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Unformatted text preview: Version D Multiple Choice Identify the letter of the choice that best completes the statement or answers the question. ____ 1. If the consumer's income and all prices simultaneously decrease by one-half, then a. the optimum will shift inward relative to the old optimum. b. the optimum will not change. c. the optimum will move leftward along the old budget constraint. d. the optimum will shift outward relative to the old optimum. ____ 2. If an economy is producing efficiently, then a. there is no way to produce more of one good without producing less of another good. b. it is possible to produce more of both goods without increasing the quantities of inputs that are being used. c. it is possible to produce more of one good without producing less of the other. d. it is not possible to produce more of any good at any cost. ____ 3. For a competitive market, which of the following statements is correct? a. A single buyer can influence the price of the product, but only when purchasing from several sellers in a short period of time. b. A seller can always increase her profit by raising the price of her product. c. A seller often charges less than the going price to increase sales and profit. d. If a seller charges more than the going price, buyers will go elsewhere to make their purchases. Figure 2-4 ____ 4. Refer to Figure 2-4 . If the economy moves from point A to point D, the opportunity cost is a. 10 toasters. b. 30 toothbrushes. c. 20 toasters. d. 30 toasters. ____ 5. The term price takers refers to buyers and sellers in a. markets in which buyers cannot buy all they want and/or sellers cannot sell all they want. b. perfectly competitive markets. c. markets that are regulated by government. d. monopolies. Figure 2-3 ____ 6. Refer to Figure 2-3 . Inefficient production is represented by which point or points? a. D, E b. A, C c. D d. A, B ____ 7. When the local used bookstore prices economics books at $15.00 each, they generally sell 70 books per month. If they lower the price to $7.00, sales increase to 90 books per month. Given this information, we know that the price elasticity of demand for economics books is about a. 2.91, and an increase in price from $7.00 to $15.00 results in an increase in total revenue. b. 0.34, and an increase in price from $7.00 to $15.00 results in a decrease in total revenue. c. 2.91, and an increase in price from $7.00 to $15.00 results in a decrease in total revenue. d. 0.34, and an increase in price from $7.00 to $15.00 results in an increase in total revenue. ____ 8. Suppose a price ceiling is not binding ; this means that a. people are finding a way to circumvent the law. b. the equilibrium price is below the price ceiling....
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- Fall '09