tt - S P Q D 10 10 2 6 4 Quiz 4 Sample Questions 1. Total...

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Unformatted text preview: S P Q D 10 10 2 6 4 Quiz 4 Sample Questions 1. Total revenue will increase if price a. falls and demand is inelastic. b. falls and demand is elastic. c. rises and demand is elastic. d. rises and demand is unitary elastic. 2. According to the accompanying diagram, in market equilibrium consumer surplus is a. $0. b. $4. c. $8. d. $16. e. none of the above. 3. A monopolist maximizes profit by setting a. total revenue equal to total cost. b. marginal revenue equal to marginal cost. c. average revenue equal to average cost. d. total revenue as high as possible. e. consumer’s surplus equal to price. 4. Suppose that last year you produced 500 million units at an AC of $2 and this year you are producing 600 million units at an AC of $1.80. Your firm is experiencing a. increasing returns to scale. b. decreasing returns to scale. c. constant returns to scale. d. diminishing returns to scale. 5. Average fixed cost in the short run a. increase as the quantity produced increases. b. decrease as the quantity produced increases. c. are equal to zero as they do not matter for profit maximization. d. none of the above. 2 S P Q D 10 10 2 6 4 Answers: 1. Total revenue will increase if price a. falls and demand is inelastic. b. falls and demand is elastic. c. rises and demand is elastic. d. rises and demand is unitary elastic. 2. According to the accompanying diagram, in market equilibrium consumer surplus is a. $0. b. $4. c. $8. d. $16. e. none of the above. 3. A monopolist maximizes profit by setting a. total revenue equal to total cost. b. marginal revenue equal to marginal cost. c. average revenue equal to average cost. d. total revenue as high as possible. e. consumer’s surplus equal to price. 4. Suppose that last year you produced 500 million units at an AC of $2 and this year you are producing 600 million units at an AC of $1.80. Your firm is experiencing a. increasing returns to scale. b. decreasing returns to scale. c. constant returns to scale. d. diminishing returns to scale. 5. Average fixed cost in the short run a. increase as the quantity produced increases. b. decrease as the quantity produced increases. c. are equal to zero as they do not matter for profit maximization. d. none of the above. 3 Questions: 1. Graphically, consumer’s surplus is measured by a. the sum of the vertical differences between the demand curve and the supply curve for all quantities exchanged. b. the sum of the vertical differences between the price paid and the supply curve for all quantities exchanged. c. the area above the demand curve and below the price for all quantities exchanged. d. the area below the demand curve and above the price for all quantities exchanged. e. none of the above....
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This note was uploaded on 04/14/2008 for the course ECO 2301 taught by Professor Lubaketsler during the Spring '08 term at University of Texas at Dallas, Richardson.

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tt - S P Q D 10 10 2 6 4 Quiz 4 Sample Questions 1. Total...

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