College American Economics Opportunity Cost Questions

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Opportunity cost is shown on the production possibilities frontier (PPF) graph 

Group of answer choices

WHEN WE MOVE FROM AN INEFFICIENT POINT TO THE ORIGIN.

when we move from one point on the frontier to another point on the frontier.

at any one single point on the graph.

when we move from one unattainable point to an efficient point on the frontier.

when we move from the origin to any inefficient point.

Flag question: Question 2Question 2

Because of free entry and exit, companies in perfectly competitive markets

Group of answer choicesCAN EARN POSITIVE OR NEGATIVE ECONOMIC PROFITS, BUT IN THE LONG RUN, FIRMS HAVE ZERO ECONOMIC PROFITS.

CAN EARN POSITIVE ECONOMIC PROFITS, BUT IN THE LONG RUN, FIRMS HAVE ZERO ECONOMIC PROFITS.

CAN EARN NEGATIVE ECONOMIC PROFITS, BUT IN THE LONG RUN, FIRMS HAVE ZERO ECONOMIC PROFITS.

CAN EARN POSITIVE OR NEGATIVE ECONOMIC PROFITS, BUT IN THE LONG RUN, FIRMS HAVE NEGATIVE ECONOMIC PROFITS.

Flag question: Question 3Question 3

A price taker

Group of answer choicesWILL ALWAYS MAKE ECONOMIC PROFITS.

MUST SET THE PRICE EQUAL TO THE PRICE CHARGED BY OTHER SELLERS.

IS A CHARACTERISTIC HELD BY A MONOPOLISTICALLY COMPETITIVE FIRM.

HAS SOME CONTROL OVER THE PRICE IT CHARGES.

Flag question: Question 4Question 4

A monopoly charges ________ prices and produces a ________ quantity than a competitive market.

Group of answer choicesHIGHER; HIGHER

LOWER; HIGHER

LOWER; LOWER

HIGHER; LOWER

Flag question: Question 5Question 5

Price discrimination exists when a firm sells ________ goods at more than one price to ________ groups of customers based on their ______.

Group of answer choicesDIFFERENT; SIMILAR; WILLINGNESS TO PAY

DISCOUNTED; LARGE; AGE

EXISTING; DISTINCT;AGE

IDENTICAL; DIFFERENT; WILLINGNESS TO PAY

Flag question: Question 6Question 6

Product differentiation

Group of answer choicesOCCURS IN PERFECTLY COMPETITIVE MARKETS AND MONOPOLISTICALLY COMPETITIVE MARKETS.

MAY OCCUR IN ANY MARKET STRUCTURE IF THE COMPANIES ADVERTISE TO PROMOTE THE DIFFERENCES IN THEIR PRODUCT.

ONLY OCCURS IN MONOPOLISTICALLY COMPETITVE MARKETS.

OCCURS WHEN A COMPANY HAS A MONOPOLY BECAUSE THEY ARE THE ONLY ONE SELLING THE GOOD OR SERVICE.

Flag question: Question 7Question 7

The price elasticity of demand tells us

Group of answer choices

THE MOVEMENT ALONG A SUPPLY CURVE WHEN THERE IS A CHANGE IN DEMAND.

how much more consumers will demand when incomes rise.

the extent to which demand increases as additional buyers enter the market.

NONE ARE CORRECT

how sensitive buyers are to a change in price.

Flag question: Question 8Question 8

If barriers to entry are high and products are very differentiated, then (hint: think about which market structure it would resemble with the given characteristics)

Group of answer choicesTHE INDUSTRY WILL LOOK LIKE MONOPOLY

THE INDUSTRY IS PROBABLY MONOPOLISTICALLY COMPETITIVE.

THE INDUSTRY IS PROBABLY PERFECTLY COMPETITIVE.

THE INDUSTRY IS PROBABLY A DIFFERENTIATED MONOPSONY.

Flag question: Question 9Question 9

Which of the following is true for profit-maximizing firms operating in a competitive market, monopolistic competition, and monopoly?

Group of answer choicesPROFITS ARE MAXIMIZED WHEN MARGINAL COST EQUALS MARGINAL REVENUE.

FIRMS EARN POSITIVE ECONOMIC PROFITS IN THE LONG RUN.

FIRMS EARN ZERO ECONOMIC PROFITS IN THE LONG RUN.

PRICE EQUALS MARGINAL REVENUE.

Flag question: Question 10Question 103

If there are only a few companies in an oligopoly, the total quantity of the good they produce jointly will likely be ________ the total quantity on the market if the market were perfectly competitive and ________ the total quantity on the market if the market were controlled by a monopoly.

Group of answer choicesGREATER THAN; LESS THAN

LESS THAN; LESS THAN

LESS THAN; GREATER THAN

GREATER THAN; GREATER THAN

Flag question: Question 11Question 11

If the income elasticity of demand for X is negative it means that X is

Group of answer choicesA NORMAL GOOD.

A COMPLEMENT

A NECESSITY.

A SUBSTITUTE

AN INFERIOR GOOD.

Flag question: Question 12Question 12

Economists typically measure the likely level of oligopoly power present in an industry by calculating the 

Group of answer choicesCONCENTRATION RATIOS.

CAPITAL RATIOS.

COMPETITION RATIOS.

RESERVE RATIOS.

Flag question: Question 13Question 13

Firms in this market structure are likely to advertise because they need to differentiate themselves from the other firms in the market.

Group of answer choicesOLIGOPOLY, PERFECT COMPETITION, AND MONOPOLISTIC COMPETITION

PERFECT COMPETITION AND MONOPOLISTIC COMPETITION

PERFECT COMPETITION AND MONOPOLISTIC COMPETITION

MONOPOLISTIC COMPETITION

Flag question: Question 14Question 14

One of the fundamental causes of Perfectly Competitive markets is that 

Group of answer choicesACCOUNTING PROFITS BECOME ZERO BECAUSE OF PRICE WARS.

THERE ARE MORE BUYERS THAN SELLERS, GIVING THE BUYERS MARKET POWER.

THERE ARE MORE SELLERS THAN BUYERS, GIVING THE SELLERS MARKET POWER.

THERE ARE SO MANY BUYERS AND SELLERS THAT EACH HAS NO IMPACT ON THE MARKET PRICE AND THE MARKET OUTPUT

Flag question: Question 15Question 15

In both perfect competition and monopolistic competition, each firm

Group of answer choicesHAS MANY COMPETITORS.

IS LIKELY TO ADVERTISE.

SELLS A PRODUCT THAT IS AT LEAST SLIGHTLY DIFFERENT FROM THOSE OF OTHER FIRMS.

HAS SOME MONOPOLY POWER.

Flag question: Question 16Question 16

The law of demand states that, other things equal:

Group of answer choicesCONSUMERS WILL BUY MORE OF A PRODUCT AT HIGH PRICES THAN AT LOW PRICES.

THE LARGER THE NUMBER OF BUYERS IN A MARKET, THE LOWER WILL BE PRODUCT PRICE.

PRICE AND QUANTITY DEMANDED ARE INVERSELY RELATED.

PRICE AND QUANTITY DEMANDED ARE DIRECTLY RELATED.

Flag question: Question 17Question 17

If there is currently a surplus of a product in a market, the price of the product 

Group of answer choicesWILL RISE IN THE NEAR FUTURE.

IS IN EQUILIBRIUM.

IS BELOW THE EQUILIBRIUM LEVEL.

IS ABOVE THE EQUILIBRIUM LEVEL.

Flag question: Question 18Question 18

An increase in demand will cause

Group of answer choicesTHE DEMAND CURVE TO SHIFT TO THE LEFT, THE PRICE TO DECREASE, AND THE QUANTITY TO DECREASE

THE DEMAND CURVE TO SHIFT TO THE LEFT, THE PRICE TO DECREASE, AND THE QUANTITY TO INCREASE

THE DEMAND CURVE TO SHIFT TO THE RIGHT, THE PRICE TO INCREASE, AND THE QUANTITY TO INCREASE

THE DEMAND CURVE TO SHIFT TO THE RIGHT, THE PRICE TO INCREASE, AND THE QUANTITY TO DECREASE

Flag question: Question 19Question 19

If there is an increase in supply, 

Group of answer choicesTHERE WILL BE A MOVEMENT ALONG THE SUPPLY CURVE

THE SUPPLY CURVE WILL SHIFT TO THE RIGHT CAUSING THE PRICE TO DECREASE.

THE SUPPLY CURVE WILL SHIFT TO THE LEFT CAUSING THE PRICE TO DECREASE

THE SUPPLY CURVE WILL BE UPWARD SLOPING

Flag question: Question 20Question 20

Assuming orange juice and Sunny Delight are substitutes, a lower price for Sunny Delight would result in a(n)

Group of answer choicesINCREASE IN DEMAND FOR ORANGE JUICE CAUSING THE QUANTITY TO DECREASE AND THE PRICE TO INCREASE.

DECREASE IN DEMAND FOR ORANGE JUICE CAUSING THE QUANTITY TO DECREASE AND THE PRICE TO DECREASE.

NONE OF THE ABOVE

INCREASE IN SUPPLY OF SUNNY DELIGHT CAUSING THE QUANTITY TO INCREASE AND THE PRICE TO DECREASE

Flag question: Question 21Question 21

A drought in California causes a major decrease in the amount of almonds that are harvested. As a result of the drought, the consumer surplus in the market for almonds (hint what will happen to the price?)

Group of answer choicesINCREASES, AND THE CONSUMER SURPLUS IN THE MARKET FOR ALMOND MILK INCREASES.

INCREASES, AND THE CONSUMER SURPLUS IN THE MARKET FOR ALMOND MILK DECREASES.

DECREASES AND THE CONSUMER SURPLUS IN THE MARKET FOR ALMOND MILK DECREASES.

DECREASES, AND THE CONSUMER SURPLUS IN THE MARKET FOR ALMOND MILK INCREASES.

Flag question: Question 22Question 22

PS Graph

Producer surplus at a price of $70 will be

Group of answer choices$175

$50

$100

NONE OF THE ABOVE

Flag question: Question 23Question 23

WelfareFinal.jpg

Please use the graph above to CALCULATE the following at the equilibrium price:

Consumer Surplus = 

Producer Surplus = 

Flag question: Question 24Question 24

A price maker 

Group of answer choicesIS A CHARACTERISTIC HELD BY A PERFECTLY COMPETITIVE FIRM

CAN SELL ITS PRODUCT AT ANY PRICE.

MUST SET THE PRICE AT THE MARKET PRICE.

WILL ALWAYS MAKE ECONOMIC PROFITS.

HAS SOME CONTROL OVER THE PRICE IT CHARGES.

Flag question: Question 25Question 25

When two or more companies set prices or quantities, economists refer to them as

Group of answer choicesMONOPOLY.

PERFECTLY COMPETITIVE MARKET.

MONOPOLISTICALLY COMPETITIVE MARKET.

COLLUDING.

PREDATORY PRICING UNIT.

Flag question: Question 26Question 26

A player’s best strategy regardless of the strategies other players choose is called a(n)

Group of answer choicesEFFICIENT STRATEGY.

DOMINANT STRATEGY.

EQUILIBRATED STRATEGY.

SURPLUS MAXIMIZATION STRATEGY.

EFFICIENT STRATEGY.

Flag question: Question 27Question 27

The ________ illustrates the combinations of two goods that a society can produce if all of its resources are being used efficiently.

Group of answer choicesLAW OF POSITIVE STATEMENTS

PRINCIPLE OF COMPARATIVE ADVANTAGE

LAW OF DEMAND

PRODUCTION POSSIBILITIES FRONTIER (PPF)

CONCEPT OF ABSOLUTE ADVANTAGE

Flag question: Question 28Question 28

A market is in equilibrium: 

Group of answer choicesAT ALL PRICES ABOVE THAT SHOWN BY THE INTERSECTION OF THE SUPPLY AND DEMAND CURVES.

WHENEVER THE DEMAND CURVE IS DOWNSLOPING AND THE SUPPLY CURVE IS UPSLOPING.

if there is no surplus of the product.

IF THE AMOUNT PRODUCERS WANT TO SELL IS EQUAL TO THE AMOUNT CONSUMERS WANT TO BUY.

Flag question: Question 29Question 29

Consumer surplus is the 

Group of answer choices

NUMBER OF UNITS THAT CONSUMERS WANT TO BUY AT THE MARKET PRICE.

total revenue earned from producing and selling a good.

DIFFERENCE BETWEEN THE PRICE THE SELLER RECEIVES AND THE WILLINGNESS TO SELL IT.

DIFFERENCE BETWEEN THE WILLINGNESS TO PAY FOR A GOOD AND THE PRICE.

DIFFERENCE BETWEEN THE WILLINGNESS TO PAY FOR A GOOD AND THE WILLINGNESS TO SELL IT.

Flag question: Question 30Question 30

When looking at a graph, the area below the demand curve and above price is 

Group of answer choicesEXTERNAL BENEFIT.

DEAD-WEIGHT LOSS

SPENDING SURPLUS.

TAX REVENUE.

CONSUMER SURPLUS.

Flag question: Question 31Question 31

The cross-price elasticity of demand can tell us whether goods are

Group of answer choicesELASTIC OR INELASTIC.

COMPLEMENTS OR SUBSTITUTES.

NORMAL OR INFERIOR.

LUXURIES OR NECESSITIES.

Flag question: Question 32Question 32

When your income increases from $400 to $450 per week, you buy 2 muffins instead of the 3 you used to buy. What is the income elasticity of demand?

Group of answer choices-3.4

3.4

11.8

-2

Flag question: Question 33Question 33

tax on final.png

Using the graph, please find the following after the tax is imposed:

Consumer Surplus   [ Select ]  [“$150”, “$125”, “$60”, “$45”] 

Producer Surplus   [ Select ]  [“$20”, “$120”, “$45”, “$60”] 

Total Tax Revenue   [ Select ]  [“$60”, “$80”, “$8”, “$120”] 

DWL   [ Select ]  [“$120”, “$80”, “$40”, “$128”] 

Flag question: Question 34Question 34

If Sima can make either 6 shirts or 7 vests per week, what is her opportunity cost of producing 1 vest?

Group of answer choices6/7 VESTS

7/6 SHIRTS

7/6 VESTS

6/7 SHIRT

Flag question: Question 35Question 35

If Pablo has the comparative advantage in producing a good, it means that he 

Group of answer choicesHE IS MORE EFFICIENT AT PRODUCING IT

HE HAS A LOWER OPPORTUNITY COST OF PRODUCING IT

HE CAN PRODUCE IT USING FEWER MATERIALS

HE IS ABLE TO PRODUCE MORE THAN OTHER PRODUCERS

Flag question: Question 36Question 36

If a market is characterized by a negative externality, 

Group of answer choicesTHE PRICE THAT IS BEING CHARGED IS HIGHER THAN WHAT IS SOCIALLY OPTIMAL BECAUSE THE GOVERNMENT IMPOSED A CORRECTIVE TAX.

THE QUANTITY PRODUCED IN THE MARKET IS TOO LOW BECAUSE PRODUCERS AREN’T INCLUDING ALL OF THE COSTS WHEN DECIDING HOW MUCH TO PRODUCE

THE QUANTITY PRODUCED IN THE MARKET IS TOO HIGH BECAUSE PRODUCERS AREN’T INCLUDING ALL OF THE COSTS WHEN DECIDING HOW MUCH TO PRODUCE

THE EXTERNAL COST SHOULD BE ADDED PRICE THAT IS CHARGED

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