Test #2

Test #2 - 1. The cost of producing one more unit of a good...

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1. The cost of producing one more unit of a good is: a. impossible to find. b. total cost. c. marginal cost . d. average cost. 2. Consumer surplus is equal to: a. total area under the demand curve down to the market price. ** b. the area from the demand curve to the supply curve less than the equilibrium quantity. c. the vertical distance from the demand curve down to the horizontal axis. d. total area under the demand curve. 3. If the cost of producing a product increases, then: a. the quantity demanded will increase. b. the demand for the product will decrease. c. the quantity supplied will increase. d. the supply of the product will decrease. 4. When the market price is artificially kept too high, then: a. economic surplus is increased. b. consumer surplus is increased. c. a deadweight loss is incurred. d. a higher level of economic efficiency is achieved. 5. The existence of a shortage in a market will cause: a. market price to rise and quantity supplied to decrease. b. market price to fall and quantity supplied to increase. c. market price to fall and quantity supplied to decrease. d. market price to rise and quantity supplied to increase. 6. Market equilibrium: a. maximizes producer surplus. b. maximizes economic surplus. c. maximizes consumer surplus. d. all of the above. 7. An advance in technology increases supply: a. because buyers are willing to buy more of a product produced with the latest technology. b. because new technology is so expensive. c. because labor's or capital's productivity increases and costs of production fall. d. all of the above.
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8. Market supply is determined: a. by assuming each producer produces the same quantity at every price and multiplying that times the number of producers. b. by adding the prices each producer will charge for each quantity. c. by dividing the sum of the quantities produced by the number of producers. d. by adding the quantities each producer will supply at every possible price. 9. Which of the following pairs of goods would be an example of complements? a. Shoes and sandals b. Gasoline and automobiles c. Apples and bananas d. Cooking oil and golf balls 10. When the price of a good increases: a. the quantity demanded of the good will increase. b. the demand for the good will increase. c. the quantity demanded of the good will decrease. d. the demand for the good will decrease. 11. Inferior goods are: a. substandard. b. goods that do not work. c. goods whose purchase is inversely related to consumer income d. goods whose purchase is directly related to consumer income. 12. Under a rent control law the quantity supplied of apartments decreases because: a. landlords sell off some former apartments as condominiums. b. landlords abandon some former apartments buildings.
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This note was uploaded on 05/19/2008 for the course ECO 2023 taught by Professor Sabet during the Spring '08 term at FIU.

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Test #2 - 1. The cost of producing one more unit of a good...

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