HEY PPL QUESTION IS JUMBLE UP! FIND URSELF =D
A
1) Firms in an oligopolistic market structure are likely to collude when
a there are low barriers to entry into the industry.
b there are greater economies of scale to be reaped as a result.
c the demand for the product is falling rapidly.
d the product is not differentiated.
Correct Answer : there are greater economies of scale to be reaped as a result.
2)
The diagram below shows the cost structure and demand of an electric corporation which manufactures electric light bulbs, owned by a profit maximizing entrepreneur.
The regulation committee insists that the firm should be nationalized and sets its price where the firm would break even. What price should the corporation charge and which level of output would the monopolist be producing at?
a 250 units at $7 each
b 250 units at $5 each
c 550 units at $3 each
d 700 units at $1 each
Correct Answer : 550 units at $3 each
3)
Monopoly power may be achieved in all of the following ways except
a the natural efficiency of a single firm.
b the merger of existing firms.
c a conspiracy among firms.
d decreasing returns to scale.
Correct Answer : decreasing returns to scale.
4)
When Singapore Petroleum Company (SPC) offered a 15 per cent discount on its fuel, other petrol companies in Singapore followed suit.
Which one of the following could explain this?
a All petrol companies in Singapore are price takers.
b They are engaging in non-price competition.
c Singapore Petroleum Company is less efficient than the other petrol firms.
d There is mutual interdependence among firms in the petroleum industry.
Correct Answer : There is mutual interdependence among firms in the petroleum industry.
5) Which of the statements below is/are correct?
a When demand is price elastic, a reduction in price leads to a decrease in total revenue.
b When demand is price elastic, a reduction in price leads to an increase in total revenue.
c When demand is price inelastic, a reduction in price leads to an increase in total revenue.
d Both a and c.
Correct Answer : When demand is price elastic, a reduction in price leads to an increase in total revenue.
6)
Refer to the graph below. Start at point A. When the magnitude of an increase in supply is greater than the magnitude of an increase in demand:
a Equilibrium price will increase, and quantity will increase. The market moves to point B.
b Equilibrium price will decrease, and quantity will increase. The market moves to point C.
c Equilibrium price will increase, and quantity will increase. The market moves to point D.
d Equilibrium price will increase, and quantity will increase. The market moves to point B.
Correct Answer : Equilibrium price will decrease, and quantity will increase. The market moves to point C.
7) The opportunity cost of the federal government's building a new aircraft carrier could be :
a raising taxes.
b decreasing the federal budget surplus.
c cutting Medicare benefits.
d creating an arms race with Russia, China, or some other country.
Correct Answer : cutting Medicare benefits.
8)
The supply of a good to a market is likely to be more price elastic when
a Producers are operating close to full capacity
b The time period required for production is small
c Factor inputs cannot be substituted between alternative uses
d Stock levels are low
Correct Answer : The time period required for production is small
9) If the price elasticity of demand for butter is 2, a 1% decrease in the price of butter will
a Reduce the quantity demanded by half
b Increase the quantity demanded by 2%
c Increase the quantity demanded by 0.5%
d Double the quantity demanded
Correct Answer : Increase the quantity demanded by 2%
10) Evidence suggests that the cross elasticity of demand between private and public transport, whilst positive, is very low. Therefore it follows that
a A fall in the demand for private transport would cause a small rise in the demand for public transport
b A rise in the price of private transport would cause a small rise in the demand for public transport
c A rise in the price of private transport would cause a slight fall in the demand for public transport
d A fall in the demand for private transport would cause a small rise in the price of public transport
Correct Answer : A rise in the price of private transport would cause a small rise in the demand for public transport
11)
When there is a leftward shift in supply curve, equilibrium price _____ and equilibrium quantity _____. (assuming there is no shift in the demand curve)
a falls, falls
b rises, rises
c rises, falls
d falls, rises
Correct Answer : rises, falls
12) The minimum efficient scale (MES) refers to the
a smallest plant size which is profitable to operate.
b output level after which no economies of scale is available.
c profit-maximising output level in the long run.
d largest plant size available in the short run.
Correct Answer : output level after which no economies of scale is available.
13) If the government establishes the market price above the equilibrium price, that price is a price______ and there is a _________.
a ceiling, shortage
b ceiling, surplus
c floor, shortage
d floor, surplus
Correct Answer : floor, surplus
14)
Refer to the graph below. Start at point A. As an assistant to Alan Greenspan, you are asked to predict the direction of gas prices. This is today's news: An oil shortage, caused mostly by OPEC cutbacks, appears to be being compensated for by a reduced preference for driving. Analysts now attribute the recent fall in oil stocks to this new trend in the driving habits of Americans.
a You'll tell Alan Greenspan that the market is headed for point F.
b You'll tell Alan Greenspan that the market is headed for point G.
c You'll tell Alan Greenspan that the market is headed for point H.
d You'll tell Alan Greenspan that the market will remain at point A.
Correct Answer : You'll tell Alan Greenspan that the market is headed for point G.
15)
The data below shows the total cost of a perfectly competitive firm producing a good X.
Units of X produced
Total Cost (S$)
0
100
1
200
2
280
3
460
4
620
5
800
What is the minimum price required for the firm to continue production in the short run?
a $60
b $90
c $130
d $140
Correct Answer : $90
16) Finish the following sentence: When a good has few close substitutes readily available,
a quantity demanded is not nearly as responsive to a change in price.
b price elasticity of demand is greater than one.
c proportional changes in quantity demanded tend to be greater than proportional changes in price.
d all of the above are true.
Correct Answer : quantity demanded is not nearly as responsive to a change in price.
17)
Refer to the graph below. Assume that TVs and VCRs are two complement goods and that the diagram below represents the demand for VCRs. Which move would best describe the impact of a decrease in the price of TVs on this diagram?
a The move from A to B.
b The move from A to C.
c Both moves. Demand first moves from A to B, then from B to C.
d None of the above. Since this is the demand for VCRs, changes in the price of other goods would have no impact on it.
Correct Answer : The move from A to C.
18) When the magnitude of a decrease in supply is greater than the magnitude of a decrease in demand:
a Both equilibrium quantity and price will increase
b Both equilibrium quantity and price will decrease
c Equilibrium quantity will increase, and equilibrium price will decrease
d Equilibrium quantity will decrease, and equilibrium price will increase
Correct Answer : Equilibrium quantity will decrease, and equilibrium price will increase
19) Why is the demand for the product of a monopolistically competitive firm more price elastic than that of a monopolist?
a Marginal revenue equates marginal cost for the monopolistically competitive firm.
b Average revenue exceeds average cost in the long run equilibrium of a monopolist.
c A monopolistically competitive firm produces goods with close substitutes.
d Barriers exist to entry of new firms for the monopolistically competitive firm.
Correct Answer : A monopolistically competitive firm produces goods with close substitutes.
20)
Positive cross-elasticities suggest that goods are ________ and
negative cross-elasticities suggest that goods are ________.
a substitutes, inferior
b normal, complements
c substitutes, complements
d normal, inferior
Correct Answer : substitutes, complements
21) In the theory of the firm, the long run is distinguished from the short run in that
a all firms produce at the level of output at which their costs are minimised.
b all the factor inputs can be varied.
c he quantity supplied can be varied in response to a change in price.
d only profit maximising firms can produce.
Correct Answer : all the factor inputs can be varied.
22) What will be the effect on the price charged by a monopoly who practises first- degree price discriminiation, and on the quantity it produces, if a tax of 50 cents per unit of output is introduced?
a Price: Increases by 50 cents
Quantuty: Falls
b Price: Increases by 50 cents
Quantity: Unchanged
c Price: Increases by less than 50 cents
Quantity: Unchanged
d Price: No change
Quantity: Falls
Correct Answer : Price: No change
Quantity: Falls
23) The price per unit at which a profit-maximising firm can sell its output is fixed by the government. The firm will produce at the level of output where
a average cost is equal to average revenue.
b average cost is minimised.
c marginal cost is equal to price.
d total revenue is maximised.
Correct Answer : marginal cost is equal to price.
24) When a firm doubles all its inputs, its output increases by 150%. This illustrates
a the law of variable proportions.
b increasing marginal returns.
c increasing returns to scale.
d increasing short-run marginal cost.
Correct Answer : increasing returns to scale.
25)
Refer to the graph below. At which points are resources fully and efficiently employed along both the AE and the FE curves?
a At points B, C, and D only.
b At points A, F, and E only.
c At points A, B, C, D, F, and E.
d At point H only.
Correct Answer : At points A, B, C, D, F, and E.
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