Question 1
2 / 2 pts
An industry (such as California cheese) might advertise so that its product (cheese)
will now be viewed as homogeneous for all producers.
will now have a price elasticity of demand that is more elastic.
will be sold in perfectly competitive markets.
is no longer viewed as homogeneous.
may be characterized by a horizontal demand curve.
IncorrectQuestion 2
0 / 2 pts
A monopolistically competitive firm usually charges more than a perfectly competitive firm because
producing homogenous output is more expensive than producing differentiated output.
it is part of a group of firms that has formally agreed to control the price and the output of a product.
producing differentiated output is more expensive than producing homogenous output.
its primary goal is to reap monopoly profits by replacing competition with cooperation.
it has a monopoly, but potential entrants exist in the form of contestable markets.
Question 3
2 / 2 pts
Firms in a monopolistically competitive industry produce
monopolistic goods only.
only consumer products—and no industrial products.
homogeneous goods and services.
only industrial products—and no consumer products.
differentiated products.
Question 4
2 / 2 pts
Product differentiation makes the demand for a monopolistically competitive firm’s product
perfectly inelastic.
less elastic than that of a monopoly.
less elastic than in a competitive market.
more elastic than in a competitive market.
perfectly elastic.
Question 5
2 / 2 pts
Profit-maximizing, monopolistically competitive firms
consider the actions of their competitors when determining price.
consider only marginal cost and marginal revenue, which determine the level of output—and the level of output determines price.
consider only average total cost and average variable cost, which determine the level of output—and the level of output determines price.
take their price from the industry price, as do perfectly competitive firms.
consider the actions only of the price leader in their market when determining price.
Question 6
2 / 2 pts
Which of the following most closely approximates the conditions of monopolistic competition?
the tobacco market, which is characterized by a few firms producing a differentiated product with difficult entry
the market for Grade A sorghum (milo), which is characterized by many firms producing a homogeneous product
the market for jumbo aircraft, where one major domestic firm competes with one major foreign firm
a cable television service, where a licensed supplier competes with firms offering satellite service
the restaurant industry, which is characterized by many firms producing differentiated products in an industry with free entry and exit
IncorrectQuestion 7
0 / 2 pts
Refer to the following graph to answer the following questions:
Profit-maximizing output for the monopolistically competitive firm is ________ units.
30
20
35
0 (zero)
25
Question 8
2 / 2 pts
As product differentiation decreases, ________ increases.
marginal cost
markup
demand elasticity
excess capacity
demand inelasticity
Question 9
2 / 2 pts
The primary purpose of advertising for a monopolist is to increase
price.
differentiation.
demand.
variety.
elasticity.
IncorrectQuestion 10
0 / 2 pts
You shop at the local drugstore because it is convenient. This situation is best described as
a market with horizontal demand.
differentiation by a cartel.
monopolistic competition with differentiation by location.
perfect competition because there are so many drugstores in the area.
differentiation by style or type.
Question 11
2 / 2 pts
In 1974, the U.S. attorney general filed suit against which telecom company for violating antitrust laws?
Sprint
Pacific Bell
T-Mobile
AT&T
Verizon
Question 12
2 / 2 pts
The following table shows two firms in a duopoly. Each firm makes its decision without knowledge of the other firm’s decision. The payoffs for each firm represent economic profits, and each firm strictly prefers more economic profit than less. If both firms were able to collude and make their supply decisions collectively, Flixbuster would sell ________ subscriptions per month and Nextflix would sell ________ subscriptions per month.
600; 600
200; 200
200; 400
400; 400
400; 200
Question 13
2 / 2 pts
In 2011, none of Roderick’s friends owned a North Face jacket and Roderick did not have a strong preference for North Face jackets. In 2012, many of Roderick’s friends owned a North Face jacket, and Roderick did have a strong preference for North Face jackets. The change in Roderick’s preferences from 2011 to 2012 can be best explained by the ________ effect.
switching
winter
social
duopolist
network
Question 14
2 / 2 pts
A business decision best understood with a sequential game is whether or not to
offer employees an early retirement package.
merge with a competing firm.
start an advertising campaign for a new product.
shut down.
stop producing an unprofitable product.
Question 15
2 / 2 pts
There are four ice cream shops on a small tourist island. The following table shows the quantity of ice cream cones that each firm produces in a typical year and the price that each firm currently charges for each ice cream cone it sells. An economist might suspect ________ collusion occurring in this market where ________ is the price leader and all other firms set price to match the price leader.
| Firm | Quantity | Price |
| Black Bear Cones | 1,383 | $2.85 |
| Frozen Treat | 2,410 | 2.89 |
| Cream Emporium | 27,377 | 2.99 |
| Royal Scoop | 670 | 3.05 |
tacit; Cream Emporium
explicit; Royal Scoop
tacit; Royal Scoop
explicit; Cream Emporium
illegal; Cream Emporium
Question 16
2 / 2 pts
Oligopolistic markets are socially ________ because price is ________ marginal cost.
efficient; equal to
inefficient; greater than
efficient; less than
efficient; greater than
inefficient; less than
Question 17
2 / 2 pts
An equilibrium in a game in which players pursue their own self-interest is called
a noncooperative equilibrium.
a sequential equilibrium.
collusion.
a prisoner’s dilemma.
a cooperative equilibrium.
Question 18
2 / 2 pts
The following table shows a small community’s demand for monthly subscriptions to a streaming movie service. Assume that only two firms (Nextflix and Flixbuster) sell in this market, that each firm offers the same quality of service and movie selection, and that each firm’s marginal cost is constant and equal to 0 (zero) due to excess capacity. Use this information to answer the following questions:
| Price/Month (P) | Number of Customers (Q) | Total Revenue/Month (TR) |
| $10 | 0 | $0 |
| 9 | 100 | 900 |
| 8 | 200 | 1,600 |
| 7 | 300 | 2,100 |
| 6 | 400 | 2,400 |
| 5 | 500 | 2,500 |
| 4 | 600 | 2,400 |
| 3 | 700 | 2,100 |
| 2 | 800 | 1,600 |
| 1 | 900 | 900 |
| 0 | 1,000 | 0 |
The following list includes four different collusive agreements that Nextflix and Flixbuster are considering. Assuming both firms will abide by the terms, which collusive agreement(s) would maximize total profit in the market?
I. Nextflix supplies 400 subscriptions and Flixbuster supplies 500 subscriptions.
II. Nextflix supplies 500 subscriptions and Flixbuster supplies 300 subscriptions.
III. Nextflix supplies 250 subscriptions and Flixbuster supplies 250 subscriptions.
IV. Nextflix supplies 100 subscriptions and Flixbuster supplies 400 subscriptions.
agreements I and II
agreements III and IV
agreements II and III
agreement I
agreement IV
IncorrectQuestion 19
0 / 2 pts
The following table shows the dollar amount of sales in 2016 for the four largest firms in the above-ground pool industry. Total industry sales in 2016 were $467,000. Use this table to answer the following questions:
| Firm Name | Sales in 2016 |
| Clear Water Island | $112,000 |
| Poolside Paradise | 47,000 |
| Nautical Waters | 19,000 |
| Sunny Plastics | 14,000 |
| All other firms in industry combined | 275,000 |
If Clear Water Island acquired Poolside Paradise, the concentration ratio would ________ and the market price of pools would likely ________.
decrease; fall
decrease; rise
increase; fall
decrease; not change
increase; rise
Question 20
2 / 2 pts
The Organization of Petroleum Exporting Countries (OPEC) is considered a cartel by economists because the
firms in the cartel sell a homogenous (undifferentiated product).
firms sell a product with few substitutes.
firms are controlled by the government.
firms agree to restrict output in order to increase prices and profits.
organization is international and thus not subject to antitrust laws.
Question 21
2 / 2 pts
Use the following table to answer the following questions:
| Labor Hours | Output |
| 0 | 0 |
| 1 | 10 |
| 2 | 18 |
| 3 | 25 |
| 4 | 30 |
| 5 | 33 |
| 6 | 34 |
| 7 | 35 |
If the workers are paid $8 per hour, the price of the product is $4, and the fixed cost of the business is $20, then how many workers should the business employ?
four
seven
three
six
five
IncorrectQuestion 22
0 / 2 pts
Use the following graph, which depicts Mighty Max’s labor demand for his duffel bag business, to answer the following questions. The labor demand curve shown is calculated based on a duffel bag price of $10.
Assume that the price of duffel bags is $10. If the marginal product of labor of the sixtieth worker drops by half, what is the value of the marginal product of labor of the sixtieth worker now?
$10
$20
$25
$30
$15
Question 23
2 / 2 pts
The government lowers the retirement age to 55. We would expect to see the labor supply curve
shift right.
stay the same but move upward.
shift left.
stay the same.
stay the same but move downward.
IncorrectQuestion 24
0 / 2 pts
Use the following table to answer the following questions:
| Workers | Output | MPL | VMPL | Wage | Gain/Loss |
| 0 | 0 | — | — | — | — |
| 1 | 300 | 300 | $900 | $400 | F3 |
| 2 | 450 | 150 | D4 | $400 | $50 |
| 3 | 550 | 100 | $300 | $400 | F5 |
| 4 | 600 | C6 | D6 | $400 | $-250 |
What is the value that belongs in cell F3?
$ – 300
$600
$ – 100
$750
$500
Question 25
2 / 2 pts
Use the following table, which shows the supply and demand schedules for workers in the country of Hovian, to answer the following questions:
| Wage | Quantity of Workers Demanded | Quantity of Workers Supplied |
| $10 | 150 | 75 |
| $20 | 100 | 100 |
| $30 | 75 | 125 |
| $40 | 60 | 135 |
| $50 | 40 | 125 |
The equilibrium wage is
$50.
$20.
$10.
$40.
$30.
Question 26
2 / 2 pts
With a large group of citizens leaving a country, what will happen to the equilibrium wage and quantity of workers employed?
The equilibrium number of workers will fall and the wage will fall.
The equilibrium number of workers will fall and the wage will rise.
Both will rise.
The equilibrium number of workers will rise and the wage will fall.
Both will fall.
IncorrectQuestion 27
0 / 2 pts
A profit-maximizing firm in a competitive market that is producing on a production curve where the marginal product of labor is diminishing also has
an upward-sloping labor demand curve.
a perfectly elastic labor supply curve.
a perfectly inelastic labor supply curve.
a perfectly inelastic labor demand curve.
a downward-sloping labor demand curve.
Question 28
2 / 2 pts
Because a product’s demand for an input to its production depends on the decision to produce this product, it is called ________ demand.
production
secondary
dependent
derived
input
Question 29
2 / 2 pts
Which of the following situations describes a monopsony?
Fernando is an accountant in New York City.
Leslie is a college instructor and there is only one university within 300 miles of her permanent residence.
Nicolette is an ice cream artist and several shops are hiring.
Francine is the only teleport technician in the world.
Leo is the only professional dog groomer in town.
Question 30
2 / 2 pts
Ummal travels back in time to deposit $100 in a high-interest-bearing savings account. When she returns to the present, she is a billionaire. We can expect Ummal to work ________ hours because of the ________ effect.
fewer; income
fewer; substitution
more; labor–leisure
more; income
more; substitution
Question 31
2 / 2 pts
Kati-Lyn has to choose between eating Chinese food and Indian food. Both Chinese food and Indian food cost the same. Which of the following equations, where MU is marginal utility and U is total utility, will lead to the optimal level of consumption?
MUChinese > MUIndian
MUChinese < MUIndian
UChinese > UIndian
MUChinese = MUIndian
UChinese = UIndian
Question 32
2 / 2 pts
Refer to the following table to answer the following questions:
| Soccer Games Attended | Total Utility (Utils per Game) |
| 0 | 0 |
| 1 | 150 |
| 2 | 275 |
| 3 | 375 |
| 4 | 450 |
| 5 | 500 |
| 6 | 525 |
| 7 | 500 |
| 8 | 400 |
If the price of attending a soccer game changes from $20 to $25, the marginal utility per dollar spent for the fifth game changes from
4.00 to 3.00.
5.00 to 4.00.
3.75 to 3.00.
18.75 to 15.00.
3.00 to 3.75.
Question 33
2 / 2 pts
Since two goods are subject to diminishing marginal utility, the marginal rate of substitution is
always increasing.
variant.
the inverse slope of the indifference curve.
constant.
always decreasing.
Question 34
2 / 2 pts
Refer to the following indifference curve. The marginal rate of substitution (MRS) between points A and B is
−2
−1
1/2
1
−1/2
IncorrectQuestion 35
0 / 2 pts
A new ________ that is parallel to the first one, but just tangent to the new indifference curve, will reveal the real-income effect.
perfect complement curve
indifference curve
perfect substitute curve
maximization point
budget constraint line
Question 36
2 / 2 pts
Refer to the following figure to answer the following questions:
The product’s marginal utility in dollars is equal to
$20.
$150.
$15.
$250.
$500.
Question 37
2 / 2 pts
Refer to the following table to answer the following questions:
| Strawberries Consumed | Total Utility | Apples Consumed | Total Utility |
| 0 | 0 | 0 | 0 |
| 1 | 7 | 1 | 14 |
| 2 | 13 | 2 | 26 |
| 3 | 18 | 3 | 36 |
| 4 | 22 | 4 | 44 |
| 5 | 25 | 5 | 50 |
| 6 | 27 | 6 | 54 |
| 7 | 28 | 7 | 56 |
Assume that strawberries cost $1 and apples cost $2. If a consumer has $8, the bundle of goods that would maximize her utility per dollar and remain within her budget would be
2 strawberries and 3 apples.
4 strawberries and 2 apples.
0 strawberries and 4 apples.
6 strawberries and 1 apple.
6 strawberries and 5 apples.
Question 38
2 / 2 pts
When comparing two goods for purchase, it is useful to acknowledge the marginal utility and the dollar price. The optimizing decision requires choosing the good with the
higher total utility per dollar.
higher marginal utility.
lower marginal price.
higher marginal utility per dollar.
equivalent marginal and dollar prices.
Question 39
2 / 2 pts
Someone who is not a “morning person” is often heard saying, “I’m cranky until I’ve had a cup of coffee.” After that first cup of coffee (and a mood improvement), the person experiences the uncommon phenomenon of ________. That is, of course, until the stress of a typical day takes its toll.
constant marginal utility
rebounding utility
rare utility
decreasing marginal utility
increasing marginal utility
Question 40
2 / 2 pts
A typical indifference curve that reflects the trade-off between two goods that are not ________ or ________ has a marginal rate of substitution that falls between these two extremes.
intersections; intrasections
right angles; straight lines
“goods”; “bads”
perfect substitutes; perfect complements
opportunity costs; utility costs
IncorrectQuestion 41
0 / 2 pts
A tariff
subsidizes the production of goods leaving the country.
is a limit on the quantity of a good that can be imported into a country.
is a tax on imports.
is a strict enforcement of health laws.
is a voluntary agreement between two countries to limit exports.
Question 42
2 / 2 pts
The United States feels that it has become too dependent on oil from Saudi Arabia, so it places a limit on the amount of oil that is imported from Saudi Arabia. This is an example of a(n)
tariff.
quota.
export subsidy.
nontariff trade barrier.
import subsidy.
Question 43
2 / 2 pts
For nearly four decades, the United States has had a
trade balance.
trade deficit.
ban on imports.
ban on exports.
trade surplus.
Question 44
2 / 2 pts
A possible reason a nation might impose a restrictive policy such as a tariff is to
give consumers more foreign-made options.
increase the welfare of domestic consumers.
encourage specialization in the good in which the nation has a comparative advantage.
help domestic firms increase market share relative to their foreign competition.
increase the level of imports.
Question 45
2 / 2 pts
The following table identifies the real value of exports, imports, and gross domestic product (GDP) for the U.S. economy, measured in billions of dollars for a series of years. Use the table to answer the following questions:
| Year | Exports | Imports | GDP |
| 1950 | 58.4 | 70.5 | 2,183.987 |
| 1960 | 105.1 | 122.8 | 3,108.707 |
| 1970 | 187.0 | 253.6 | 4,722.012 |
| 1980 | 376.0 | 369.5 | 6,450.392 |
| 1990 | 645.0 | 721.5 | 8,955.041 |
| 2000 | 1,258.4 | 1,736.2 | 12,559.660 |
| 2010 | 1,776.6 | 2,235.4 | 14,783.809 |
According to the table, in the year 2000, the real value of exports as a percentage of GDP was ________ and the real value of imports as a percentage of GDP was ________.
2.00; 1.30
12.48; 15.45
5.43; 6.12
8.79; 10.68
10.02; 13.82
Question 46
2 / 2 pts
Use the following graph to answer the following questions:
In a trading (open) economy, the quantity supplied of TVs (in thousands) in the domestic market will be
90.
120.
60.
30.
150.
IncorrectQuestion 47
0 / 2 pts
Use the following scenario to answer the following questions:
Natasha can produce either 5,000 pounds of cheese or 20 houses per year. Jameson can produce either 5,000 pounds of cheese or 10 houses per year.
Natasha’s opportunity cost of producing one pound of cheese is ________ house(s).
250
500
20
1/250 of a
1/20 of a
Question 48
2 / 2 pts
The North American Free Trade Agreement (NAFTA) was intended to increase U.S. trade with which other countries?
Brazil and Mexico
Canada, Brazil, and Mexico
Mexico and Canada
Brazil and Panama
Canada and Russia
Question 49
2 / 2 pts
For country A, an export is a good produced in
country A and purchased by residents of country A.
any other country.
country B and purchased by residents of country B.
country A and purchased by residents of country B.
country B and purchased by residents of country A.
Question 50
2 / 2 pts
Trade surplus is
when a nation no longer feels it has the need for trade partners.
when a nation imports more than it exports.
when a nation exports more than it imports.
the difference between a nation’s total exports and total imports.
the sum of a nation’s total exports and total imports.
