Final Exam

 Due Nov 12 at 11:59pm

 Points 150
 Questions 150
 Available Nov 12 at 3pm - Nov 12 at 11:59pm about 9 hours
 Time Limit 110 Minutes

Instructions
Select the best answers.

Attempt History

Attempt Time Score

LATEST Attempt 1 38 minutes 149 out of 150
Score for this quiz: 149 out of 150
Submitted Nov 12 at 4:29pm
This attempt took 38 minutes.

Question 1
0 / 1 pts

Which of the following market structure has the highest level of market power?

You Answered

Perfect competition

Monopolistic competition

Oligopoly
Correct Answer

Monopoly

Question 2
1 / 1 pts

Which of the following items does not cause entry barrier of a firm?
large firm’s economies of scale

complex technology,
Correct!

low capital requirement

none of these

Question 3
1 / 1 pts

Which of the following describes the features of perfect competition?

large number of buyers and sellers, engaged in heterogeneous products.

Correct!

large number of buyers and sellers, engaged in homogeneous products.

there is barrier in entry and exit to the market.

few number of sellers, engaged in homogeneous or differentiated products.

Question 4
1 / 1 pts

Which of the following characterize monopolistic competition?

A firm that controls the entire market.

Correct!

None of these.
Engage in differentiated products with high barriers in entry and exit.

sell identically the same products at a single price.

Question 5
1 / 1 pts

The following are features of monopoly.

maximizes profit
Correct!

all of these

dominates the entire market

high barriers to entry and exit

Question 6
1 / 1 pts

The following are features of oligopoly, except

there are high barriers to entry and engage in heterogeneous product.

Correct!

there are high barriers to entry and engage in one single product.

selling the homogeneous or differentiated products.

Interdependence and lack of uniformity.

Question 7
1 / 1 pts
A market structure with high barriers to entry and exit and dominates the entire market.

Monopolistic competition

Pure competition
Correct!

Monopoly

Oligopoly

Question 8
1 / 1 pts

Which of the following statement is true?

Elastic demand will decrease revenue when price is decreased.

Inelastic demand will decrease revenue whin price is increased.

Correct!

Elastic demand will increase revenue when price is decreased.

Inelastic demand will increase revenue when price is decreased.

Question 9
1 / 1 pts

Jim has estimated elasticity of demand for gasoline to be -0.7 in the short-run and -1.8 in the long
run. A decrease in taxes on gasoline would:

raise tax revenue in the short run but lower tax revenue in the long run.
raise revenue in both the short and long run.

lower revenue in both the short and long run.

Correct!

Lower revenue in the short run but raise revenue in the long run.

Question 10
1 / 1 pts

Buyers consider nails and lumber to be complements. If nails just increased its prices, what
would you expect to occur in the lumber market?

Demand would rise, and lumberwould increase supply.

Demand would rise, and lumber would reduce price.

Demand would fall, and lumberwould increase price.

Correct!

Demand would fall, and lumberwould reduce price.

Question 11
1 / 1 pts

Which of the coefficient points out that total revenue will increase if you sell one more.

MR < 0
Correct!

MR > 0

MR > MC
MR < MC

Question 12
1 / 1 pts

Which of the following statement is false?

Correct!

complement goods: demand increases as the price of a complement increases.

substitute goods: demand decreases as the price of a substitute decreases,

Inferior goods: demand decreases as income increases.

normal goods: demand increases as income increases,

Question 13
1 / 1 pts

Which of the coefficient points out that total profit will increase if you sell one more.

Correct!

MR > MC

MR < MC

MR > 0

MR < 1

Question 14
1 / 1 pts

Jim recently graduated from college. His income increased tremendously from $5,000 a year to
$60,000 a year. Jim decided that instead of renting he will buy a house. This implies that
need information on the price of houses.

renting and owning are complementary for Jim.

Correct!

houses are normal goods for Jim.

houses are inferior goods for Jim.

Question 15
1 / 1 pts

Which of the following goods has a negative income elasticity of demand?

Bread
Correct!

Items from Dollar stores.

Cars

Shoes

Question 16
1 / 1 pts

Which of the following is not the factor that make demand more elastic

Correct!

As price decreases, demand becomes more elastic.

Products with close substitutes have more elastic demand.

Demand for brands is more elastic than industry demand.

In the long run, demand becomes more elastic

Question 17
1 / 1 pts

It’s lunch time, you are hungry and you would like to have some pizza. By the law of
diminishing marginal value,

You would pay an equal amount of money for both the slices since they are identical.
Correct!

You would pay more for your first slice of pizza than your second

None of these

You would pay more for your second slice of pizza than your first.

Question 18
1 / 1 pts

An economist estimated the cross-price elasticity for peanut butter and jelly to be 1.5. Based on
this information, we know the goods are

complements.

inelastic.

inferior goods.
Correct!

substitutes.
Question 19
1 / 1 pts

Christine has purchased five bananas and is considering the purchase of a sixth. It is likely she
will purchase the sixth banana if

the average value of the sixth bananas exceeds the price.

Correct!

the marginal benefit of the sixth banana exceeds its price.

the marginal value she gets from the sixth banana is lower than its price.

the total personal value of six bananas exceeds the total expenditure to purchase six bananas.

Question 20
1 / 1 pts

Which of the following is the cause of diminishing marginal returns?

Increasing complexity of a large system

The “fixity” of some factor, like testing capacity

Difficulty of monitoring and motivating a large work force

Correct!

All of these

Question 21
1 / 1 pts

Diminishing marginal returns causes marginal productivity to decline. Diminishing marginal

productivity causes marginal costs to increase.
The first statement is true and the second statement is false.

Both statements are false.

The first statement is false and the second statement is true.

Correct!

Both statements are true.

Question 22
1 / 1 pts

If long-run average costs are constant with respect to output, then you have constant returns to
scale. If long run average costs rise with output, you have increasing returns to scale.

Both statements are true.

The first statement is false and the second statement is true.

Both statements are false.

Correct!

The first statement is true and the second statement is false.

Question 23
1 / 1 pts

According to the law of diminishing marginal returns, marginal returns:

diminish constantly.

diminish never.
Correct!
diminish eventually.

diminish always prior to increasing.

Question 24
1 / 1 pts

What might you reasonably expect of an industry in which firms tend to have economies of
scale?

Correct!

A small number of firms.

A large number of firms .

Exceptional competition among firms .

Highly diversified firms .

Question 25
1 / 1 pts

As a golf club production company produces more clubs, the average total cost of each club
produced decreases. This is because:

total fixed costs are decreasing as more clubs are produced .

average variable cost is decreasing as more clubs are produced .

Correct!

there are scale economies.

total variable cost is decreasing as more clubs are produced.

Question 26
1 / 1 pts
Following are the costs to produce Product A, Product B, and Products A and B together. Which
of the following exhibits economies of scope?

All of these

100, 150, 260

Correct!

100, 150, 240

100, 150, 250

Question 27
1 / 1 pts

A security system company’s total production costs depend on the number of systems produced
according to the following equation: Total Costs = $20,000,000 + $4000 * quantity produced.
Given these data, which of the following is a false statement?

Correct!

There are diseconomies of scale .

There are economies of scale.

There are fixed costs associated with this business.

A firm that produces a larger output has a cost advantage over a smaller firm.

Question 28
1 / 1 pts

Learning curves mean that current production lowers future costs. It’s important to look over the
life cycle of a product when working with products characterized by learning curves.
Both statements are false.

The first statement is true and the second statement is false.

The first statement is false and the second statement is true.

Correct!

Both statements are true.

Question 29
1 / 1 pts

Once marginal cost rises above average cost,

Correct!

Average costs will increase

None of the above

Average costs are unaffected

Average costs will decrease

Question 30
1 / 1 pts

Average costs curves initially fall

due to declining accounting costs.

due to rising marginal costs.

due to rising average fixed costs .

Correct!
due to declining average fixed costs.

Question 31
1 / 1 pts

As a T-shirt making company producing T-shirts, the average total cost of each T-shirts
produced increases. This is because:

Correct!

There is a diseconomies of scale.

total fixed costs are increasing as T-shirts are produced.

average variable cost is decreasing as more T-shirts are produced.

total variable cost is decreasing as more T-shirts are produced.

Question 32
1 / 1 pts

The following dimensions help the firm to define market before making investment, except

Correct!

Amount of capital

Location

Product

Time

Question 33
1 / 1 pts
If the market for a certain product experiences an increase in supply and a decrease in demand,
which of the following results is expected to occur?

The equilibrium price would fall, and the equilibrium quantity would fall.

The equilibrium price would rise, and the equilibrium quantity could rise or fall.

Both the equilibrium price and the equilibrium quantity could rise or fall.
Correct!

The equilibrium price would fall, and the equilibrium quantity could rise or fall.

Question 34
1 / 1 pts

Suppose there are seven sellers and seven buyers in a competitive market, each willing to buy or
sell one unit of a good, with values { $9, $8, $7, $6, $5, $4, $3}. If the government imposes a
price ceiling at $7 in the above market, how many goods will be traded?

Correct!

Five

Two

Four

Three

Question 35
1 / 1 pts

Changes in prices of a good cause

movement along the demand curve.
Correct!

both movement along the demand curve and movement along the supply curve.

no movement along either curve

movement along the supply curve.

Question 36
1 / 1 pts

Suppose a recent and widely circulated medical article has reported new benefits of cycling for
exercise. Simultaneously, the price of the parts needed to make bikes falls. If the change in
supply is greater than the change in demand, the price will _________ and the quantity will
_________.

rise, fall
Correct!

fall, rise

rise, rise

fall, fall

Question 37
1 / 1 pts

The price of peanuts increases. At the same time, we see the price of jelly (which is often
consumed with peanut butter) rise. How does this affect the market for peanut butter?

The demand curve will shift to the right; the supply curve will shift to the left .

The demand curve will shift to the right; the supply curve will shift to the right
The demand curve will shift to the left; the supply curve will shift to the right.
Correct!

The demand curve will shift to the left; the supply curve will shift to the left.

Question 38
1 / 1 pts

The following are the uncontrollable factors that can cause demand shift, except

prices of complementary products owned by other companies

interest rates
Correct!

advertising

Income

Question 39
1 / 1 pts

Suppose there are six sellers and six buyers in a competitive market, each willing to buy or sell
two units of a good, with values { $8, $7, $6, $5, $4, $3}. If the government imposes a price
floor at $6 in the above market, how many goods will be traded?

Three
Correct!

Six

Eight

Four
Question 40
1 / 1 pts

Suppose there are seven sellers and seven buyers in a competitive market, each willing to buy or
sell one unit of a good, with values {$10, $9, $8, $7, $6, $5, $4}. Assuming there are no
transactions costs, what is the equilibrium price in this market?

$5
Correct!

$7

$8

$6

Question 41
1 / 1 pts

Suppose there are seven sellers and seven buyers in a competitive market, each willing to buy or
sell one unit of a good, with values {$10, $9, $8, $7, $6, $5, $4}. If the government imposes a
price floor at $8 in the above market, how many goods will be traded?

Correct!

Three

Two

Five

Four

Question 42
1 / 1 pts
A competitive firm can earn positive or negative profit in the short run until entry or exit occurs.
In the long run, competitive firms are condemned to earn only an low rate of return.

Both statements are true.

Correct!

The first statement is true and the second statement is false.

The first statement is false and the second statement is true.

Both statements are false.

Question 43
1 / 1 pts

Which of the products below is closest to operating in a perfectly competitive industry?

Mang Inasal's Chicken

Restaurants

Nike shoes
Correct!

Carrots

Question 44
1 / 1 pts

What is the main difference between a competitive firm and a monopoly firm?

Correct!

Monopoly firms can generally earn positive profits over a longer period of time.
Monopoly firms are more efficient and therefore have lower costs.

The number of customers served by the firm

Monopoly firms enjoy government protection from competition.

Question 45
1 / 1 pts

The following items are the characteristics of a competitive firm, except

has no barriers to entry or exit.

Correct!

produce a product or service with no substitute

many rivals and no cost advantage over them

one that cannot affect price.

Question 46
1 / 1 pts

A competitive firm’s profit maximizing price is $15. At MC=MR, the output is 100 units. At this
level of production, average total costs are $12. The firm’s profits are

$300 in the short run and long run

$500 in the short-run and zero in the long run

$500 in the short-run and long-run

Correct!

$300 in the short-run and zero in the long run

Question 47
1 / 1 pts

What would happen to revenues if a firm in a perfectly competitive industry raised prices?

They would increase along with profit

They would increase but profit would decrease

They would increase

Correct!

They would fall to zero

Question 48
1 / 1 pts

At the individual firm level, which of the following types of firms faces a downward-sloping
demand curve?

Correct!

A monopoly firm but not a perfectly competitive firm

A perfectly competitive firm but not a monopoly firm

Both a perfectly competitive firm and a monopoly firm

Neither a perfectly competitive firm nor a monopoly firm

Question 49
1 / 1 pts

The following are attributes of monopoly firms that protect them from the forces of competition,
except
Correct!

they produce diversified products or services

there are barriers to entry, so no other firms can enter the industry.

they have no rivals

They dominates the entire market.

Question 50
1 / 1 pts

If a firm in a perfectly competitive industry is experiencing average revenues greater than

average costs, in the long-run

Correct!

some firms will enter the industry and price will fall

some firms will leave the industry and price will rise

some firms will leave the industry and price will fall

some firms will enter the industry and price will rise

Question 51
1 / 1 pts

Which of the following types of firms are guaranteed to make positive economic profit?

A perfectly competitive firm but not a monopoly

Correct!
Neither a perfectly competitive firm nor a monopoly

A monopoly but not a perfectly competitive firm

Both a perfectly competitive firm and a monopoly

Question 52
1 / 1 pts

Buyers have higher power when

their suppliers sell a highly differentiated product.

they are not a significant purchaser of their supplier's output.

Correct!

switching costs are low.

the buyer industry is highly fragmented

Question 53
1 / 1 pts

The following are one of three strategies a firm can adopt in order to stay one step ahead of the
forces of competition, except

Correct!

encourage product substitution

cost reduction

reduction in the intensity of competition

product differentiation
Question 54
1 / 1 pts

One of characteristics of the best industries which was not included in Porter’s Five Forces

Correct!

cooperation from complements

low threat of substitutes

high entry barriers

low supplier power

Question 55
1 / 1 pts

When a resource or capability is valuable, inimitable and rare, a firm may gain a

competitive parity.

cost advantage.

temporary competitive advantage.

Correct!

sustainable competitive advantage.

Question 56
1 / 1 pts

Attractive industries have all the following, except

low rivalry
high entry barriers
Correct!

high supplier power

low buyer power

Question 57
1 / 1 pts

Firms have a competitive advantage when they can deliver the same product or service benefits
as competitors at a lower cost. Also firms have a competitive advantage when they can deliver
superior product or service benefits than the competitor at a higher cost.

Both statements are false.

Both statements are true.

The first statement is false and the second statement is true.

Correct!

The first statement is true and the second statement is false.

Question 58
1 / 1 pts

The following are composition of the resources and capabilities of an excellent firm
performance, except

intellectual assets

organizational excellence

human capital
Correct!

customer’s loyalty

Question 59
1 / 1 pts

The concept that describes firms possessing different bundles of resources is

imitability

barriers to entry
Correct!

resource heterogeneity

resource immobility

Question 60
1 / 1 pts

Which of the following is NOT a factor that contributes to higher rivalry in an industry?

Low switching costs for buyers.

Numerous competitors.
Correct!

Fast industry growth.

High fixed costs.

Question 61
1 / 1 pts

An industry is defined as
a group of firms producing the exact same products and services.

firms producing items that sell through the same distribution channels.
Correct!

a group of firms producing products that are close substitutes.

firms that have the same resources and capabilities.

Question 62
1 / 1 pts

If a firm successfully adopts a product differentiation strategy, the elasticity of demand for its
products should

Correct!

decrease.

increase.

be unaffected.

become marginal.

Question 63
1 / 1 pts

Which of the following is NOT an example of an entry barrier?

Correct!

Low capital requirements for entry

Government protection through patents or licensing requirements

Strong brands

Lower costs driven by economies of scale

Question 64
1 / 1 pts

If buyers expect future price increases, they will ___________ their purchases to avoid it.
Similarly, sellers will __________ selling to take advantage of it.

Delay; accelerate

Delay; delay
Correct!

Accelerate; delay

Accelerate; accelerate

Question 65
1 / 1 pts

If the U.S. economy strengthens, consumer incomes increase, and consumers buy more imported
goods and services. How will this affect exchange rates?

The dollar will depreciate relative to the yuan, and U.S. prices will decrease.
Correct!

The dollar will depreciate relative to the yuan, and U.S. prices will increase.

The dollar will appreciate relative to the yuan, and U.S. prices will decrease.
The dollar will appreciate relative to the yuan, and U.S. prices will increase.

Question 66
1 / 1 pts

If the Chinese yuan devalues relative to the US dollar, then

Currency devaluation helps domestic firms by increasing demand but hurts domestic consumers
by increasing domestic price.
Correct!

US producers will be hurt; Chinese consumers will be hurt.

US producers will benefit; Chinese consumers will benefit

US producers will benefit; Chinese consumers will be hurt

Question 67
1 / 1 pts

Bubbles (if they exist) are prices that can be explained by normal economic forces. Purchasing
power parity means that exchange rates and/or prices adjust so that tradable goods cost is the
same everywhere.

Both statements are false.

Correct!

The first statement is false and the second statement is true.

Both statements are true.

The first statement is true and the second statement is false.

Question 68
1 / 1 pts
If buyers expect a future price increase, they will delay their purchases to avoid it. Similarly,
sellers will accelerate selling to take advantage of it.

Both statements are true.

Correct!

Both statements are false.

The first statement is true and the second statement is false.

The first statement is false and the second statement is true.

Question 69
1 / 1 pts

Following are certain features of bubbles that economists have documented, except

Bubbles emerge at times when investors disagree about the significance of a big economic
development.

Financial bubbles are marked by huge increases in trading

it's more costly to bet on prices going down than up, because the bullish investors dominate.
Correct!

Bubbles can easily figure out by most businessmen, henceforth its occurrence can easily be
predicted.

Question 70
1 / 1 pts

The intersection between demand for dollars and the supply of dollars is known as the

Correct!

Exchange rate
Quantity

Inflation rate

Price

Question 71
1 / 1 pts

Following a peso appreciation relative to the dollar, which of the following results is expected to
occur?

Prices in the United States would rise, and prices in Mexico would rise.

Prices in the United States would fall, and prices in Mexico would fall.
Correct!

Prices in the United States would rise, and prices in Mexico would fall.

Prices in the United States would fall, and prices in Mexico would rise.

Question 72
1 / 1 pts

An individual in the United States wants to buy office equipment from England that costs 2,800
pounds. If the exchange rate is $1.92, how much will it cost him in dollar terms?

$2,800
Correct!

$5,376

Need more information

$1,458

Question 73
1 / 1 pts

Following a peso appreciation relative to the dollar, which of the following results is expected to
occur?

U.S. consumers would benefit, and Mexican producers would be hurt.

Correct!

U.S. consumers would be hurt, and Mexican producers would be hurt.

U.S. consumers would be hurt, and Mexican producers would benefit.

U.S. consumers would benefit, and Mexican producers would benefit.

Question 74
1 / 1 pts

Currency appreciation help consumers because they make imports cheaper in the domestic
currency. Also helps suppliers because they make exports less expensive in the foreign currency.

Correct!

The first statement is true and the second statement is false.

Both statements are false.

The first statement is false and the second statement is true.

Both statements are true.

Question 75
1 / 1 pts
The so-called “carry trade,” borrowing in foreign currency to buy imports or invest in a foreign
country does not affect the exchange rates, However, borrowing in foreign currencies to spend or
invest domestically, increases demand for the domestic currency, appreciating the domestic
currency.

The first statement is false and the second statement is true.

Correct!

Both statements are true.

The first statement is true and the second statement is false.

Both statements are false.

Question 76
1 / 1 pts

Following an increase in Mexican interest rates relative to U.S. interest rates, which caused US
investors to invest in Mexican Bonds. Which of the following would occur?

The dollar would depreciate relative to the peso, and Mexican prices would decrease.
Correct!

The exchange rate would not be affected, and neither would Mexican prices.

The dollar would depreciate relative to the peso, and Mexican prices would increase.

The dollar would appreciate relative to the peso, and Mexican prices would increase.

Question 77
1 / 1 pts

After acquiring a substitute product, which of the following is not the recommended action to
do?
raise price more on the low-margin (more price elastic demand) product.

raise price on both products to eliminate price competition between them.

reposition the products so that there is less substitutability between them.

Correct!

reduce price on both products to eliminate price competition between them.

Question 78
1 / 1 pts

After running a promotional campaign, the owners of a local hardware store decided to decrease
the prices for the advertised prices sold in their store. One can infer that

Correct!

the promotional expenditures made the demand for the advertised products more elastic.

the promotional expenditures made the demand for the advertised products less elastic.

the owners got it wrong. To cover the promotional expenses, they should have raised the prices.

the promotional expenditures had no effect on demand elasticity.

Question 79
1 / 1 pts

Firms tend to raise the price of their goods after acquiring a firm that sells a substitute good
because

they lose market power.

the aggregate demand for both goods is more elastic than the demand for the individual goods.
Correct!
the aggregate demand for both goods is less elastic than the demand for the individual goods.

there is an increase in the overall demand for their products.

Question 80
1 / 1 pts

After firm A producing one good acquired another firm B producing another good, it lowered the
prices for both goods. One can conclude that the goods were

None of these

substitutes.
Correct!

complements.

not related.

Question 81
1 / 1 pts

On average, if demand is unknown and costs of underpricing are _______ than the costs of
overpricing, then _________.

smaller; overprice

larger; underprice
Correct!

smaller; underprice
None of these

Question 82
1 / 1 pts

After massive promotion of Rihanna’s latest music album, the producers reacted by raising
prices for her albums. This implies that promotion expenditures made the album demand

unitary elastic.
Correct!

less elastic.

more elastic.

change due to psychological pricing.

Question 83
1 / 1 pts

A shoe-producing firm decides to acquire a firm that produces shoe laces. This implies that the
firm’s aggregate demand (shoes + laces) will be:

equally elastic as the individual demands.

None of these
Correct!

more elastic than the individual demands.

less elastic than the individual demands.

Question 84
1 / 1 pts

Which of the following statements is false?

If demand is unknown, and the costs of underpricing are smaller than the costs of over-pricing,
then underprice, on average, and vice-versa.

After acquiring a complementary product, reduce price on both products to increase demand for
both products.
Correct!

After acquiring a substitute product, reduce price on both products to eliminate price competition
between them.

If demand is unknown, and the costs of underpricing are smaller than the costs of over-pricing,
then underprice, on average, and vice-versa.

Question 85
1 / 1 pts

A firm that acquires a substitute product can reduce cannibalization by

doing nothing.

setting the same price on both products.

lowering prices on the low-margin products.

Correct!

repositioning a product so that it does not directly compete with the substitute.

Question 86
1 / 1 pts

The oligopoly market is characterized by few sellers, selling the homogeneous or

differentiated products.

Correct!

True
False

Question 87
1 / 1 pts

A monopoly refers to a market structure where a single firm controls the entire market.

Correct!

True

False

Question 88
1 / 1 pts

In monopolistic competition there is an intense competition among the firms, the entity incurring
the loss cannot easily move out of the industry at any time it wants.

True
Correct!

False

Question 89
1 / 1 pts

The monopolistic competition, is a market structure with a large number of firms that
produce differentiated products which are not close substitutes for each other.

True
Correct!

False

Question 90
1 / 1 pts

The Oligopoly firms producing the homogeneous products are called as Imperfect Oligopoly.
True
Correct!

False

Question 91
1 / 1 pts

Product variation means that firms operating under the monopolistic competition produces
the product which is not identical from each other.

True
Correct!

False

Question 92
1 / 1 pts

The monopolistic competition is also called as imperfect competition because this market
structure lies between the pure monopoly and the pure oligopoly competition.

True
Correct!

False

Question 93
1 / 1 pts

Under the perfect competition, a seller is the price maker and can influence the market price.

True
Correct!

False

Question 94
1 / 1 pts

The term aggregate demand is not the same or different from market demand.

True
Correct!

False

Question 95
1 / 1 pts

“Demand is elastic” in business vernacular it often means tht the price is too low.

True
Correct!

False

Question 96
1 / 1 pts

The marginal value of consuming each subsequent unit diminishes the more you consume

Correct!

True

False

Question 97
1 / 1 pts

Assuming other factors are held constant consumers purchase less as price increases

Correct!

True

False
Question 98
1 / 1 pts

Marginal analysis finds the profit increasing solution to the pricing tradeoff.

It tells you which direction to go whether to raise or lower price, and also tells you how far to go.

True
Correct!

False

Question 99
1 / 1 pts

Consumer surplus is equal to value to consumer plus the price paid.

True
Correct!

False

Question 100
1 / 1 pts

In elastic demand, the price changes less than the quantity changes.

Correct!

True

False

Question 101
1 / 1 pts

If something other than price causes an increase in demand, we say that there is
“downward demand shift” to the right.
True
Correct!

False

Question 102
1 / 1 pts

Estimated price elasticity is used to estimate demand from a price and quantity change.

Correct!

True

False

Question 103
1 / 1 pts

Consumers make consumption decisions using marginal analysis, consume more if marginal
value is less than the price

True
Correct!

False

Question 104
1 / 1 pts

If demand is elastic, price cuts increase revenue.

Correct!

True

False

Question 105
1 / 1 pts
If the cost of producing two outputs jointly is less than the cost of producing them
separately then there are diseconomies of scope between the two products.

True
Correct!

False

Question 106
1 / 1 pts

Economies of scope between the two products can be an important source of competitive
advantage and shape acquisition strategy.

Correct!

True

False

Question 107
1 / 1 pts

The law of diminishing marginal returns states that as you expand output, your marginal
productivity eventually declines.

Correct!

True

False

Question 108
1 / 1 pts

Diseconomies of scope when the cost of producing two products together is higher than the cost
of separate production.

Correct!

True
False

Question 109
1 / 1 pts

Increasing marginal costs eventually cause increasing average costs and make it easier
to compute break-even prices.

True
Correct!

False

Question 110
1 / 1 pts

If average cost increases with output, then you have increasing returns to scale.

True
Correct!

False

Question 111
1 / 1 pts

When negotiating contracts, it is important to know what your costs curves look like; otherwise,
you could end up accepting contracts with unprofitable prices.

Correct!

True

False

Question 112
1 / 1 pts

In business investments if you hear the words “efficiency” or “synergy,” hold on to your money.
Correct!

True

False

Question 113
1 / 1 pts

Prices are a primary way that market participants communicate with one another. High prices tell
suppliers to supply less.

True
Correct!

False

Question 114
1 / 1 pts

A “market maker” makes a market – by buying low and selling high.

Correct!

True

False

Question 115
1 / 1 pts

If the costs of making a market are large, then the equilibrium price may be better viewed as
a spread rather than a single price.

Correct!

True

False

Question 116
1 / 1 pts

The behavior of sellers is determined by a “demand” curve.

True
Correct!

False

Question 117
1 / 1 pts

It is highly recommended to use demand and supply analysis for an individual firm

True
Correct!

False

Question 118
1 / 1 pts

In a competitive equilibrium there are no consummated wealth-creating transactions.

True
Correct!

False

Question 119
1 / 1 pts

If price is below the equilibrium price, there are too many sellers, forcing price down.

True
Correct!

False
Question 120
1 / 1 pts

Quantities are a primary way that market participants communicate with one another.

True
Correct!

False

Question 121
1 / 1 pts

For competitive firms price is always greater than marginal revenue.

True
Correct!

False

Question 122
1 / 1 pts

The indifference principle tells us that in long-run equilibrium, all professions should be
equally attractive, provided labor is mobile.

Correct!

True

False

Question 123
1 / 1 pts

If an asset is mobile, then in long-run equilibrium, the asset will be indifferent about where it
is used; that is, no matter where it goes it will make the no profit

True
Correct!

False

Question 124
1 / 1 pts

When risk premia become too small, some investors view this as a time to get out of risky assets
because the market may be ignoring risk in pursuit of higher returns.

Correct!

True

False

Question 125
1 / 1 pts

Compensating wage differentials reflect differences in the inherent attractiveness of

various professions.

Correct!

True

False

Question 126
1 / 1 pts

No industry is perfectly competitive thus few firms are almost close to it.

True
Correct!

False
Question 127
1 / 1 pts

Perfect competition is theoretical, but benchmarking on it is valuable to expose the forces that
move prices and firm profit in the long run .

Correct!

True

False

Question 128
1 / 1 pts

Without continuing stream of innovations and brand support, the product’s profits would
have been slowly eroded away by the forces of competition.

Correct!

True

False

Question 129
1 / 1 pts

Monopoly firms can earn positive profit for a longer period of time than competitive firms, but
entry and imitation eventually erode their profit as well.

Correct!

True

False

Question 130
1 / 1 pts

Profit exhibits what is called mean reversion, or “regression toward the mean.”

Correct!
True

False

Question 131
1 / 1 pts

Risk premia are analogous to compensating wage differentials: just as workers are compensated
for unpleasant work, so too are investors compensated for bearing risk.

Correct!

True

False

Question 132
1 / 1 pts

A competitive firm produces a product or service with very close substitutes so they have
very elastic demand.

Correct!

True

False

Question 133
1 / 1 pts

Tipping is an element of strategy by using a set of techniques to create a platform by making a

technology to a particular technological system and market.

True
Correct!

False

Question 134
1 / 1 pts
A valuable resource must allow a business to conceive of and implement strategies that improve
its efficiency or effectiveness.

Correct!

True

False

Question 135
1 / 1 pts

Resources are defined as “the tangible and intangible assets firms use to conceive of and
implement their “strategies”.

Correct!

True

False

Question 136
1 / 1 pts

According to the resource-based view (RBV), individual firms may exhibit sustained
performance

advantages due to the superiority of their resources.

Correct!

True

False

Question 137
1 / 1 pts

For a resource to be rare, it must be simultaneously available to a large number of competitors.

True
Correct!
False

Question 138
1 / 1 pts

Strategy is the art of matching the resources and capabilities of a firm to the opportunities and
risks in its external environment for the purpose of developing a sustainable competitive
advantage

Correct!

True

False

Question 139
1 / 1 pts

Competitive advantage flows from having something that competitors can't easily duplicate

Correct!

True

False

Question 140
1 / 1 pts

Publicly available knowledge is going to help you create a competitive advantage.

True
Correct!

False

Question 141
1 / 1 pts

Borrowing in foreign currency to buy imports or invest in a foreign country devalue domestic
currency.
True
Correct!

False

Question 142
1 / 1 pts

Investing in a foreign country or importing goods from a foreign country increases the demand
for foreign currency.

Correct!

True

False

Question 143
1 / 1 pts

If sellers expect a future price increase, they will accelerate their sales to take advantage of it.

True
Correct!

False

Question 144
1 / 1 pts

The bubble will never pop even if sufficient number of skeptical investor act simultaneously.

True
Correct!

False
Question 145
1 / 1 pts

The so-called “carry trade,” borrowing in foreign currencies to spend or invest in foreign country
does not affect the exchange rates.

Correct!

True

False

Question 146
1 / 1 pts

Currency devaluations help consumers because they make imports less expensive in the

domestic currency.

True
Correct!

False

Question 147
1 / 1 pts

Currency devaluation hurts consumers because they make imports more expensive in the
domestic currency.

Correct!

True

False

Question 148
1 / 1 pts

Bubbles persist because no one has the firepower to successfully attack them.

Correct!
True

False

Question 149
1 / 1 pts

Psychological biases suggests “framing” price changes as gains rather than as losses.

Correct!

True

False

Question 150
1 / 1 pts

With bigger MR, reduce price (sell more) to maximize profits.

Correct!

True

False
Quiz Score: 149 out of 150