Exam 2 Questions Flashcards
Price rises and Ed equals -2.47 will cause
total revenue to decline
At any level of of output
average total cost will exceed average variable cost by the level of average fixed cost
Which of the following best approximates a pure monopoly?
The only bank in a small town
Suppose that a monopolist calculates that at its present output level, marginal revenue is $2 and marginal cost is $1. He or she could maximize profits or minimize losses by
decreasing price and increasing output
If the demand for product X is inelastic, a 4% increase in the price of X will
decrease the quantity of X demanded by less than 4%
If a firm in a purely competitive industry is confronted with an equilibrium price of $5, its marginal revenue
will also be $5
Which of the following statements about pure competition in the long run is not true
The long-run adjustment in pure competition happens through shifts in the industry demand curve
A consumer with a fixed income will maximize utility when each good is purchased in amounts such that the
marginal utility per dollar spent is the same for all goods
Select the marginal cost
Change in TVC/Change in Q
When marginal utility is negative, an increase in the
quantity consumed will decrease total utility
The economic incentive for price discrimination is based upon
differences among buyers’ elasticities of demand
If marginal cost is above average total cost
both average total cost and average variable cost are increasing
When the price of a product is increased 10 percent, the quantity demanded decreases 15 percent. The price elasticity of demand coefficient for this product is
1.5
Which situation is consistentwith the law of diminishing marginal utility?
The more pizza Joe eats, the less he enjoys an additional slice
The income elasticity of demand for jewelry is +2. Other things equal, a 10% increase in consumer income will
increase the quantityof jewelry purchased by 20%
