# economics data bank

August 14, 2017

37.The local pizza
restaurant makes such great bread sticks that consumers do not respond much to
a change in the price. If the owner is only interested in increasing revenue,
he would
a.lower the
b.leave the
price of the bread sticks alone.
c.raise the
d.none of the
above are correct.

38.Which of
the following statements is false?
a.When the
marginal product of labor is upward?sloping, the marginal cost curve is
upward?sloping.
b.The average
fixed cost curve is downward?sloping and approaches the horizontal
axis.
c.The
marginal cost curve intersects the average variable cost curve at the
minimum of average variable cost.
d.When the
marginal cost curve is above the average cost curve, the average cost
curve is upward?sloping.

39.Suppose
that Carolyn receives a pay increase. We would expect
a.Carolynâs?demand for normal goods to remain unchanged.
b.Carolynâs?demand for inferior goods to decrease.
c.Carolynâs?demand for luxury goods to decrease.
d.Carolynâs?demand for normal goods to decrease.

40.Scenario
1.Imagine that two
oil companies, Lexxon and PB, own adjacent oil fields. Under the fields is a
common pool of oil worth \$48 million. Drilling a well to recover oil costs \$4
million per well. If each company drills one well, each will get half of the
oil and earn a \$20 million profit (\$24 million in revenue ? \$4 million in
costs). Assume that each firm can drill either one or two wells and having X
percent of the total wells means that a company will collect X percent of the total
revenue.
Refer to Scenario 1. PB would adopt what sort of well?drilling strategy in a Nash
equilibrium?
a.PB will
never drill a second well.
b.PB will
always drill a second well.
c.PB will
drill a second well only if Lexxon drills a well.
d.PB will
drill a second well only if Lexxon does not drill a well.

41.Suppose a
monopolist faces the following conditions. The firm is currently producing
20,000 units and generating \$40,000 revenues. At the current level of
production, the firm has the minimum average total cost that is equal to \$2. In
addition, at this level of production, the firmâs average variable cost is \$1. What should the monopolist firm do to
maximize its profit in the short run?
a.Increase
output level and decrease price
b.Decrease
output level and increase price
c.Do nothing
d.Shut down
immediately

42.The textile
industry is composed of a large number of small firms. In recent years, these
firms have suffered economic losses and many sellers have left the industry.
Economic theory suggests that these conditions willa.shift the demand curve outward so that price will rise to the level of
production cost.
b.cause the
remaining firms to collude so that they can produce more efficiently.
c.cause the
market supply to decline and the price of textiles to rise.
d.cause firms
in the textile industry to suffer long?run economic losses.

43.Which of the following would not shift
the demand curve for a good or service?
a.a change in
income.
b.a change in
the price of the good or service
c.a change in
expectations about the price of the good or service.
d.a change in
the price of a related good.

44.For the same amount of pollution emitted,
an emissions tax is said to be more efficient than an environmental standard
because all polluters:
a.emit
pollution up to the point at which the marginal benefit of polluting is equal
to the emissions tax.
b.emit the
same amount of pollution, regardless of the marginal benefit of
polluting.
c.pay the
same total tax bill for their pollution.
d.reduce
pollution emissions to zero.

45.An important difference between the
situation faced by a profit?maximizing monopolistically competitive firm in the
short run and the situation faced by that same firm in the long run is that in
the short run,
a.price may
exceed marginal revenue; in the long run, price equals marginal
revenue.
b.price may
exceed marginal cost; in the long run, price equals marginal cost.
c.price may exceed
average total cost; in the long run, price equals average total
cost.
d.there are
many firms in the market; in the long run, there are only a few firms in
the market.

fewer mystery books. This shows that you consider mystery books as a/ana.normal good
b.inferior
good
c.luxury good
d.comple

47.Generally a
firm is more willing and able to increase quantity supplied in response to a
price change when
a.the
relevant time period is short rather than long
b.the
relevant time period is long rather than short
c.supply is
inelastic
d.the firm is
experiencing capacity problems.

48.Public
goods should be produced up to the point at which the marginal cost of
production equals:
a.the maximum
price any individual is willing to pay for that unit.
b.the sum of
the individual marginal benefits from all consumers of that unit.
c.zero, which
is the marginal cost of allowing another individual to consume the
good.
d.the highest
marginal benefit from any individual consumer of the good.

49.The profit?maximization problem for a
monopolist differs from that of a competitive firm in which of the following
ways?
a.A
competitive firm maximizes profit at the point where marginal revenue equals
marginal cost; a monopolist maximizes profit at the point where
marginal
revenue exceeds marginal cost.
b.A
competitive firm maximizes profit at the point where average revenue equals
marginal cost; a monopolist maximizes profit at the point where
average
revenue exceeds marginal cost.
c.For a
competitive firm, marginal revenue at the profit?maximizing level of output
is equal to marginal revenue at all other levels of output; for a
monopolist,
marginal revenue at the profit?maximizing level of output is smaller
than it is for
larger levels of output.
d.For a
profit?maximizing competitive firm, thinking at the margin is much more
important than it is for a profit?maximizing monopolist.

50.Which one
of the following descriptions is not suitable for monopolistic competition?
a.There is no
profit in the long run.
b.It is easy
for a new firm to enter the industry.
c.It has a
supply curve with a positive slope.
d.It has
market power.