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Economics MCQ PDF
Economics MCQ PDF
Ans (b )
8. Single commodity consumption mode is
c) Law of supply
Ans (d )
9. Above the equilibrium price
a) S < D
b) S > D
c) S = D
d) none
Ans ( c)
a) Production technology
c) Both
d) None
Ans (a)
Ans (b)
13. At the point of equilibrium
Ans (d )
b) Cross-elasticity of demand
a) Upward sloping
b) horizontal
c) downward sloping
d) vertical
ANS(b)
25. Most important form of selling cost is
a) Advertisement
b) Sales
c) Homogeneous product
d) None
Ans( a)
26. Consumer surplus is
a) Potential price – Actual price
b) MVn=TVn-1
c) Demand = Supply
d) None
Ans(a)
27. Changes in quantity demand occur
a) Only when price changes
c) both
d) None
Ans (a)
28. Demand for a commodity depends on
c) Income
Ans(d)
a) J.R. Hicks
b) J. M. Keynes
c) Alfred Marshall
d) J.S. Mill
Ans ( c)
a) Zero
d) Equal to one.
Ans ( a)
a) Capital
b) labourer
c) Profit
d) organization
Ans (b)
a) destruction of utility
b) creation of utilities
c) exchange value
d) None
Ans ( b)
34. Reward paid to capital is
a) interest
b) profit
c) wages
d) rent
Ans ( a)
a) Innovations
b) Risks
d) none
Ans (b)
36. A firm can achieve equilibrium when its
a) MC =MR
b) MC = AC
c) MR = AR
d) MR = AC
Ans( a)
37. The firm and industry are one and the same under
a) Perfect competition
b) duopoly
c) oligopoly
d) monopoly
Ans(d)
53 A student chooses to study because the marginal benefit is greater than the
________cost.
a. average
b. total
c. marginal
d. expected
Ans. ( c)
54 Periods of less than full employment correspond to:
a. Points outside the production possibility curve.
b. Points inside the production possibility curve.
c. Points on the production possibility curve.
d. Either points inside or outside the production possibility curve.
Ans. ( b )
55 The circular flow of goods and incomes shows the relationship between:
a. Income and money.
b. Wages and salaries.
c. Goods and services.
d. Firms and households.
Ans. ( d )
56 In a free market system, the amount of goods and services that any one
householdgets depends upon its:
a. Income.
b. Wage and interest income.
c. Wealth.
d. Income and wealth.
Ans. ( d )
63 Which of the following will NOT cause a shift in the demand curve for
compact discs?
a. A change in the price of pre-recorded cassette tapes.
b. A change in income.
c. A change in the price of compact discs.
d. A change in wealth.
Ans.( c )
63 When excess demand occurs in an unregulated market, there is a tendency for:
a. Quantity supplied to decrease.
b. Quantity demanded to increase.
c. Price to rise.
d. Price to fall.
Ans.( c )
64 Market equilibrium exists when _____________ at the prevailing price.
a. quantity demanded is less than quantity supplied
b. quantity supplied is greater than quantity demanded
c. quantity demanded equals quantity supplied
d. quantity demanded is greater than quantity supplied
Ans.( c )
65 A movement along the demand curve to the left may be caused by:
a. A decrease in supply.
b. A rise in the price of inputs.
c. A fall in the number of substitute goods.
d. A rise in income.
Ans.( a)
DETERMINATION OF DEMAND
76 The demand for a product or a service depends on a host of factors.
(a)True (b) False Ans. ( a)
2 The quantity of a good demanded rises from 1000 to 1500 units when the price
fallsfrom $1.50 to $1.00 per unit. The price elasticity of demand for this product is
approximately:
a. 1.0
b. 16
c. 2.5
d. 4.0
Ans. ( a)
5 The price elasticity of demand is 5.0 if a 10 percent increase in the price results
in a
a. 2%decrease in quantity demanded.
b. 5%decrease in quantity demanded.
c. 10% decrease in quantity demanded
d. 50% decrease in quantity demanded.
Ans. ( d )
6 Demand for a good will likely be more elastic,
a. The higher the level of income.
b. The larger the proportion of monthly income spent on it.
c. The fewer the good substitutes available.
d. The higher the price of complementary goods.
Ans. ( b )
7 Demand will be more elastic,
a. The higher the income.
b. The lower the price.
c. The shorter the passage of time after a permanent price increase.
d. The more substitutes available for the good.
Ans. ( d )
8 The price elasticity of demand measures the sensitivity of demand to price
changes.
(a)True (b) False
Ans. ( a)
12 Demands for most goods tend to become more elastic with the passage of time.
(a)True (b) False
Ans. ( a)
13 If two goods are substitutes, then an increase in the price of one good will leads
to anincrease in the demand for the other good.
(a)True (b) False
Ans. ( a)
14 If two goods are complements, then a decrease in the price of one good will
results in
a decrease in the demand of the other good.
(a)True (b) False
Ans. ( b)
15 The price elasticity of demand is the same as the slope of the demand curve.
(a)True (b) False
Ans. ( b )
16 If demand is price elastic, then:
a. a rise in price will raise total revenue.
b. a fall in price will raise total revenue.
c. a fall in price will lower the quantity demanded.
d. a rise in price won't have any effect on total revenues.
Ans. ( c)
17 Complementary goods have:
a. The same elasticity’s of demand.
b. very low price elasticity of demand.
c. negative cross price elasticity of demand with respect to each other.
d. positive income elasticity of demand.
Ans. ( c )
18 The price elasticity of demand generally tends to be:
a. smaller in the long run than in the short run.
b. smaller in the short run than in the long run.
c. larger in the short run than in the long run.
d. unrelated to the length of time.
Ans. ( b )
19 If the price elasticity of supply of doodads is 0.60 and the price increases by 3
percent,then the quantity supplied of doodads will rise by
a. 0.60 percent.
b. 0.20 percent
c. 1.8 percent
d. 18 percent.
Ans. ( c )
20 If the cross-price elasticity between two commodities is 1.5,
a. The two goods are luxury goods.
b. The two goods are complements.
c. The two goods are substitutes.
d. The two goods are normal goods.
Ans. ( c )
SUPPLY ANALYSIS
1 The cost of factor inputs like land, labor, and capital has a major influence on
supply.
(a)True (b) False
Ans. ( a)
2 Which of the following factors will make the demand for a product more elastic?
(Assume the product has a straight-line, downward sloping demand.)
a. The product has no close substitutes.
b. A very small proportion of income is spent on the good.
c. A long time period has elapsed since the product’s price changed.
d. A lower price
Ans. ( c )
3 For a given normal supply curve; the amount of a tax paid by the buyer will be
larger
a. the more elastic the demand.
b. the more inelastic the demand.
c. the income elasticity is equal to zero
d. when the price is high.
Ans. (b)
8 Supply determinants are five ceteris paribus factors that are held constant when a
supply curve is constructed.
(a)True (b) False
Ans. ( a)
11 The supply curve for tomatoes is not thus more elastic in the short run than in
themomentary period.
(a)True (b)False
Ans. ( b)
12 Macroeconomic studies are based on empirical evidence.
(a)True (b)False
Ans. ( a)
13 Demand curve slopes upwards from left to right.
(a) True (b)False
Ans. ( b)
14 In the market, anyone who agrees to pay the requisite price of a product would
beexcluded from their consumption.
(a) True (b)False
Ans. ( b)
15 Aglets are the metal or plastic tips on shoelaces that make it easier to lace your
shoes.
The demand for aglets is probably
a. perfectly elastic.
b. inelastic.
c. elastic but not perfectly elastic.
d. unit elastic.
Ans. ( b)
2 Most operations produce a mixture of both products and services. Which of the
following businesses is closest to producing “pure” services?
a. IT company
b. A Restaurant
c. Counsellor/therapist
d. Steel company
Ans. ( c )
9 The law of variable proportions states that as the quantity of one factor is
increased,keeping the other factors fixed, the marginal product of that factor will
eventuallydecline.
(a)True (b)False
Ans. ( a)
12. One of the dangers of allocating common fixed costs to a product line is that
suchallocations can make the line appear less profitable than it really is.
(a)True (b)False
Ans. ( a)
16 Only the variable costs identified with a product are relevant in a decision
concerningwhether to eliminate the product.
(a)True (b)False
Ans. ( b)
17 Managers should pay little attention to bottleneck operations because they have
limited capacity for producing output.
(a)True (b)False
Ans. ( b)
11. The set of all pairs (z1, z2) of inputs that yield the output y is the y-is quant.
(a)True (b)False
Ans. ( a)
12. L-shaped isoquants imply that production requires that the inputs
are perfect substitutes.
a. are imperfect substitutes.
b. cannot be used together.
c. must be used together in a certain proportion.
d. None of these
Ans. ( c )
13. Isoquants that are downward-sloping straight lines imply that the inputs
a. are perfect substitutes.
b. are imperfect substitutes.
c. cannot be used together.
d. must be used together in a certain proportion.
Ans. ( a)
15. The profit maximization firm will choose the least cost combination of factors
toproduce at any given level of output.
(a)True (b) False
Ans. ( a)
2. An implicit cost is
a. the cost of giving up an alternative
b. the cost of a chosen alternative
c. calculated by subtracting the monetary cost.
d. none of the above
Ans. ( a)
3 The historical cost of an asset refers to the actual cost incurred at the time the
asset wasacquired.
(a)True (b) False
Ans. ( a)
4 An Explicit cost is a business expense accounted cost that can be easily identified
suchas wage, rent and materials.
(a)True (b) False
Ans. ( a)
5 Private is the cost that has to be paid by an individual who is directly involved in
theproduction or consumption of a particular good.
(a)True (b) False
Ans. ( a)
6 Social cost or external cost is not the cost burden carried by individuals who are
notdirectly involved in the production or consumption of that particular good
(a)True (b) False
Ans. ( b)
7 Average cost is the sum total of Average variable it and average fixed cost.
(a)True (b) False
Ans. ( a)
8 Cost-output relationship facilitates many managerial relationships such as:
a. Formulating the standards of operations.
b. Formulating the rational policy on plant size.
c. Formulating a policy of profit prediction.
d. All of these
Ans. ( d)
11 Marginal costs is the change in total cost resulting from unit change in……..
a. output
b. input
c. both(a) and (b)
d. None of these
Ans. ( a)
12 The ………. implies that the cost of production continues to be low till the firm
reachesthe optimum scale (Marginal cost = Average cost).
a. V-shape
b. Q-shape
c. U-shape
d. All of these
Ans. ( c)
5 The size and liquidity requirements are based on the minimum invest ability
requirements for the MSCI Global Standard Indices.
(a) True (b) False
Ans. ( a)
6 Oligopoly is a market structure in which a small number of firms account for the
wholeindustry’s output.
(a) True (b) False
Ans. ( a)
7 The number of firms and product differentiation are extremely crucial in
determiningthe nature of competition in a market.
(a) True (b) False
Ans. ( a)
8 type of market structure represented by the constant returns to scale (CRS)
technologyincludes
a. Monopolistic competition
b. Oligopoly
c. Duopoly
d. Perfect competition
Ans. ( d)
9 In industries in which there are scale economies, the variety of goods that a
country canproduce is constrained by
a. the fixed cost
b. the size of the labor force
c. the marginal cost
d. the size of the market
Ans. ( d)
20 In the long run, every cost is variable cost. In this period, all costs ever incurred
by thefirm must be recovered.
(a)True (b) False
Ans. ( a)
PERFECT COMPETITION
1. A perfectly competitive firm will maximize profit at the quantity at which the
firm'smarginal revenue equals
a. price
b. average revenue
c. total cost
d. marginal cost
Ans. ( d)
2 Which of the following is not a valid option for a perfectly competitive firm?
a. Increasing its output.
b. Decreasing its output.
c. Increasing its price.
d. Increasing its resources.
Ans. ( c)
3 In the long run, a perfectly competitive firm will achieve all but which of the
following:
a. Economic profit
b. Allocative Efficiency
c. Productive Efficiency
d. Normal profit
Ans. ( a)
4 If the price a firm receives for its product is equal to the marginal cost of
producing thatproduct, the firm is:
a. Always earning an economic profit
b. Always productively efficient.
c. Always allocatively efficient.
d. Always experiencing an economic loss.
Ans. ( c)
2. National income is the total of the value of the goods and the services which are
produced in an economy.
(a) True (b) False
Ans. ( a)
3. Which two of the following are likely to raise the equilibrium value of National
Income?
(a) Rise in savings.
(b) Rise in imports.
(c) Rise in government spending.
(d) Rise in exports.
Ans. ( c)
4. Which two of the following are excluded when measuring National Income?
(a) Value added in the output method.
(b) Value of intermediate inputs in the output method.
(c) Consumer spending in the expenditure method.
(d) Transfer payments in the income method.
Ans. ( b)
5. The return on an investment comes in the form of a stream of earnings in the
future.
(a) True (b) False
Ans. ( a)
9. Gross Domestic Product (GDP) is the total market value of all final goods and
services currently produced within the domestic territory of a country in a year.
(a) True (b) False
Ans. ( a)
10. Which of the following will not be a relevant factor when using the payback
method of capital investment appraisal?
(a) The timing of the first cash inflow
(b) The total cash flows generated by the asset
(c) The cash flows generated by the asset up to the payback period
(d) The cost of the asset
Ans. ( b)
11. Why the payback method is often considered inferior to discounted cash flow
in capital investment appraisal?
(a) I is more difficult to calculate
(b) It does not calculate how long it will take to recoup the money invested
(c) It does not take account of the time value of money
(d) It only takes into account the future income of a project
Ans. ( c)
12. Gross National Product is the total market value of all final goods and services
produced in a year.
(a) True (b) False
Ans. ( a)
13. In 2005………. was the least significant liability of U. S. non financial
businesses in terms of total value.
(a) bonds and mortgages
(b) bank loans
(c) inventories
(d) trade debt
Ans. ( b)
14. …………..are examples of financial intermediaries.
(a) Commercial banks
(b) Insurance companies
(c) Investment companies
(d) All of the above
Ans. ( d)
16. The means by which individuals hold their claims on real assets in a well-
developed economy are
(a) investment assets.
(b) depository assets.
(c) derivative assets
(d) financial assets
Ans. ( d)
17. Capital budgeting is the process of evaluating and selecting long-term
investments that are consistent with the goal of the firm.
(a) True (b) False
Ans. ( a)
18. Although derivatives can be used as speculative instruments, businesses most
often use them to
(a) attract customers.
(b) appease stockholders.
(c) offset debt.
(d) hedge
Ans. ( d)
19. The investment in fixed assets increases the fixed cost of the firm which must
be recovered from the benefit of the same project.
(a)True (b) False
Ans. ( a)
20. National Income is defined as the sum total of all the goods and services
produced in a country, in a particular period of time.
(a) True (b) False
Ans. ( a)
INFLATION
1. In period of inflation, phantom or paper profits may be reports as a result of
using the:
(a) FIFO costing assumption
(b) Perpetual inventory method
(c) LIDO costing assumption
(d) Periodic inventory method
Ans. ( b)
2. Inflation is:
(a) an increase in the overall price level.
(b) an increase in the overall level of economic activity.
(c) a decrease in the overall level of economic activity.
(d) a decrease in the overall price level.
Ans. ( a)
4. The value of a rupee does not stay constant when there is inflation.
(a) True (b) False
Ans. ( a)
7. An official measure of money in the United States is M1, which consists of the
sum of
(a) currency plus traveler's checks.
(b) currency plus checkable deposits.
(c) currency plus traveler's checks plus checkable deposits.
(d) currency plus traveler's checks plus time deposits.
Ans. ( c)
9. The inflation rate is used to calculate the real interest rate, as well as real
increases inwages.
(a) True (b) False
Ans. ( a)
10……………… the quantity of money in the India.
(a) The State Department controls
(b) The Department of Treasury controls
(c) The Reserve Bank of India controls
(d) Commercial banks control
Ans. ( c)
11. There are broadly ….. ways of controlling inflation in an economy.
(a) 2
(b) 3
(c) 4
(d) 5
Ans. ( a)
15. If the Fed is worried about inflation and wants to raise the interest rate, it
(a) increases the demand for money.
(b) increases the supply of money.
(c) decreases the demand for money.
(d) decreases the supply of money.
Ans. ( d)
16. The circular flow of goods and incomes shows the relationship between:
(a) income and money.
(b) goods and services.
(c) firms and households.
(d) wages and salaries.
Ans. ( c)
19. Hyperinflation refers to a situation where the prices rise at an alarming high
rate.
(a) True (b) False
Ans. ( a)
20. The inflation rate is used to calculate the real interest rate, as well as real
increases inwages.
(a)True (b) False
Ans. ( a)
Which of the following inputs is NOT involved in entrepreneurship?
Opportunity
Proactive individual(s)
Risk
Experts:
averse.
rewarders.
managers.
loving.
self-efficacy.
self-determination.
Close-mindedness
Being disagreeable
tenacity.
neuroticism.
self-efficacy.
obstacle thinking.
thought self-leadership.
Ans ( c)
b) Seebohm Rowntree
c) Henry Ford
d) Max Weber
Ans. ( b)
3. Which one of the following is not one of Drucker's five guiding principles of
management?
Ans. ( c)
Ans. ( a)
5. At what level of an organisation does a corporate manager operate?
a) Functional
b) Operational
c) Middle level
d) Top level
Ans. ( d)
a) Profit maximisation
Ans. ( b)
a) Conceptual skills
b) Human skills
c) Technical skills
d) Writing skills
Ans. ( d)
8. Which of these is not part of the recognised challenges for modern
managers?
b) Managing communications
c) Managing change
Ans. ( a)
a) Barack Obama
b) James Dyson
c) Damien Hirst
d) Mo Farah
Ans. ( b)
a) Profit maximisation
Ans. ( d)
1 In real life, entrepreneurs are those that…
Ans.1. c
b) Limited expansion
Ans.2. d
Ans.3. d
Ans.4. c
a) This person operates as an entrepreneur to survive for the first three months after
setting up a business.
entrepreneurial opportunity
Ans.5. c
6 A Pre-entrepreneur is…
Ans.6. a
vendor
vendor
Ans.7. b
Ans.8. a
9 A small-scale entrepreneur is ….
Ans.9. b
they…
b) Are not creating jobs for themselves but are wealth driven
Ans.10. d
1 Entrepreneurship is about….
a) People and guess what they need, it motivates the entrepreneur to start, set up
and
grow a business.
b) People and knowing what they need, it motivates the entrepreneur to start a
business.
c) People and knowing what they need, it motivates the entrepreneur to start, set up
and grow a business.
d) People and knowing what they need, it motivates the entrepreneur to take an
unknown risk.
Ans. 1. ( c)
2 The most important reason amongst others why people start their own
business is to….
a) Survive financially
Ans. 2. ( a)
Ans. 3. ( b)
4 A need to achieve can emerge in various ways…
a) High energy levels to chase goals; confidence that success will be achieved
soon; and non-measurement of success
b) High energy levels to chase goals; confidence that success will be achieved
soon; and measurement of success
c) Low energy levels to chase goals; confidence that success will be achieved; and
measurement of success
d) High energy levels to chase goals; confidence that success will be achieved; and
measurement of success.
Ans. 4 ( d)
a) The need to make decisions, having to abide by someone’s policies, rules and
regulations
b) The need to make decisions on an ad hoc basis and without having to abide by
someone’s policies, rules and regulations
Ans. ( c)
MONOPOLY
MULTIPLE CHOICES: Choose the one alternative that best completes the
statement or answers the question.
1) Unregulated monopolies
A) Cannot change the market quantity.
B) Can influence the market quantity and price.
C) Cannot incorporate.
D) Take the market price as given.
Ans. B
5) A public franchise is
A) An exclusive right granted to an inventor of a product.
B) A government issued license required to practice a profession.
C) A unique source of raw materials.
D) An exclusive right granted to a firm to supply a good or service.
Ans. D
7) A patent grants
A) A guarantee of quality to consumers.
B) An exclusive right to an inventor of a product.
C) The right to practice a profession.
D) Control over a unique source or supply of raw materials.
Ans. B
8) Patents create monopolies by restricting
A) Prices. B) Profit. C) Entry. D) Demand.
Ans. C
9) Patents are ________ barriers to entry and public franchises are ________
barriers to entry.
A) legal; legal B) legal; natural C) natural; natural D) natural; legal
Ans. A
18) Monopolists
A) Face downward sloping demand curves. B) Are price takers.
C) Have no short-run fixed costs. D) Maximize revenue, not profits.
Ans. A
25) A monopoly firm expands its output and lowers its price. The firm finds that its
total revenue falls.Hence, the firm is producing in the
A) Inelastic range of its supply curve. B) Elastic range of its supply curve.
C) Elastic range of its demand curve. D) Inelastic range of its demand curve.
Ans. D
26) The figure above shows a monopoly firm's demand curve. If the price and
quantity of haircutsmove from point t to point r, the monopoly's
A) marginal revenue will decrease. B) total revenue will fall.
C) total revenue will remain the same. D) total revenue will rise.
Ans. B
27) The figure above shows a monopoly firm's demand curve. If the price and
quantity of haircutsmove from point t to point u, the monopoly's
A) total revenue will remain the same. B) total revenue will fall.
C) marginal revenue will increase. D) total revenue will rise.
Ans.B
28) The figure above shows a monopoly firm's demand curve. At point t
A) demand is inelastic. B) demand is elastic.
C) demand is unit elastic. D) total revenue is at a minimum.
Ans. C
29) The figure above shows a monopoly firm's demand curve. The monopoly's
total revenue is at itsmaximum when the firm produces at point
A) t. B) u. C) x. D) r.
Ans. A
30) The figure above shows a monopoly firm's demand curve. The monopoly's
total revenue is zero atpoint
A) x. B) t. C) u. D) r.
Ans. A
31) The figure above shows a monopoly firm's demand curve. At point u in the
figure, the demandfacing the monopoly is
A) less than the supply. B) inelastic.C) unit elastic. D) elastic.
Ans.B
36) The figure above shows a monopoly's total revenue and total cost curves. The
monopoly'seconomic profit is maximized when it produces
A) 5 units of output. B) 20 units of output.
C) 0 units of output. D) 15 units of output.
Ans. D
37) The figure above shows a monopoly's total revenue and total cost curves. The
monopoly's marginalrevenue equals its marginal cost when it produces
A) 5 units of output. B) 15 units of output.
C) 20 units of output. D) 0 units of output.
Ans. B
38) The monopoly with the TR and TC curves shown in the figure above will
produce
A) 5 units of output. B) 20 units of output.
C) 15 units of output. D) 0 units of output.
Ans. C
39) For the unregulated, single-price monopoly shown in the figure above, when
its profit ismaximized, output will be
A) 4 units per year and the price will be $6. B) 6 units per year and the price will
be $4.
C) 4 units per year and the price will be $4. D) None of the above answers is
correct.
Ans. A
40) The unregulated, single-price monopoly shown in the figure above will
produce where its demand
A) Equals its ATC curve. B) is inelastic.
C) is elastic. D) Equals its MC curve.
Ans. C
41) The unregulated, single-price monopoly shown in the figure above has a total
economic profit of
A) $4. B) $16. C) $24. D) $8.
Ans. D
42) The unregulated, single-price monopoly shown in the figure above will sell
A) 50 tickets. B) 30 tickets.C) less than 30 tickets. D) 100 tickets.
Ans. B
43) An unregulated, single-price monopoly is shown in the figure above. If fixed
cost is $20, themonopoly's total costs when it is maximizing its profit will be
A) $30. B) $40. C) $140. D) $80
Ans. D
44) An unregulated, single-price monopoly is shown in the figure above. If fixed
cost is $20, themonopoly's total economic profit when it is maximizing its profit
will be
A) $0. B) $50. C) negative. D) $25.
Ans. D
45) The monopoly illustrated in the figure above is unregulated and charges a
single price. Thedeadweight loss created by the monopoly is
A) $90.00. B) $0. C) $22.50. D) $45.00.
Ans. C
46) Unregulated monopolies can often earn an economic profit in the long run
because
A) they have high costs.
B) barriers to entry prevent competing firms from entering the market.
C) they receive government subsidies.
D) the risks of running a monopoly are high.
Ans. B
47) Compared to a single-price monopoly, a perfectly competitive industry
produces
A) more output and has a higher price. B) more output and has a lower price.
C) less output and has a higher price. D) less output and has a lower price.
Ans. B
Ans. A
50) The unregulated, single-price monopolist illustrated in the figure above has a
total revenue of
A) $8.00 per day. B) $36.00 per day. C) $16.00 per day. D) $40.00 per day.
Ans. D
51) The unregulated, single-price monopolist illustrated in the figure above has a
total cost of
A) $16.00 per day. B) $40.00 per day. C) $32.00 per day. D) $8.00 per day.
Ans. C
52) The unregulated, single-price monopolist illustrated in the figure above earns
an economic profitof
A) $8.00 per day. B) zero. C) $10.00 per day. D) $40.00 per day.
Ans. A
53) The unregulated, single-price monopolist illustrated in the figure above will
produce
A) 6 units per day. B) 9 units per day. C) 0 units per day. D) 4 units per day.
Ans. D
54) In the figure above, compared to a perfectly competitive industry with the
same costs, asingle-price, unregulated monopoly will decrease production by
A) 2 units per day. B) 4 units per day. C) 6 units per day. D) zero.
Ans. A
55) The unregulated, single-price monopolist illustrated in the figure above will set
a price of
A) $6.00 per unit. B) $8.00 per unit. C) $10.00 per unit. D) $2.00 per unit.
Ans. C
56) In the figure above, compared to a perfectly competitive industry with the
same costs, asingle-price, unregulated monopoly will raise the price by
A) $8.00 per unit. B) $6.00 per unit. C) $4.00 per unit. D) $2.00 per unit.
Ans. C
57) In the figure above, the deadweight loss created if the industry changes from
perfectly competitiveto a single-price, unregulated monopoly is
A) zero. B) $36.00 per day. C) $8.00 per day. D) $24.00 per day.
Ans. C
58) In the figure above, the redistribution from the consumers to the producer if the
firm is asingle-price, unregulated monopoly rather than a perfectly competitive
industry is
A) $16.00 per day. B) $32.00 per day. C) $8.00 per day. D) zero.
Ans. A
63) In the figure above, the single-price, unregulated monopoly sets a price of
A) $40 per unit. B) $60 per unit. C) $80 per unit. D) $0 per unit.
Ans. B
64) Consumer surplus is
A) equal to the price minus the marginal cost.
B) less in the case of a single-price monopoly than in the case of a perfectly
competitive industry.
C) zero for a single-price monopolist.
D) positive in the case of a monopolist practicing perfect price discrimination.
Ans. B
65) In comparison with a perfect competition, a single-price monopolist with the
same costs
A) generates a larger consumer surplus and a larger economic profit.
B) generates a smaller consumer surplus but a larger economic profit.
C) generates a larger consumer surplus and a smaller economic profit.
D) generates a smaller consumer surplus and a smaller economic profit.
Ans. B
66) Compared to a competitive industry, a monopoly transfers
A) consumer surplus to producers.
B) producer surplus to consumers.
C) deadweight loss away from producers to consumers.
D) deadweight loss away from consumers to producers.
Ans. A
79) Using the demand schedule in the above table, if the firm's marginal cost is
constant at $3.00,output for a perfect price discriminating monopolist is
A) 2 units. B) 4 units. C) 5 units. D) 3 units.
Ans. C
80) Using the demand schedule in the above table, the marginal revenue for the
perfectly pricediscriminating monopolist from the sale of the third unit of output is
A) $6. B) $5. C) $4. D) $3.
Ans. B
81) Using the demand schedule in the table above, the total revenue a perfectly
price discriminatingmonopolist receives from selling 5 units of output is
A) $18. B) $5. C) $15. D) $25
Ans. D
82) If the monopoly illustrated in the figure above could engage in perfect price
discrimination, theneach buyer would pay
A) $2.00. B) $3.50. C) $3.00. D) a different price.
Ans. D
83) If the monopoly illustrated in the figure above could engage in perfect price
discrimination, thenthe lowest ticket price would be
A) $3.50. B) $3.00. C) $1.00. D) $2.00.
Ans. D
84) If the monopoly illustrated in the figure above could engage in perfect price
discrimination, then it would sell
A) 60 tickets. B) 50 tickets. C) 30 tickets. D) 100 tickets.
Ans. A
85) If the monopoly illustrated in the figure above could engage in perfect price
discrimination, thentotal revenue collected by the firm would be
A) $110. B) $210. C) $120. D) $310.
Ans. B
86) In the figure above, what is the loss of consumer surplus if the firm is a
perfectlyprice-discriminating monopoly instead of a perfectly competitive
industry?
A) $22.50 B) $90.00 C) $0 D) $45.00
Ans. B
87) If the monopoly illustrated in the figure above could engage in perfect price
discrimination, the dead weight loss would be
A) $22.50. B) $250.00. C) $0. D) $90.00.
Ans. C
88) In the figure above, the elasticity of demand facing the monopoly equals one
when it produces________ output.
A) k B) h C) j D) none of the above
Ans. A
89) In the figure above, a single-price unregulated monopoly will set price
A) a. B) b . C) c. D) d.
Ans. B
90) In the figure above, a single-price unregulated monopoly will produce at output
A) k. B) j. C) h. D) none of the above
Ans. C
91) In the figure above, the transfer of consumer surplus from consumers to the
producer caused byproduction under a single-price monopoly instead of perfect
competition is the area of
A) trapezoid beic. B) rectangle begd. C) rectangle befc. D) triangle abe.
Ans. C
92) In the figure above, consumer surplus at the price that maximizes the profit for
an unregulated,single-price monopolist is the area of
A) triangle eig. B) triangle abe. C) rectangle 0hgd. D) rectangle 0heb.
Ans. B
93) In the figure above, the deadweight loss from production under a single-price
monopoly insteadof perfect competition is the area of
A) triangleaic. B) triangle aeb. C) triangleeig. D) triangleeif.
Ans. C
94) In the figure above, a perfectly price-discriminating monopoly will maximize
profit by producingat output
A) h. B) k.C) j. D) None of the above
Ans. C
95) In the figure above, the total revenue of a perfectly price-discriminating
monopolist at theprofit-maximizing output is equal to the area of
A) 0dgh. B) 0beij. C) aci. D) 0aij.
Ans. D
96) When an increase in a firm's output of a good or service brings a decrease in
the average total cost of producing it, the firm is experiencing
A) Diseconomies of scale. B) Economies of scale.
C) Economies of scope. D) Diminishing returns.
Ans. B
98) When an increase in the range of goods produced brings a decrease in the
average total cost ofproduction, the firm is experiencing
A) diminishing returns. B) economies of scale.
C) economies of scope. D) diseconomies of scale.
Ans. C
99) Which of the following is NOT a possible gain to society from a monopoly?
A) The monopoly may induce innovation.
B) The monopoly may achieve economies of scope.
C) The monopoly may create rent seeking.
D) The monopoly may achieve economies of scale.
Ans. C
100) Which of the following statements regarding a marginal-cost pricing rule is
incorrect?
A) It is efficient.
B) It allows the firm to earn a normal profit.
C) It maximizes total surplus in a regulated industry.
D) It sets price equal to marginal cost.
Ans. B
114) The figure above shows the demand and marginal revenue curves facing Sue's
Surfboards, the solerenter of surfboards on Big Wave Island. If Sue is renting 25
surfboards an hour so that themarginal revenue is negative, then Sue's Surfboards
A) must face a unit elastic demand for surfboard rentals.
B) can increase its profit by increasing the number of rentals.
C) must face an elastic demand for surfboard rentals.
D) must face an inelastic demand for surfboard rentals.
Ans. D
115) Bob's Books is the only bookstore in town. The figure above shows the
demand curve for booksand Bob's Books' marginal revenue curve and marginal
cost curve. Bob's Books maximizes itsprofit and sets the price of a book equal to
________ and has total annual revenue of ________.
A) $20, $60,000 B) $30; $60,000 C) $10; $40,000 D) $40; $40,000
Ans. B