The demand for each seller's product in perfect competition is horizontal at the market price

because:

  A. all the sellers get together and set the price.

  B. the price is set by the government.

  C. all the demanders get together and set the price.

  D. each seller is too small to affect market price.

The law of supply states that other things being equal,

  A. supply creates its own demand.

  B. supply will increase if productivity increases.

  C. supply will increase to meet demand if demand increases.

  D. as price increases, quantity supplied increases.

A profit maximizing monopolist's price is:

  A. greater than 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. equal to what the price would be if the mononoplist's industry were competitive.

  D. not consistently related to price if the market were competitive.

If a good's income elasticity of demand is positive, this means:

  A. sales of the good are responsive to changes in the price of another good.

  B. sales of the good increase when buyers' incomes increase.

  C. sales of the good are responsive to changes in price.

  D. sales of the good fall when buyers' income increase.

In an indifference curve/budget line diagram, a consumer's equilibrium consumption
combination will occur

  A. at the origin.

  B. outside the budget line.

  C. inside the budget line.

  D. on the budget line.

If the cross-price elasticity of demand for goods A and B is a positive value, this means the two
goods are:

  A. substitutes.

  B. normal.

  C. inferior.

  D. complements.

The type of firms that do not have market power are:

  A. oligopoly.

  B. perfectly competitive.

  C. monopolistically competitive.

  D. monopolies.

If your total satisfaction increases when you consume another unit, your marginal utility must be:

  A. decreasing.

  B. increasing.

  C. negative.

  D. positive.

According to the law of demand, other things being equal,

   A. when the price a good goes up, then people buy less of that good.

  B. when the price a good goes up, then people buy more of that good.

  C. when people's income goes up, then they buy less of a good.

  D. when people's income goes up, then they buy more of a good.

An increase in the price of input used to produce a product will lead to

  A. a decrease in quantity supplied of that product

  B. an increase in the supply of that product.

  C. a decrease in the supply of that product.

  D. a decrease in the demand for that product.

If a perfectly competitive firm's total revenue is less than its total variable cost, the firm

  A. should stop production by shutting down temporarily.

  B. should continue to produce and increase its demand.

  C. should adopt new technology in order to lower its costs of production.

  D. should raise its price above its average variable cost.

Perfect competition is characterized by all of these EXCEPT which of the following?

  A. Sellers are price takers

  B. Advertising by individual sellers

  C. Homogeneous products

  D. Horizontal demand for individual sellers.

The concept of "demand" in economics refers to

   A. the different types of goods and services that people of different income levels want to
buy.

  B. how changes in the prices of all goods affect people's buying behavior.

  C. changes in people's consumption behavior over time.

  D. the different quantities of a good or service people will buy at different possible
prices.

Question 50 of 50
2 Points

According to the above figure, at a price of $1 per gallon, there would be

  A. a surplus of 50 million gallons.

  B. a shortage of 30 million gallons.

  C. a shortage of 20 million gallons.

  D. a surplus of 30 million gallons.