risen.17) A monopolistically competitive firm earning profits in the short run will find the demand forits product becoming more elastic in the long run because:A) m ore substitutes are available because new rivals have entered the market.B) t he price of the product relative to buyers' incomes has increased.C) c onsumers have tired of the firm's product.D) c onsumers incomes have fallen.18) A monopolistically competitive firm earning profits in the short run will find the demand forits product decreasing and becoming more elastic in the long run as new firms move into the industry until:A) t he original firm is driven into bankruptcy.B) t he firm's demand curve is perfectly elastic.C) t he firm's demand curve is tangent to its average total cost curve.D) t he firm exits the market.19) I n the long run, a typical monopolistically competitive firm will:A) e arn an economic profit.B) b reakeven.C) i ncur an economic loss.D) s hut down.20) I f a monopolistically competitive firm breaks even in an economic sense, the entrepreneur:A) s hould exit the industry.B) i s earning as much in this industry as he or she could anywhere else.C) a voids having to pay income tax.D) n one of the above.21) I f a monopolistically competitive firm breaks even in an economic sense, the entrepreneur:A) i s earning an accounting profit and will have to pay taxes on that profit.B) i s earning zero accounting and economic profit.C) s hould exit the industry.D) n one of the above.22) I f a typical monopolistically competitive firm is losing money in an economic sense, then:A) a ll firms will exit the market.B) a s some firms leave, the remaining firms find the demand for their product increasing.C) a s some firms leave, the remaining firms find the demand for their product becomesmore elastic.D) a ll of the above happen.23) P rofits earned by monopolistically competitive firms in the short run typically will decline inthe long run because:A) t heir products are of poor quality.B) b uyers realize the products are less differentiated than they initially believed.C) b uyers tire of their products.D) o f the entry of imitators.24) A monopolistically competitive firm has more control over the price of its product because:A) o f entrance of new firms into the market.B) i t can convince buyers that its product is very similar.C) i t can convince buyers that its product is differentiated.D) e ntrance of new firms is very difficult.25) A major difference between monopolistically competitive and perfectly competitive marketsis:A) t he number of sellers.B) t he degree by which market demand slopes downward.C) p roducts are not standardized in monopolistic competition.D) b arriers to entry.26) A mong the characteristics that monopolistic competition and perfect competition share is:A) m any, small independently acting sellers.B) l ow barriers to entry into the industry by new firms.C) t he typical firm breaks even in the long run.D) a ll of the above.27) I f buyers of a monopolistically competitive product feel the products of different sellers arestrongly differentiated, then:A) t he demand for each seller's product is perfectly inelastic.B) t he demand for each seller's product is perfectly elastic.C) t he demand for each seller's product is relatively inelastic.D) t he demand for each seller's product is relatively elastic.28) A monopolistically competitive firm can increase its profits beyond the long-run equilibriumbreakeven level by:A) c ontinually finding ways to produce its product at a lower cost level.B) s elling more of its product.C) m arketing its product as similar to others in the industry.D) a ll of the above.29) A monopolistically competitive firm can convince buyers that its product has value by:A) s elling the product at a lower price than rivals do.B) d ifferentiating its product to suit consumers' preferences.C) m arketing its product as similar to competitors.D) b locking entry.30) W hich of the following is NOT a characteristic of long-run equilibrium in a monopolisticallycompetitive market?A) S elling price equals average total cost.B) P roduction is at minimum average total cost.C) M arginal revenue equals marginal cost.D) S elling price is greater than marginal cost.31) H ow does the long run equilibrium of a monopolistically competitive industry differ fromthat of a perfectly competitive industry?A) I n long-run equilibrium in a monopolistically competitive firm will earn economicprofits.B) I n long-run equilibrium in a monopolistically competitive firm price will be higher thanthe average cost of production.C) I n long-run equilibrium in a monopolistically competitive firm does not use fully theplant size it built.D) I n long-run equilibrium in a monopolistically competitive firm is allocatively efficientwhile the perfectly competitive firm is not.32) I s a monopolistically competitive firm productively efficient?A) I t is NOT because it does not produce at minimum average total cost.B) I t is because it produces where marginal cost equals marginal revenue.C) I t is NOT because price is greater than marginal product.D) I t is because price equals average total costs.33) F or allocative efficiency to hold:A) p rice is equal to marginal cost.B) p rice is equal to marginal revenue.C) a verage variable cost is minimized in production.D) a verage total cost is minimized in production.Refer to Figure 12.1 for the questions below.Figure 12.134) T he monopolistic competitor in figure 12.1 will produce:A) Q1.B) Q2.C) Q3.D) Q4.35) T he monopolistic competitor in figure 12.1 will charge:A) P1.B) P2.C) P3.D) P4.36) T he monopolistic competitor in figure 12.1:A) i s making a profit.B) i s breaking even.C) s hould shut down.D) i s losing money but should operate in the short run.37) T he productive efficient output for the monopolistic competitor in figure 12.1 is:A) Q1.B) Q2.C) Q3.D) Q4.38) B rand management:A) i s picking a brand name for a new product that will attract attention.B) i s the efforts to maintain the differentiation of a product over time.C) i s the efforts to reduce the cost of production.D) i s selling the right to use a brand name in a particular market.39) W hat is the purpose of advertising by a monopolistically competitive firm?A) I ncrease demand for the firm's product.B) M ake the demand for the firm's product more inelastic.C) E arn more economic profit for the firm.D) F irms advertise for all these reasons.40) W hat is considered by some individuals to be good about advertising by monopolisticallycompetitive firms?A) A dvertising can act as a barrier to entry.B) A dvertising has a low cost.C) F irms tend to advertise their best products, so the quantity of advertising providesconsumers with useful information.D) F irms that advertise have lower costs of production.41) A dvertising, marketing, and brand management are all done by monopolisticallycompetitive firms in an effort to:A) s atisfy buyers with the lowest possible price.B) p roduce at the lowest possible average total cost level.C) i ncrease demand and make it more inelastic to earn above break-even profits.D) t o get price to equal average total costs.42) A n advantage of trademarking your product is:A) a trademark differentiates your product.B) a trademark means no one else can legally produce a similar product.C) a trademark means your product name may become highly associated with the product.D) a ll of the above.43) A disadvantage for consumers who buy a product of a monopolistically competitive firm is:A) t hey have no choice in the attributes of the product.B) t hey pay a price greater than the marginal cost of production.C) t hey have no choice about whether to buy or not.D) t hey pay a price greater than average total cost.44) A n advantage to consumers from buying a product of a monopolistically competitive firm is:A) t hey are paying a price greater than marginal cost.B) t hey are paying for product advertising.C) t hey can buy a product more closely suited to their tastes.D) t hey can buy the same product as everyone else.。

Chapter 01Thinking Like an Economist Multiple Choice Questions1. Economics is best defined as the study of:A. prices and quantities.B. inflation and interest rates.C. how people make choices under the conditions of scarcity and the results of those choices.D. wages and incomes.2. Economic questions always deal with:A. financial matters.B. political matters.C. insufficient resources.D. choice in the face of limited resources.3. The range of topics or issues that fit within the definition of economics is:A. limited to market activities, e.g., buying soap.B. limited to individuals and firms.C. extremely wide, requiring only the ideas of choice and scarcity.D. very limited.4. The central concern of economics is:A. poverty.B. scarcity.C. wealth accumulation.D. overconsumption.5. The scarcity principle indicates that:A. no matter how much one has, it is never enough.B. compared to 100 years ago, individuals have less time today.C. with limited resources, having more of "this" means having less of "that."D. because tradeoffs must be made, resources are therefore scarce.6. The logical implication of the scarcity principle is that:A. one will never be satisfied with what one has.B. as wealth increases, making choices becomes less necessary.C. as wealth decreases, making choices becomes less necessary.D. choices must be made.7. If all the world's resources were to magically increase a hundredfold, then:A. the scarcity principle would still govern behavior.B. economics would no longer be relevant.C. the scarcity principle would disappear.D. tradeoffs would become unnecessary.8. The principle of scarcity applies to:A. the poor exclusively.B. all consumers.C. all firms.D. everyone—consumers, firms, governments, and nations.9. At the very least, Joe Average and Bill Gates are both identically limited by:A. their wealth.B. the 24 hours that comprise a day.C. their knowledge.D. their influence.10. Forest is a mountain man living in complete isolation in Montana. He is completely self-sufficient through hunting, fishing, and farming. He has not been in the city to buy anything in five years. One can infer:A. the scarcity principle does not apply to Forest.B. Forest is not required to make choices.C. the scarcity principle still applies because more hunting means less fishing and farming.D. Forest is very satisfied.11. The scarcity principle applies to:A. all decisions.B. only market decisions, e.g., buying a car.C. only non-market decisions, e.g., watching a sunset.D. only the poor.12. Chris has a one-hour break between classes every Wednesday. Chris can either stay at the library and study or go to the gym and work out. The decision Chris must make is:A. not an economic problem because neither one costs money.B. not an economic problem because it's an hour that is wasted no matter what Chris does.C. an economic problem because the tuition Chris pays covers both the gym and the library.D. an economic problem because Chris has only one hour during which he can study or work out.13. Josh wants to go to the football game this weekend, but he has a paper due on Monday. It will take him the whole weekend to write the paper. Josh decided to stay home and work on the paper. According to the scarcity principle, the reason Josh didn't go to the game is that:A. Josh prefers schoolwork to football games.B. writing the paper is easier than going to the game.C. Josh doesn't have enough time for writing the paper and going to the game.D. it's too expensive to go to the game.14. Whether studying the size of the U.S. economy or the number of children a couple will choose to have, the unifying concept is that wants are:A. limited, resources are limited, and thus choices must be made.B. unlimited, resources are limited, and thus choices must be made.C. unlimited, resources are limited to some but not to others, and thus some people must make choices.D. unlimited, resources are limited, and thus government needs to do more.15. The cost-benefit principle indicates that an action should be taken:A. if the total benefits exceed the total costs.B. if the average benefits exceed the average costs.C. if the net benefit (benefit minus cost) is zero.D. if the extra benefit is greater than or equal to the extra costs.16. When a person decides to pursue an activity as long as the extra benefits are at least equal to the extra costs, that person is:A. violating the cost-benefit principle.B. following the scarcity principle.C. following the cost-benefit principle.D. pursuing the activity too long.17. Choosing to study for an exam until the extra benefit (improved score) equals the extra cost (mental fatigue) is:A. not rational.B. an application of the cost-benefit principle.C. an application of the scarcity principle.D. the relevant opportunity cost.18. The scarcity principle tells us that __________, and the cost-benefit principle tells us __________.A. choices must be made; how to make the choicesB. choices must be made; that the costs can never outweigh the benefits of the choicesC. rare goods are expensive; that the costs should outweigh the benefits of the choicesD. rare goods are expensive; that the costs can never outweigh the benefits of the choices19. According to the cost-benefit principle:A. the lowest cost activity usually gives the lowest benefit.B. a person should always choose the activity with the lowest cost.C. a person should always choose the activity with the greatest benefit.D. the extra costs and benefits of an activity are more important considerations than the total costs and benefits.20. A rational person is one who:A. is reasonable.B. makes choices that are easily understood.C. possesses well-defined goals and seeks to achieve them.D. is highly cynical.21. The seventh glass of soda that Tim consumes will produce an extra benefit of 10 cents and has an extra cost of zero (Tim is eating at the cafeteria). Thecost-benefit principle predicts that Tim will:A. realize he has had too much soda to drink and go home.B. drink the seventh glass and continue until the marginal benefit of drinking another glass of soda is zero.C. volunteer to empty out the fountain.D. not drink the seventh glass.22. Janie must either mow the lawn or wash clothes, earning her a benefit of $30 or $45, respectively. She dislikes both equally and they both take the same amount of time. Janie will therefore choose to _________ because the economic surplus is ________.A. mow the lawn; greaterB. wash clothes; greaterC. mow the lawn; smallerD. wash clothes; smaller23. Dean decided to play golf rather than prepare for tomorrow's exam in economics. One can infer that:A. Dean has made an irrational choice.B. Dean is doing poorly in his economics class.C. the economic surplus from playing golf exceeded the surplus from studying.D. the cost of studying was less than the cost of golfing.Larry was accepted at three different graduate schools, and must choose one. Elite U costs $50,000 per year and did not offer Larry any financial aid. Larry values attending Elite U at $60,000 per year. State College costs $30,000 per year, and offered Larry an annual $10,000 scholarship. Larry values attending State College at $40,000 per year. NoName U costs $20,000 per year, and offered Larry a full $20,000 annual scholarship. Larry values attending NoName at $15,000 per year.24. The opportunity cost of attending Elite U is:A. $50,000B. $10,000C. $20,000D. $15,00025. The opportunity cost of attending State College is:A. $30,000B. $20,000C. $15,000D. $10,00026. Larry maximizes his surplus by attending:A. Elite U, because $60,000 is greater than the benefit at the other schools.B. State College, because the difference between the benefit and cost is greatest there.C. NoName U, because Larry has a full scholarship there.D. Elite U, because the opportunity costs of attending Elite U are the lowest.27. Larry has decided to go to Elite U. Assuming that all of the values described are correct, for Larry to decide on Elite U, he must have:A. calculated his surplus from each choice and picked the one with the highest surplus.B. underestimated the benefits of attending NoName.C. miscalculated the surplus of attending Elite U.D. determined the opportunity cost of each choice and picked the one with the lowest opportunity cost.28. Jen spends her afternoon at the beach, paying $1 to rent a beach umbrella and $11 for food and drinks rather than spending an equal amount of money to go to a movie. The opportunity cost of going to the beach is:A. the $12 she spent on the umbrella, food and drinks.B. only $1 because she would have spent the money on food and drinks whether or not she went to the beach.C. the movie she missed seeing.D. the movie she missed seeing plus the $12 she spent on the umbrella, food and drinks.29. Relative to a person who earns minimum wage, a person who earns $30 per hour has:A. a lower opportunity cost of working longer hours.B. a higher opportunity cost of taking a day off.C. a lower opportunity cost of driving farther to work.D. the same opportunity cost of spending time on leisure activities.30. The opportunity cost of an activity is the value of:A. an alternative forgone.B. the next-best alternative forgone.C. the least-best alternative forgone.D. the difference between the chosen activity and the next-best alternative forgone.31. Amy is thinking about going to the movies tonight. A ticket costs $7 and she will have to cancel her dog-sitting job that pays $30. The cost of seeing the movie is:A. $7.B. $30.C. $37.D. $37 minus the benefit of seeing the movie.32. Economic surplus is:A. the benefit gained by taking an action.B. the price paid to take an action.C. the difference between the benefit gained and the cost incurred of taking an action.D. the wage someone would have to earn in order to take an action.33. The Governor of your state has cut the budget for the University and increased spending on Medicaid. This is an example of:A. the pitfalls of considering average costs instead of marginal costs.B. poor normative economic decision making.C. poor positive economic decision making.D. choice in the face of limited resources.34. Sally earned $25,000 per year before she became a mother. After she becamea mother, she told her employer that her opportunity cost of working is now $50,000, and so she is not willing to work for anything less. Her decision is based on:A. the high cost of raising a child.B. her desire to save for her child's college expenses.C. her increased value to her employer.D. the value she places on spending time with her child.35. Alex received a four-year scholarship to State U. that covered tuition and fees, room and board, and books and supplies. As a result:A. attending State U. for four years is costless for Alex.B. Alex has no incentive to work hard while at State U.C. the cost of attending State U. is the amount of money Alex could have earned working for four years.D. the cost of attending State U. is the sum of the benefits Alex would have had attending each of the four other schools to which Alex had been admitted.36. Suppose Mary is willing to pay up to $15,000 for a used Ford pick-up truck, but she finds one for $12,000. Her __________ is __________.A. benefit; $12,000B. cost; $15,000C. economic surplus; $3,000D. economic surplus; $12,00037. In general, rational decision making requires one to choose the actions that yield the:A. largest total benefits.B. smallest total costs.C. smallest net benefits.D. largest economic surpluses.38. Suppose the most you would be willing to pay for a plane ticket home is $250, but you buy one online for $175. The economic surplus of buying the online ticket is:A. $175.B. $250.C. $75.D. $0.39. The use of economic models, like the cost-benefit principle, means economists believe that:A. this is exactly how people choose between alternatives.B. this is a reasonable abstraction of how people choose between alternatives.C. those who explicitly make decisions this way are smarter.D. with enough education, all people will start to explicitly make decisions this way.40. Jenna decides to see a movie that costs $7 for the ticket and has an opportunity cost of $20. After the movie, she says to one of her friends that the movie was not worth it. Apparently:A. Jenna failed to apply the cost-benefit model to her decision.B. Jenna was not rational.C. Jenna overestimated the benefits of the movie.D. Jenna underestimated the benefits of the movie.41. Most of us make sensible decisions most of the time, because:A. we know the cost-benefit principle.B. subconsciously we are weighing costs and benefits.C. most people know about the scarcity principle.D. we conduct hypothetical mental auctions when we make decisions.42. Suppose a person makes a choice that seems inconsistent with the cost-benefit principle. Which of the following statements represents the most reasonable conclusion to draw?A. The person (explicitly or implicitly) over-estimated the benefits orunder-estimated the costs or both.B. The cost-benefit principle is rarely true.C. The person does not grasp how decisions should be made.D. The person is simply irrational.43. Economic models are intended to:A. apply to all examples equally well.B. eliminate differences in the way people behave.C. generalize about patterns in decision-making.D. distinguish economics students from everyone else.44. Economic models claim to be:A. reasonable abstractions of how people make choices, highlighting the most important factors.B. exact replications of the decision-making process people use.C. interesting chalkboard exercises with little applicability to the real world.D. exceptionally accurate methods of predicting nearly all behavior of everyone.45. The cost-benefit model used by economists is:A. unrealistic because it is too detailed and specific to apply to a variety of situations.B. unrealistic because everyone can think of times when he or she violated the principle.C. useful because everyone follows it all of the time.D. useful because most people follow it most of the time.46. Barry owns a clothing store in the mall and has asked two economic consultants to develop models of consumer behavior that he can use to increase sales. Barry should choose the model that:A. does not include simplifying assumptions.B. is the most detailed and complex.C. assumes that consumers apply the cost-benefit principle.D. predicts that consumers will always prefer Barry's store to the competing stores.47. Economists use abstract models because:A. every economic situation is unique, so it is impossible to make generalizations.B. every economic situation is essentially the same, so specific details are unnecessary.C. they are useful for describing general patterns of behavior.D. computers have allowed economists to develop abstract models.48. Most people make some decisions based on intuition rather than calculation. This is:A. irrational, because intuition is often wrong.B. consistent with the economic model of decision-making, because calculating costs and benefits leads to decision-making pitfalls.C. consistent with the economic model because people intuitively compare the relative costs and benefits of the choices they face.D. inconsistent with the economic model, but rational because intuition takes into account non-financial considerations.49. Moe has a big exam tomorrow. He considered studying this evening, but decided to go out with Curly instead. Since Moe always chooses rationally, it must be true that:A. the opportunity cost of studying tonight is less than the value Moe gets from spending time with Curly.B. the opportunity cost of studying tonight is equal to the value Moe gets from spending time with Curly minus the cost of earning a low grade on the exam.C. Moe gets more benefit from spending time with Curly than from studying.D. Moe gets less benefit from spending time with Curly than from studying.50. If one fails to account for implicit costs in decision making, then applying the cost-benefit rule will be flawed because:A. the benefits will be overstated.B. the costs will be understated.C. the benefits will be understated.D. the costs will be overstated.Your classmates from the University of Chicago are planning to go to Miami for spring break, and you are undecided about whether you should go with them. The round-trip airfares are $600, but you have a frequent-flyer coupon worth $500 that you could use to pay part of the airfare. All other costs for the vacation are exactly $900. The most you would be willing to pay for the trip is $1400. Your only alternative use for your frequent-flyer coupon is for your trip to Atlanta two weeks after the break to attend your sister's graduation, which your parents are forcing you to attend. The Chicago-Atlanta round-trip airfares are $450.51. If you do not use the frequent-flyer coupon to fly, should you go to Miami?A. Yes, your benefit is more than your cost.B. No, your benefit is less than your cost.C. Yes, your benefit is equal to your cost.D. No, because there are no benefits in the trip.52. What is the opportunity cost of using the coupon for the Miami trip?A. $100B. $450C. $500D. $55053. If you use the frequent-flyer coupon to fly to Atlanta, would you get any economic surplus by making the trip?A. No, there is a loss of $50.B. Yes, surplus of $350.C. Yes, surplus of $400.D. Yes, surplus of $100.54. If the Chicago-Atlanta round-trip air fare is $350, should you go to Miami?A. No, there is a loss of $50.B. No, there is a loss of $100.C. Yes, there is economic surplus of $50.D. Yes, there is economic surplus of $400.55. Pat earns $25,000 per year (after taxes), and Pat's spouse, Chris, earns $35,000 (after taxes). They have two pre-school children. Childcare for their children costs $12,000 per year. Pat has decided to stay home and take care of the children. Pat must:A. value spending time with the children by more than $25,000.B. value spending time with the children by more than $12,000.C. value spending time with the children by more than $13,000.D. value spending time with the children as much as does Chris.You paid $35 for a ticket (which is non-refundable) to see SPAM, a local rock band, in concert on Saturday. (Assume that you would not have been willing to pay any more than $35 for this concert.) Your boss called and she is looking for someone to cover a shift on Saturday at the same time as the concert. You will have to work 4 hours and she will pay you time and a half, which is $9/hr.56. Should you go to the concert instead of working Saturday?A. Yes, your benefit is more than your cost.B. No, your benefit is less than your cost.C. Yes, your benefit is equal to your cost.D. No, because there are no benefits in the concert.57. What is the opportunity cost of going to the concert?A. $1B. $9C. $35D. $3658. What is your opportunity cost, if you go to work on Saturday?A. $0B. $9C. $35D. $3659. Your economic surplus of going to work on Saturday is:A. $0B. $1C. $35D. $36Matt has decided to purchase his textbooks for the semester. His options are to purchase the books via the Internet with next day delivery to his home at a cost of $175, or to drive to campus tomorrow to buy the books at the university bookstore at a cost of $170. Last week he drove to campus to buy a concert ticket because they offered 25 percent off the regular price of $16.因为他们提供75折的正常价格16美元。

第一章练习题参考答案1．你为了洗车最多愿意支付6美元，即你得到的收益是6美元，而你为别人洗车最少能得到3.5美元，也就是说你让别人给你洗车的机会成本是3.5美元，那么当你决定洗车时，你可以得到2.5美元(6－3.5＝2.5)2．所以，为了赚尽可能多的钱，会使用4磅符合肥料。

3．按照以前的收费方式，6美元为沉没成本，就是不管有多少袋垃圾，均收取6美元，所以居民就尽可能使每袋垃圾的平均成本最小化，改变收费方式以后，按照单件收费，收取的费用就随着垃圾袋数的增加而增加，所以这种方式在一定程度上会抑制垃圾袋的总数，也就使得回收垃圾袋的总数减少。

4．史密斯家：孩子每次喝可乐时:边际收益＝B1 ＞0,边际成本＝C1＝0，净收益S1＝B1－C1> 0；琼斯家：孩子每次喝可乐时：边际收益＝B2＝B1＞0，边际成本＝C2 > 0，净收益S2＝B2－C2；S1＞S2，所以史密斯家的可乐喝得快琼斯家孩子每次喝的个人成本C2＝3瓶×每瓶价格／每瓶喝的次数5．汤姆如果把钱借给迪克，那么他放弃了将钱进行蘑菇生产，也就是说他将失去将该200美元进行蘑菇生产所得到的收益，也就是该200美元的机会成本，而如果将200美元进行蘑菇生产他得到的收益如下：假设价格为P 则购买蘑菇数量为200/P。

一年以后数量加倍，变为400/P。

价格不变，那么总收入为400美元。

所以迪克需要支付的利息为200美元。

6．因为两道题使用的时间相等，但是第一道题的分值远远大于第二道题，所以若重新考试，并且时间上充裕，会考虑先第一道题；若只剩最后几秒，且两道题都还没做，则考虑先做第二道，可多得10分，大于先做第二道多得的4分。

7．两个人看演出的意愿是一样的，因为不管是玛莎丢了10美元的票还是莎拉丢了10美元的钱，都已经是沉没成本了，无法再收回了，再加上两人都是理性人并且有足够的钱再去买一张票，所以两个人购票看演出的意愿是一样的。

8．由于暴风雪使得很多人放弃了开车去现成观看比赛，也就是说，相对于你，乔伊很有可能花较少的钱买到一个较好的位置，这时，作为理性人，乔伊观看比赛的意愿会比你强。

哈伯德英文版微观经济学练习c10Microeconomics - Testbank 1 (Hubbard/O'Brien)Chapter 10 Technology, Production, and Costs1) T he average total cost of production is the:A) e xtra cost required to produce one more unit.B) t otal cost of production.C) t otal cost of production divided by the level of output.D) t otal cost of production multiplied times the level of output.2) A mong the potential sources of an advance in technology for a producing firm is:A) b etter trained workers.B) m ore efficient physical capital.C) h igher skill level of managers.D) a ll of the above.3) T he short run is:A) o ne day.B) o ne week.C) s ix months.D) a s long it takes a particular firm to change its plant capacity.4) A factor of production that is not fixed in the short run is:A) p hysical capital.B) t echnology.C) l abor.D) l and.5) A characteristic of the long run is:A) t here are no fixed inputs.B) a ll inputs can be varied.C) p lant capacity can be increased or decreased.D) a ll of the above.6) E conomics cost of production differ from those in accounting in that:A) e conomics includes expenditures for hired resources while accounting does not.B) e conomics adds the opportunity cost of a firm using its own resources.C) a ccounting includes expenditures for hired resources while economics does not.D) a ccounting costs are always larger than economic costs.7) W hich of the following is an implicit cost of production?A) I nterest paid on a loan to a bank.B) W ages paid to labor plus the cost of carrying benefits for workers.C) T he utility bill paid to water, electricity, and natural gas companies.D) R ent that could have been earned on a building owned and used by the firm.8) I mplicit costs of production are also called:A) o verhead.B) v ariable costs.C) d irect costs.D) o pportunity costs.9) A factor of production that generally is fixed in the short run is:A) r aw materials.B) l abor.C) a building.D) w ater.10) T he relationship between different amounts of inputs and the resulting level of output is a:A) t otal cost schedule.B) p roduction possibilities frontier.C) p roduction function.D) p roduction quota.11) I f the firm is producing nothing in the short run, then:A) t otal costs are zero.B) v ariable costs are low but positive.C) m arginal costs are negative.D) f ixed costs are positive.12) A s a firm hires more labor in the short run, the:A) l evel of total product stays constant.B) o utput per worker rises.C) e xtra output of another worker may rise at first, but eventually must fall.D) c osts of production are increasing at a fixed rate per unit of output.Refer to Figure 10.1 for the questions below.Figure 10.113) I n figure 10.1, diminishing returns to labor set in after:A) L1.B) L2.C) L3.D) n one of the above.14) I n figure 10.1, short run output is maximized at:A) L1.B) L2.C) L3.D) n one of the above.15) I n figure 10.1, AP of labor declines after L2 because:A) M P of labor is below AP of labor.B) M P of labor is falling.C) M P of labor is negative.D) M P of labor is positive.16) I f four workers can produce 18 chairs a day and five can produce 20 chairs a day, themarginal product of the fifth worker is:A) four chairs.B) f ive chairs.C) t wo chairs.D) 38 chairs.17) T he short run marginal product of labor increasing at first and then falling is an example ofthe law of:A) d emand.B) s upply.C) d iminishing marginal utility.D) d iminishing returns.18) T he reason the marginal product of labor in the short run increases at first and then falls isbecause:A) a s more labor is hired, they are not as skilled as the first ones hired.B) t here are fewer opportunities for division of labor and specialization.C) t he management is inefficient.D) t he extra workers have busy work piled on them.19) I f 11 workers can produce a total of 54 units of a productand another worker has a marginalproduct of six, then the average product of 12 workers is:A) 60.B) 54.C) 48.D) 5.20) I f another worker adds nine units of output to a group of workers who had an averageproduct of seven units, then the average product of labor:A) w ill remain the same.B) w ill increase.C) w ill decrease.D) a nd what will happen to it can not be determined.21) I f average product is decreasing, we know that:A) t otal product is negative.B) m arginal product is negative.C) m arginal product is smaller than average product.D) m arginal product is at its positive.22) I f all we know is all workers' marginal product, then total and average product can be foundby:A) d ividing marginal costs by the number of workers.B) m ultiplying the average marginal product times the number of workers.C) s umming the marginal values to find the total and multiplying it times the number ofworkers to get the average.D) s umming the marginal values to find the total and dividing it by the number of workersto get the average.23) I f we know that marginal product is equal to average product, then:A) a verage product is at a maximum.B) t otal product is at a maximum.C) m arginal product is at a maximum.D) a verage product must be falling.24) M arginal cost is U-shaped because of the:A) l aw of demand.B) l aw of diminishing marginal utility.C) l aw of diminishing returns.D) l aw of increasing costs.25) A verage total cost is equal to:A) a verage fixed costs minus average variable costs.B) t otal costs divided by the level of output.C) m arginal costs plus variable costs.D) t otal costs divided by the number of workers.Refer to Figure 10.2 for the questions below.Figure 10.226) I n figure 10.2, the difference between average total costs and average variable costs is:A) a verage fixed costs.B) m arginal costs.C) f ixed costs.D) s unk costs.27) I n figure 10.2, average variable costs approach average total costs as output rises because:A) m arginal costs are above average variable costs.B) a verage fixed costs are falling.C) f ixed costs are falling.D) t otal costs are falling.28) I n the long run:A) a ll inputs in production are variable.B) t here are no fixed costs.C) t otal costs equal variable costs.D) a ll of these are correct.29) L ong run costs are U-shaped because:A) o f the law of demand.B) o f the law of diminishing returns.C) o f economies and diseconomies of scale.D) o f the law of supply.30) I f average total cost is $50 and average fixed cost is $15 when output is 20 units, then thefirm's total variable cost at that level of output is:A) $1,000.B) $700.C) $300.D) i mpossible to determine without additional information.31) I f average total cost is $50 and average fixed cost is $15 when output is 20 units, then thefirm's average variable cost at that level of output is:A) $45.B) $35.C) $30.D) i mpossible to determine without additional information.32) W hen the average total cost is $16, the level of total cost is $800, then the number of units thefirm is producing is:A) i mpossible to determined with the information given.B) 784.C) 12,800.D) 50.33) I f a firm doubles all its inputs in the long run and it finds its average cost of production hasdecreased, then it has:A) d iminishing returns.B) e conomies of scale.C) d iseconomies of scale.D) d eclining fixed costs.34) E conomies of scale exist because as a firm increases its size in the long run:A) t he firm can afford more sophisticated technology in production.B) l abor and management can specialize their activities more.C) a s a larger input buyer the firm can purchase inputs at a lower per unit cost.D) a ll of these.35) I n natural monopolies such as the generation of electricity, long-run average costs continue todecrease as the plant size gets larger, because:A) d iminishing returns are not present.B) d iseconomies of scale are very minor but economies of scale continue.C) s omeone must have made a mistake at lower levels of output.D) t here are no fixed costs.36) W hen a firm's long-run average cost curve is horizontal for a range of output, then in thatrange the firm has:A) i ncreasing returns to scale.B) c onstant returns to scale.C) d ecreasing returns to scale.D) c onstant average fixed costs.37) A n isoquant shows:A) t he combinations of two goods that yield the same total satisfaction.B) t he combinations of two inputs that yield the same total product.C) t he combinations of two inputs that cost the same total quantity of money.D) t he combination of two goods that cost the same amount of money.38) T he typical shape of isoquants is:A) c oncave towards the origin.B) c onvex towards the origin.C) s traight downsloping line.D) s traight upsloping line.39) A s a firm substitutes labor for capital, more labor is required to equal one less unit of capitalbecause:A) c apital is always more productive than labor.B) a s less capital is used, diminishing returns to labor become more pronounced.C) d iseconomies of scale.D) t he price of each input changes.40) A n isocost line shows:A) a ll the possible combinations of two inputs the firm can use.B) a ll the possible combinations of two inputs the firm can use that have the same total cost.C) a ll the possible combinations of two inputs the firm can use that have the same marginalcost.D) a ll the possible combinations of two inputs with constant returns to scale.41) T he position of the isocost line is determined by the:A) p rices of the two inputs.B) p roductivities of the two inputs.C) l evel of total cost.D) p rice of the product.42) O n an isoquant/isocost graph the least cost combination of producing a given output is:A) a ny point on the isoquant curve.B) a ny point on the isocost curve.C) t he tangency point between the isoquant curve and the isocost line.D) o nly on one of the axes of the graph.43) D ifferent economies might use different combinations of inputs like labor and capital toproduce the same goods because of:A) d ifferent technologies.B) d ifferences in the productivity of the inputs.C) d ifferences in the prices of the inputs.D) a ll of the above.44) I f labor is the horizontal axis input and physical capital is the vertical axis input, then at theleast costs output:A) t he marginal rate of technical substitution is equal to the wage rate divided by the costof capital.B) t he marginal rate of technical substitution is multiplied times the wage rate divided bythe cost of capital.C) t he marginal rate of technical substitution is divided by the wage rate multiplied timesthe cost of capital.D) t he marginal rate of technical substitution is equal to the amount of capital divided bythe amount of labor.45) I f the amount of labor being used has a marginal product of 12 units of output per worker at awage rate of $6 per worker and the current capital amount being used has a marginal product of 20 units per machine, then for this to be a least cost combination of inputs the cost of capital must be:A) $2.B) $10.C) $20.D) I mpossible to determine with the information given.。

微观经济学的练习题以及答案英文版Chapter 01Thinking Like an Economist Multiple Choice Questions1. Economics is best defined as the study of:A. prices and quantities.B. inflation and interest rates.C. how people make choices under the conditions of scarcity and the results of those choices.D. wages and incomes.2. Economic questions always deal with:A. financial matters.B. political matters.C. insufficient resources.D. choice in the face of limited resources.3. The range of topics or issues that fit within the definition of economics is:A. limited to market activities, e.g., buying soap.B. limited to individuals and firms.C. extremely wide, requiring only the ideas of choice and scarcity.D. very limited.4. The central concern of economics is:A. poverty.B. scarcity.C. wealth accumulation.D. overconsumption.5. The scarcity principle indicates that:A. no matter how much one has, it is never enough.B. compared to 100 years ago, individuals have less timetoday.C. with limited resources, having more of "this" means having less of "that."D. because tradeoffs must be made, resources are therefore scarce.6. The logical implication of the scarcity principle is that:A. one will never be satisfied with what one has.B. as wealth increases, making choices becomes less necessary.C. as wealth decreases, making choices becomes less necessary.D. choices must be made.7. If all the world's resources were to magically increase a hundredfold, then:A. the scarcity principle would still govern behavior.B. economics would no longer be relevant.C. the scarcity principle would disappear.D. tradeoffs would become unnecessary.8. The principle of scarcity applies to:A. the poor exclusively.B. all consumers.C. all firms.D. everyone—consumers, firms, governments, and nations.9. At the very least, Joe Average and Bill Gates are both identically limited by:A. their wealth.B. the 24 hours that comprise a day.C. their knowledge.D. their influence.10. Forest is a mountain man living in complete isolation inMontana. He is completely self-sufficient through hunting, fishing, and farming. He has not been in the city to buy anything in five years. One can infer:A. the scarcity principle does not apply to Forest.B. Forest is not required to make choices.C. the scarcity principle still applies because more hunting means less fishing and farming.D. Forest is very satisfied.11. The scarcity principle applies to:A. all decisions.B. only market decisions, e.g., buying a car.C. only non-market decisions, e.g., watching a sunset.D. only the poor.12. Chris has a one-hour break between classes every Wednesday. Chris can either stay at the library and study or go to the gym and work out. The decision Chris must make is:A. not an economic problem because neither one costs money.B. not an economic problem because it's an hour that is wasted no matter what Chris does.C. an economic problem because the tuition Chris pays covers both the gym and the library.D. an economic problem because Chris has only one hour during which he can study or work out.13. Josh wants to go to the football game this weekend, but he has a paper due on Monday. It will take him the whole weekend to write the paper. Josh decided to stay home and work on the paper. According to the scarcity principle, the reason Josh didn't go to the game is that:A. Josh prefers schoolwork to football games.B. writing the paper is easier than going to the game.C. Josh doesn't have enough time for writing the paper and going to the game.D. it's too expensive to go to the game.14. Whether studying the size of the U.S. economy or the number of children a couple will choose to have, the unifying concept is that wants are:A. limited, resources are limited, and thus choices must be made.B. unlimited, resources are limited, and thus choices must be made.C. unlimited, resources are limited to some but not to others, and thus some people must make choices.D. unlimited, resources are limited, and thus government needs to do more.15. The cost-benefit principle indicates that an action should be taken:A. if the total benefits exceed the total costs.B. if the average benefits exceed the average costs.C. if the net benefit (benefit minus cost) is zero.D. if the extra benefit is greater than or equal to the extra costs.16. When a person decides to pursue an activity as long as the extra benefits are at least equal to the extra costs, that person is:A. violating the cost-benefit principle.B. following the scarcity principle.C. following the cost-benefit principle.D. pursuing the activity too long.17. Choosing to study for an exam until the extra benefit(improved score) equals the extra cost (mental fatigue) is:A. not rational.B. an application of the cost-benefit principle.C. an application of the scarcity principle.D. the relevant opportunity cost.18. The scarcity principle tells us that __________, and the cost-benefit principle tells us __________.A. choices must be made; how to make the choicesB. choices must be made; that the costs can never outweigh the benefits of the choicesC. rare goods are expensive; that the costs should outweigh the benefits of the choicesD. rare goods are expensive; that the costs can never outweigh the benefits of the choices19. According to the cost-benefit principle:A. the lowest cost activity usually gives the lowest benefit.B. a person should always choose the activity with the lowest cost.C. a person should always choose the activity with the greatest benefit.D. the extra costs and benefits of an activity are more important considerations than the total costs and benefits.。

哈伯德英文版微观经济学练习c09Microeconomics - Testbank 1 (Hubbard/O'Brien)Chapter 9 Consumer Choice and Behavioral Economics1) E conomists assume the goal of consumers is to:A) d o as little work as possible to survive.B) m ake themselves as well off as possible.C) e xpend all their income.D) c onsume as much as possible.2) M arginal utility is:A) t he total satisfaction received from consuming a good or service.B) t he average satisfaction received from consuming a good or service.C) t he extra satisfaction received from consuming one unit of a good or service.D) n one of these describes marginal utility.3) A s a consumer consumes more and more of a good or service in a particular time period,eventually marginal utility:A) r ises.B) i s constant.C) d eclines.D) f luctuates.4) I f a consumer receives 20 units of utility from consuming two units of a good and forconsuming three units this consumer receives 25 units of utility, the marginal utility ofconsuming the third unit is:A) 45 utility units.B) 25 utility units.C) 20 utility units.D) 5 utility units.5) I f a consumer receives 20 units of utility from consuming two units of a good and fromconsuming three units this consumer receives 25 units of utility, the marginal utility ofconsuming the second unit is:A) 25 utility units.B) 20 utility units.C) 5 utility units.D) u nknown as more information is needed to determine the answer.6) I f a consumer receives 22 units of marginal utility for consuming the first unit of a good, 20units from consuming the second, and 15 from the third, the total utility of consuming thethree units is:A) 57 utility units.B) 35 utility units.C) 15 utility units.D) u nknown as more information is needed to determine the answer.7) T otal utility:A) a lways increases as a person consumes more and more of a good.B) h as a constant rate of increase as a person consumes more and more of a good.C) i s equal to the sum of the marginal utilities of all units consumed.D) i s negative when marginal utility is declining.8) I f, as a person consumes more and more of a good, each additional unit adds less satisfactionthan the previous unit consumed, we are seeing the working of the law of:A) d emand.B) s upply.C) i ncreasing opportunity cost.D) d iminishing marginal utility.9) M arginal utility can be:A) n egative.B) z ero.C) p ositive.D) a ll of these.10) I f, when you consume another unit of a good, your marginal utility is zero, then:A) y ou want more of the good.B) y our total utility has peaked.C) y ou have not yet reached the point of diminishing marginal utility.D) y ou should consume less of this good.11) C onsumers have to make tradeoffs in deciding what to consume because:A) t hey can only consume so much each day.B) t here is not enough time to consume everything.C) t hey are limited by a budget constraint.D) t here is not enough of all goods produced.12) I f your total satisfaction increases when you consume another unit, your marginal utilitymust be:A) i ncreasing.B) d ecreasing.C) n egative.D) p ositive.13) I f you ate too many pieces of pie and got sick, then at least the last piece of pie:A) h ad constant marginal utility.B) h ad constant total utility.C) h ad negative marginal utility.D) h ad positive marginal utility.14) T otal utility typically increases at a decreasing rate as a consumer consumes more of onegood or service, so marginal utility must:A) r emains constant.B) i ncrease also.C) d ecrease.D) b e negative.15) S omething has utility for a consumer if it:A) i s scarce.B) h as a high price.C) i s something everyone else wants.D) g enerates enjoyment or satisfaction.16) W hen marginal utility is zero, total utility is:A) m aximized.B) d ecreasing.C) n egative.D) i ncreasing.17) C onsumers maximize total utility within their budget constraint by:A) b uying the cheapest goods they can find.B) b uying whatever they like the best.C) b uying the good with the largest marginal utility per dollar spent.D) b uying the same dollar amount of each good.18) I f a consumer always buys goods rationally, then:A) t he total utilities of the different goods consumed will be equal.B) t he average utilities of the different goods consumed will be equal.C) t he marginal utility per dollar spent on all goods will be equal.D) t he marginal utility of the different goods consumed will be equal.19) S uppose Joe is maximizing total utility within his budget constraint and the price of jeans is$25 and yielded 100 units of extra satisfaction. If the price of a shirt is $20, then the extra satisfaction received for the last shirt must be:A) 2000 units of utility.B) 500 units of utility.C) 100 units of utility.D) 80 units of utility.20) I f a consumer is maximizing total utility by buying goods X and Y, for a consumer to buymore of good X:A) t he consumer is maximizing so nothing can change the consumption of X.B) t he price of X has to fall.C) t he price of X has to rise.D) t he price of Y has to fall.21) M ost would prefer to drive a luxury car that has all the options, but more people buy lessexpensive cars even though they could afford the luxury car because:A) c ar buyers are irrational.B) t he total utility of less expensive cars is greater than luxury cars.C) t he marginal utility per dollar spent on the less expensive car is higher than on luxurycars.D) n one of these can explain this.22) I f a consumer is purchasing good X at $5 and gets 25 units of marginal utility from the lastunit and good Y at $3 and gets 12 units of marginal utility from the last unit, the consumer:A) i s maximizing total utility and does not want to change their consumption of good X orgood Y.B) w ants to consume more of good X and less of good Y.C) w ants to consume more of good Y and less of good X.D) w ants to consume less of both good X and good Y.23) I f a consumer is obtaining nine units of utility per dollar spent on apples and six units ofutility per dollar spent on oranges, then the consumer:A) i s maximizing total utility.B) w ants to buy more apples and less oranges.C) w ants to buy more oranges and less apples.D) w ants to buy less oranges and less apples.24) I f a consumer is utility maximizing and the price of one good falls, what has happened to themarginal utility divided by the price of the good and what should the consumer do?A) M U/P has increased and the consumer should buy more of this good.B) M U/P has increased and the consumer should buy less of this good.C) M U/P has decreased and the consumer should buy more of this good.D) M U/P has decreased and the consumer should buy less of this good.25) W hen the price of a normal good falls causing your purchasing power to rise, you buy moreof it due to:A) t he substitution effect.B) t he income effect.C) t he deadweight loss effect.D) t he elasticity effect.26) W hen the price of a good falls and you buy more of it because it is relatively less expensive,this is called:A) t he substitution effect.B) t he income effect.C) t he deadweight loss effect.D) t he elasticity effect.27) I f a normal good you are consuming has its price increase, you will buy less of it because:A) t he negative income effect is greater than the positive substitution effect.B) t he positive income and substitution effects work together.C) t he negative income and substitution effects work together.D) t he positive income effect is smaller than and the negative substitution effect.28) I f an inferior good you are consuming has its price increase, you will buy less of it because:A) t he negative income effect is smaller than the positive substitution effect.B) t he positive income and substitution effects work together.C) t he negative income and substitution effects work together.D) t he positive income effect is larger than and the negative substitution effect.29) W hen price decreases for a normal good, the income and substitution effects:A) w ork in the same direction to increase quantity demanded.B) w ork in the same direction to decrease quantity demanded.C) w ork in opposite directions and quantity demanded increases.D) w ork in opposite directions and quantity demanded decreases.30) A Giffen good:A) m ust be an inferior good.B) i s one where the positive income effect of a price increase is larger than the negativesubstitution effect.C) i s one where buyers increase quantity demanded whenprice increases.D) a ll of the above.31) T o be a Giffen good a good must be:A) a normal good.B) i nferior with an income effect that is larger than the opposing substitution effect.C) i nferior with an income effect that is smaller than the opposing substitution effect.D) i nferior with an income effect and a substitution effect working in the same direction.32) A network externality is when:A) t here is production cost savings from being networked with suppliers.B) t here is production cost savings from being networked with buyers.C) t he utility of a good is affected by how many others use the good.D) t he utility of a good is affected by celebrities who use the good.33) A good is path dependent, when:A) c onsumers get utility from consuming goods that others are consuming such asrestaurants.B) t he first technology that was adopted has an advantage over a better technology thatcame later.C) p eople who move location follow the path of people who moved before them.D) i t can only be used in one way.34) B usiness firms might raise prices only if costs haveincreased but not when demand hasincreased because:A) d emand changes are hard to determine while cost changes are provided by suppliers.B) f ear that the public may demand the government put a price ceiling on the product.C) f ear that buyers will consider demand-caused price increases as unfair and buyelsewhere.D) c ost changes are usually permanent while demand changes are often temporaryfluctuations.35) S unk costs:A) a re costs that have already been paid and cannot be recaptured.B) a re important for optimal decision making.C) a re costs associated with repairing something you already own.D) a re costs that firms sink into marketing.36) W hat is held constant along one indifference curve?A) P rices of goodsB) M arginal rate of substitutionC) M arginal utilityD) T otal utility37) I ndifference curves intersect:A) a t equilibrium.B) t he consumer optimum.C) w here the marginal rate of substitution for each indifference curve is equal.D) n ever.38) T he indifference curve shows what a consumer:A) w ants.B) c an buy.C) w ill buy.D) c an't buy.39) T he budget constraint on an indifference curve graph shows what a consumer:A) w ants.B) c an buy.C) w ill buy.D) h as bought.40) T he rational consumer will buy that combination of the two goods on an indifference curvegraph that is where:A) t he indifference curve intersects the horizontal axis.B) t he indifference curve intersects the vertical axis.C) a n indifference curve is tangent to the budget constraint.D) t he budget constraint intersects one of the axes.41) W hen the price of one of the goods on an indifference curve graph increases while the otherremains constant, the consumer's:A) i ndifference curve becomes more concave away from the origin.B) i ndifference curve becomes straighter.C) b udget constraint moves away from the origin on the axis of the good whose price hasincreased.D) b udget constraint moves in towards the origin on the axis of the good whose price hasincreased.42) O n an indifference curve/budget constraint graph, the substitution effect of a price change forone good is shown as a movement:A) a long one indifference curve.B) f rom one indifference curve to another one.C) f rom one equilibrium point to another one.D) a long one budget constraint.43) O n an indifference curve/budget constraint graph, the income effect of a price change of onegood is shown as a movement:A) a long one indifference curve.B) f rom one indifference curve to another.C) f rom one equilibrium point to another.D) a long one budget constraint.44) A n increase in a consumer's income is shown on an indifference curve/budget constraintgraph by:A) i ndifference curves all shifting inward.B) i ndifference curves all shifting outward.C) b udget constraint shifting inward.D) b udget constraint shifting outward.Refer to Figure 9.1 for the questions below.Figure 9.145) I n figure 9.1, a change in income is shown in:A) p anel a.B) p anel b.C) p anel c.D) n one of the above.46) I n figure 9.1, a change in the price of candy is shown in:A) p anel a.B) p anel b.C) p anel c.D) n one of the above.47) I n figure 9.1, beginning with the lower level of utility, an increase in the price of popcorn isshown in:A) p anel a.B) p anel b.C) p anel c.D) n one of the above.48) I n figure 9.1 beginning with the lower level of utility, panel c shows:A) a n increase in income.B) a n increase in the price of candy.C) a decrease in the price of candy.D) n one of the above.。

Managerial EconomicsPart 1:1. The price of good A goes up. As a result the demand for good B shifts to the left. From this we can infer that:a. good A is a normal good.b. good B is an inferior good.c. goods A and B are substitutes.d. goods A and B are complements.e. none of the above.Choose: d) the definition os complements2. Joe's budget line is 15F + 45C = 900. When Joe chooses his most preferred market basket, he buys 10 units of C. therefore, he also buys :a. 10 units of Fb. 30 units of Fc. 50 units of Fd. 60 units of Fe. None of the aboveChoose: b) We assume that Joe will spend all his income. If C = 10, then 15F =900 – 45(10) =450, so F = 450/15 =30.3. Kim only buys coffee and compact discs. Coffee costs $0.60 per cup, and CDs cost $12.00 each. She has $18 per week to spend on these two goods. If Kim is maximizing her utility, her marginal rate of substitution of coffee for CDs is:a. 0.05b. 20c. 18d. 1.50e. None of the aboveChoose: a) At Kim's most preferred market basket, her MRS equals the price ratio (Pcoffee/PCD), which equals 0.6/12 or 0.05.4. The bandwagon effect corresponds best to which of the following?a. snob effect.b. external economy.c. negative network externality.d. positive network externality.Choose: d)5. A Giffen gooda. is always the same as an inferior good.b. is the special subset of inferior goods in which the substitution effect dominates the income effect.c. is the special subset of inferior goods in which the income effect dominates the substitution effect.d. must have a downward sloping demand curve.Choose: c) the definition of Giffen good6. An Engel curve for a good has a positive slope if the good is :a. an inferior good.b. a Giffen good.c. a normal good. d. a, b, and c are true.e. None of the above is true.Choose: c) Inferior and Giffen goods have negatively sloped Engel curves.7. The price of beef and quantity of beef traded are P* and Q*, respectively. Given this information, consumer surplus is the area:a. 0BCQ*b. ABCc. ACP*d. CBP*e. 0ACQ*Choose: d)Consumer surplus is the area between the demand line and the price.8. In Figure 1, holding income constant, what change must have occurred to rotate the budget line from the old line(1) to the new line(2)?Figure 1a. The price of Coke fellb. The price of pizza fellc. The price of pizza rosed. The price of Coke went upe. b and cChoose: b) The horizontal intercept, I/PC, is unchanged, which implies that PC could not have changed(holding income constant). Since the slope is PP/PC, the slope change means that the price of pizza must have fallen. This can also be seen intuitively from Figure 1, since the consumer can now buy more pizza than before if he spends all his income on pizza.9. Andy buys 10 pounds of onions per month when the price is $0.75 per pound. If the price falls to $0.50 per pound, he buys 30 pounds of onions. What is his arc elasticity of demand over this price range?a. - 1.33b.–2c.–2.5d. - 6e. None of the above is correct. Choose: c) Using the arc elasticity formula,The next two questions refer to the following information: Opie and Gomer are theonly two consumers in the video cassette rental market in the Mayberry. Their demand curves per week are pictured in Figure 2.10. If rentals cost $2.50 each, the total quantity demanded each week in the market is :a. 3b. 6c. 15d. 10e. None of the above is correct.Choose: b) Add horizontally to get the market demand curve. At P = $2.50, QO = 3 and QG = 3 for a total of 6 units demanded.11. For a decrease in price from $2.50 to $1.50, market demand is :a. elastic.b. unit elastic. c. inelastic.d. perfectly inelastic.e. More information is needed.Choose: a) Demand is price elastic:EP = %ΔQ/%ΔP = [(1512. As president and CEO of MegaWorld industries, you must decide on some very risky alternative investments:a. A.b. B.c. C.d. D.e. EChoose: b) Ea=2 Eb=6.8 Ec=0 Ed=6 Ee=613. An individual with a constant marginal utility of income will bea. risk averse.b. risk neutral.c. risk loving.d. insufficient information for a decision.Choose: b)An individual with a constant marginal utility of income is risk neutral.14. In the figure below, what is true about the two jobs?a. Job 1 has a lower standard deviation than Job 2.b. All outcomes in both jobs have the same probability of occurrence.c. A risk-averse person would prefer Job 2.d. A risk-neutral person would prefer Job 1.e. Job 1 has a higher expected income than Job 2.Choose: a) Job 1 has a lower standard deviation than Job 2. Expected income of Job 1 equals to Job 2.Part 2:The demand curves for steak, eggs, and hot dogs are given in the table below. The current price of steak is $5. The price of eggs is $2.50, and the price of hot dogs is $0.75. Fill in the remaining columns of the table using this information.Solution:substitutes.Part 3:Draw indifference curves to represent the following descriptions of consumer preferences:a. I can’t taste the difference between apple and grape jelly, but I likethem both.b. I only like grape jelly and never eat apple jelly.c. Apple and grape jelly are better mixed, although I don’t care too much about the proportions.Answer:a) See Figure 7(a). Since the consumer can not tell the difference between the two flavors, all he would care about is the total amount of jelly he has.b) See Figure 7(b). An increase in the amount of apple jelly does not affect the consumer since he never eats it.c) See Figure 7(c). Here, a mixed bundle is better than an extreme one, but the consumer is willing to trade off the different flavors.Figure 7 Part 4:Therearereasonsotherthanfads,fashions,and consumer insecuri ty for bandwago n andsnobeffects.Varioustypes ofexternalities inthe consumpt ion of certaingoods also exist. Explain which these effects (bandwagon or snob) might be present in the following cases:a. A restaurant that is often crowdedb. A personal computer software productc. A rock concertAnswer:a) A price decrease will attract more customers, but the crowding(longer lines,poorer service) will discourage others. This would resemble a snob effect.b) The more people you expect to buy a software product, the more likely you canfind another experienced user to ask questions about it. Also, the more likely it is that a computer bookstore will carry publications about how to use the software. Thus, we would expect to see a bandwagon effect.c) Here, crowding might discourage some customers. But, since part of the enjoyment of a concert is seeing the band with other fans, we might observe a bandwagon effect. Part 5:Tom Wilson is the operations manager for Bi-Corp, a real estate investment firm. Tom must decide if Bi-Corp is to invest in a strip mall in a northeast metropolitan area. If the shopping center is highly successful, after tax profits will be $100,000 per year. Moderate success would yield an annual profit of $50,000, while the project will lose $10,000 per year if it is unsuccessful. Past experience suggests that there is a 40% chance that the project will be highly successful, a 40% chance of moderate success, and a 20% probability that the project will be unsuccessful.a. Calculate the expected value and standard deviation of profit. Ounces ofGrape Jelly Ounces of Apple Jelly (a ) Ounces of Grape JellyOunces of Apple Jelly (b) (c ) Ounces of Grape JellyOunces of Apple Jellyb.The project requires an $800,000 investment. If Bi-Corp has an 8% opportunity coston invested funds of similar riskiness, should the project be undertaken? Solution:a.Expected Value100,000 .4 40,00050,000 .4 20,000-10,000 .2 -2,000π = 58,000Standard deviation100,000 42,000, 764,000,000 705,600,00050,000 -8,000 64,000,000 25,600,000-10,000 -68,000 4,624,000,000 924,800,000σ2 = 1,656,000,000σ = 40,693.98b.Bio-Corp's opportunity cost is 8% of 800,000 or0.08 x 800,000 = 64,000.The expected value of the project is less than the opportunity cost. Bi-Corp should not undertake the project.。

哈伯德英⽂版微观经济学练习c15Microeconomics - Testbank 1 (Hubbard/O'Brien)Chapter 15 Pricing Strategy1) I f a firm charges different consumers different prices for the same good or service, it is engaging in:A) o dd pricing.B) c ost-plus pricing.C) p rice discrimination.D) m arkup pricing.2) I f a firm charges a membership fee to gain admission to a store and then charges members for every item they buy, it is engaging in:A) o dd pricing.B) c ost-plus pricing.C) p rice discrimination.D) a two-part tariff.3) T he development of information technology over the last twenty years has enabled firms to:A) g ather information on customers' preferences.B) e stimate buyers' elasticity of demand.C) r apidly adjust prices to increase profits.D) a ll of the above.4) A limit to firms charging different prices to different customers is:A) f ederal antitrust laws which prohibit excessive price discrimination.B) c ustomer resentment about being taken in by price discrimination.C) l ow price buyers reselling the good to high price buyers.D) l ow price buyers switching to substitutes.5) T he law of one price is:A) f ederal and state statutes that prohibit price discrimination.B) t hat all customers should pay the same price.C) t hat identical products should sell for the same price everywhere.D) g overnment regulation of prices for all firms.6) W hen you buy at a low price in one market then sell at a higher price in another market you are engaging in:A) o dd pricing.B) a rbitrage.C) a n antitrust prohibited practice.D) p rice discrimination.7) I f your local national food store buys oranges at a low price in Florida and resells them to you at a higher price, then the food store's revenue minus costs is known as:A) a rbitrage profits.B) t ransactions profits.C) p ure profits.D) e xcess profits.8) B uying at a low price in one market and reselling at a higher price in another market will:A) n ot generate any profit because of transportation costs.B) n ot generate any profit because of transactions costs.C) e ventually eliminate all of the price differences.D) e ventually eliminate most, but not all, of the price differences.9) T he expenses you encounter when you buy in one market and sell in a distant market are known as:A) p roduction costs.B) f ixed costs.C) t ransactions costs.D) s unk costs.10) T he law of one price holds exactly only if:A) a ntitrust laws are being enforced.B) b uyers have complete information.C) t ransactions costs are zero.D) i t is impossible for buyers to resell the good.11) A necessary condition for successful price discrimination is:A) n o transactions costs.B) d ifferences in the elasticities of demand for the product by different customer groups.C) s elling in a perfectly competitive market.D) b uyer ignorance.12) A necessary condition for successful price discrimination is:A) t he firm must possess market power.B) b uyers are allowed to resell the product.C) z ero transactions costs.D) i dentical inelastic demand by all buyers.13) A necessary condition for successful price discrimination is:A) p erfect competition.B) a market that can be segmented into different buyer groups.C) c ustomers being able to resell the product.D) p erfectly elastic demand.14) A type of market structure that price discrimination is NOT found in is:A) p erfect competition.B) m onopolistic competition.C) o ligopoly.D) m onopoly.15) T he necessary condition for successful price discrimination that can be the most difficult one to fulfill is:A) t he firm having market power.B) s topping resale of the product from one buyer segment to another.C) b uyers having different elasticities of demand for the product.D) s eller being able to segment the total market.16) A mong the types of firms who are able to practice price discrimination are:A) m ovie theaters.B) a irlines.C) l and-line telephone companies.D) a ll of the above.17) T he type of firms that are able to practice price discrimination are:A) o nly perfectly competitive firms.B) f irms that cannot accurately determine their customers' elasticity of demand for the product.C) f irms that can keep consumers from reselling a product.D) f irms with perfectly elastic demands.18) A firm that can effectively price discriminate, will charge a higher price from the:A) c ustomers who have the relatively elastic demand for the product.B) c ustomers who have the relatively inelastic demand for the product.C) b uyers who belong to the largest market segment.D) b uyers that are members of the smallest market segment.19) F or a firm that can effectively price discriminate, who will be charged the lower price?A) c ustomers who have an elastic demand for the productB) c ustomers who have an inelastic demand for the productC) b uyers that are members of the largest market segmentD) b uyers that are members of the smallest market segment20) A irlines that have used computer economic models to determine a price each day for each seat are using:A) p rofit maximization.B) o dd pricing.C) t wo-part tariff.D) y ield management.21) Y ield management and price discrimination have enabled many firms to increase profits and at the same time:A) r educe the cost of production.B) c apture some consumer surplus.C) r educe transactions costs.D) i ncrease total surplus.22) I f a firm could practice perfect price discrimination, it would:A) a llow resale of its product.B) c harge every buyer a different price.C) c harge a price based on the quantity of a product bought.D) u se odd pricing.23) W ith perfect price discrimination there is:A) n o deadweight loss.B) n o producer surplus.C) o ne single price.D) a n increase in consumer surplus.24) A mong the results of price discrimination is:A) l arger profitsB) s maller consumer surplusC) a larger output.D) a ll of the above.25) S ome high technology products like DVD players, electronic calculators, digital cameras, are introduced at a very high price but soon the market price starts falling because:A) p roduction costs rises as output rises.B) e arly buyers of a new product have a very inelastic demand while later buyers have amore elastic demand.C) d emand for high-tech products is very irratic.D) o f sunk costs.26) O dd pricing would be:A) s elling gasoline for $1.359 a gallon rather than $1.36 a gallon.B) w hen the price of a good ends with something other than zero.C) s etting a price just below $50 like $49.95.D) a ll of the above.27) O dd pricing in the United States resulted from:A) c onverting British goods from pounds to dollars.B) g uarding against employee theft.C) o dd priced goods being associated with high quality goods.D) a ll of the above.28) O dd pricing continues today because:A) s ellers believe that customers will buy a larger quantity with an odd price.B) i t is a way to price discriminate.C) i t is too difficult for sellers to reeducate buyers into accepting even prices.D) i t lowers transactions costs.29) F irms use cost-plus because:A) i t leads to profit maximization.B) t he percentage markup is intended to cover all costs including those in a multi-product firm that are difficult to allocate to a particular good.C) i t is necessary for price discrimination.D) a ll of the above.30) C ost-plus pricing is an ok way to determine the optimal price:A) w hen marginal and average cost are roughly equal.B) w hen fixed costs are high.C) w hen fixed costs vary.D) w hen marginal costs are very different from average costs.31) I f demand is taken into account, firms that use cost-plus pricing can adjust price by:A) l owering markups on price elastic goods and raising markups on price inelastic goods.B) l etting sales fall but hold the markup constant, if demand falls.C) r aising markups on price elastic goods and lowering markups on price inelastic goods.D) l etting sales rise but hold the markup constant, if demand rises.32) E vidence that competition and demand affect firms that use cost-plus pricing includes:A) w hen competition is strong, auto makers will offer rebates.B) s upermarkets use lower markups on price elastic goods.C) s upermarkets use higher markups on price inelastic goods.D) a ll of the above.33) A two-part tariff is:A) w hen a firm charges only two different prices for the same good.B) w hen an importer has to pay a tax at the nation's borders, then a sales tax when the good is sold.C) w hen a buyer pays an initial price for entrance to the market and an additional fee for each unit of the product purchased.D) w hen a buyer must pay a down payment and monthly payments to buy a product like a car.34) C ompared to monopoly pricing, an optimal two-part tariff:A) r educes economic efficiency.B) e liminates the deadweight loss.C) e quates marginal revenue and average revenue.D) i ncreases consumer surplus.35) A firm using a two-part tariff faces a tradeoff because:A) t he only way to increase the first part price is to lower the second part price.B) p rofits decrease when this pricing scheme is used.C) c onsumer surplus increases while producer surplus decreases.D) b uyers may shun the firm's products because they do not understand the pricing.36) W ith an optimal two-part tariff:A) c onsumer surplus equals producer surplus.B) a ll consumer surplus is transformed into profit.C) t he firm earns a breakeven level of revenue.D) t he firm earns a profit.37) P rice discrimination:A) t urns some consumer surplus into producer surplus.B) i s a method to increase profits.C) l eads to a larger level of output than a one price monopoly would produce.D) a ll of the above.Refer to Figure 15.1 for the questions below.Figure 15.138) I n figure 15.1 with perfect price discrimination, the firm will charge:A) P1.B) P2.C) P3.D) a ll of the above.39) I n figure 15.1 with perfect price discrimination, consumer surplus is:A) t he entire area under the demand curve.B) t he area between the demand curve and the marginal cost curve.C) t he area under the average total cost curve.D) z ero.40) A firm's efforts to increase profit by price discrimination can be undermined by:A) a rbitrage by buyers.B) c onsumer ignorance.C) d ifferences in elasticity of demand.D) s eller market power.41) I f, at the firm's projected sales level, marginal cost is $40, average cost is $50 and the markup is 30 percent, then it's selling price is:A) $40.B) $65.C) $50.D) $52.42) I f the firm's selling price is $200 and the projected sales amount of average cost is $150, then the firm's markup is:A) 75 percent.B) 33.33 percent.C) 25 percent.D) i mpossible to determine with the information given.。