Review Session Qs - Econ 010 Midterm 1 Review 1 In a...

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Econ 010 Midterm 1 Review 1. In a perfectly competitive market, prices have dropped in the short-run. Which of the following is not a possible explanation? a. The price of a substitute has gone down. b. New firms have entered the industry. c. Firms have lower variable costs. d. Firms have lower fixed costs. 2. A perfectly price discriminating monopolist is: 3. In a monopolistically competitive market, firms are making negative profits in the short run. In the long run what will happen? 5. If an individual allocates 200 dollars for his monthly expenditure on coffee and decides to spend no more and no less regardless the price, this individual’s demand for coffee is: 6. The cross price elasticity of pizza and Philly cheese steaks is known to be positive. What happens to the price and quantity of pizza, in equilibrium, if the price of steak (an input of cheese steaks only) decreases? a. Price goes up, quantity goes down. b. Price goes down, quantity goes down. c. Price indeterminate, quantity goes down. d. Price indeterminate, quantity indeterminate. 7. A point to the right of an existing production possibility boundary might be attainable
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Econ 010 Midterm 1 Review 8. Consider a market for a good for which the demand curve has the standard negative slope and the supply curve has the standard positive slope (that is, neither the supply nor the demand are perfectly elastic or inelastic). If the producers of that good choose to offer a quantity bigger than the efficient one,
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