Which of the following is NOT an example of a demand shift?
a. A promotion at works leads to increased spending on vacation travel.
b. A shoe store's announced sale for the following week leads to lower demand for its shoes for the current week.
c. A safety recall of the Toyota Prius leads to higher demand for the Honda Civic.
d. An increase in coffee prices leads to a fall in demand for coffee.
Which is an example of the subsitution effect in demand?
a. the price of coffee rises, so you buy less coffee.
b. the price of coffee rises, so you buy more coffee.
c. the price of coffee rises, so you buy more tea and less coffee.
d. the price of coffee rises, so you buy less tea and more coffee.
If the demand for a product is elastic then
a. consumers will increase their purchases more than 10 percent when price falls 10 percent.
b. consumers will increase their purchases less than 10 percent when price falls 10 percent.
c. consumers will decrease their purchases more than 10 percent when price falls 10 percent.
d. consumers will increase their purchases equal to 10 percent when price falls 10 percent.
In perfect competition, the equilibrium quantity exchanged of a product or service occurs when
a. the marginal benefit is less than the marginal cost for the consumer.
b. the marginal benefit is more than the marginal cost for the consumer.
c. the marginal benefit is equal to the marginal cost for the consumer.
d. at the point where the quantity demanded is above the line of the demand curve.
Which situation describes the increasing returns stage of the production function?
a. Hiring one more tailor results in three more suits produced per hour.
b. Hiring one more baker results in less than one oven available per baker.
c. Buying one more office computer causes there to be more computers than workers.
d. Extending the workday results in more tired and less productive workers.
Expected future prices
Extent of competition in the market
Use of fiat money
Suppose there is a drought in California damaging orange groves.
a. price will increase, quantity will increase
b. price will decrease, quantity will decrease
c. price will decrease, quantity will increase
d. price will increase, quantity will decrease
Price discrimination is a situation where a producer
a. charges different prices in different markets.
b. charges the same price in different markets.
c. colludes with other companies on setting prices in all markets.
d. all of the above.
In a market economy, the ideal solution to the problem of externalities would be to:
a. prohibit all production involving spillover costs.
b. regulate both the amount people may consume and the price they pay for goods whose production involves spillover costs.
c.charge or tax producers so that the price of a good reflects the true social cost of the externality generated in production.
d.Allow producers to produce the output level where both the marginal private benefit and the marginal private cost equal the price.
Which of the following situations is NOT an example of how imperfect information affects a market?
a. A healthy person with a known family history of a disease takes out a large life insurance policy.
b. A used-car buyer looks up the free history report on an auto before purchasing it.
c. A doctor orders a series of medical tests at his clinic to rule out alternative diagnoses.
d. Travelers choose to stop at McDonalds for a Big Mac and milkshakes, rather than Bob's Real Home Cooking.
Which is an example of the adverse selection problem
a. consumers limit their purchases of U.S. manufactured cars.
b. A company's chief executive officer takes action to merge with another firm so stock prices can rise.
c. A cashier purposely forgets to ring up a sale and does not give the customer a receipt
d. A young man who is a heavy smoker decides to purchase health insurance.
Which of the following products is least likely to be sold in a monopolistic competitive market?
a. video games
b. internet service
Which of the following describes product differentiation?
a. a movie theater that charges differenti prices to students and seniors.
b. Coach manufacturing different model hand bags for Macys and Costco.
c. Microsoft producing XBox and Windows.
d. Google developing an operating system for mobile phones.
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