Question

1)

In the event of excess supply in the coffee market

a. the price of coffee will increase.

b. the price of coffee will decrease.

c. the supply of coffee will decrease (supply will shift to the left) to meet the demand.

d. the demand for coffee will increase (demand will shift to the right) to meet the supply.

2)

If the number of highway deaths among young people is roughly proportional to their beer consumption and young peoples' elasticity of demand for beer is 1.5, then a tax increase that increases the price of beer by 20% would roughly reduced highway deaths of young people by

a. 1.5%.

b. 13.33%.

c. 20%.

d. 30%.

3)

The price elasticity of demand for color printers is 1.6 and you would like to see the quantity demanded for color printers to increase by 32%. Then the percentage change in price should be

a. 10%.

b. 15%.

c. 20%.

d. 25%.

4)

Which of the following statements is incorrect?

a. A firm's total economic cost is at least as large as the firm's total accounting cost.

b. A firm's total economic cost includes both explicit cost and implicit cost of the firm.

c. A firm's implicit cost is the opportunity cost of non-purchased inputs.

d. A firm's total accounting cost is at least as large as the firm's implicit cost.

5) In the long run

a. all factors of production are fixed.

b. all factors of production are variable.

c. some factors of production are variable, while at least one factor of production is fixed.

d. None of the above is correct.

6)

When the firm increases output and the costs rise proportionately, then the long-run average cost curve is ________ and the firm is experiencing ________.

a. horizontal; constant returns to scale

b. downward sloping; constant returns to scale

c. upward sloping; diseconomies of scale

d. downward sloping; economies of scale