Question 1

A tax is imposed on frisbees, as shown in the diagram. What is the buyers' share of the tax per frisbee?

Accepted Answer

$0.60

Question 2

Which industry structure is most likely to have many substitutes and differentiated products, such as mechanical pencils with varying thickness and material?

Accepted Answer

Monopolistically competitive

Question 3

If the price of milk rises from $$3.69 to 5.69 $$per bag and a consumer buys the same amount, what is the shape of their demand curve?

Accepted Answer

Vertical

Question 4

Suppose a price ceiling is imposed below the equilibrium price for fresh fish in Okai, Japan. What is the expected outcome?

Accepted Answer

Shortage of fish

Question 5

A cafe in Barrie generates $$12,000 in monthly revenue, has explicit costs of 8$$,000, and opportunity costs of $5,500. What is the economic profit, and what is expected in the long run?

Accepted Answer

Economic profit is less than normal profit; the number of cafes in Barrie will decrease

Question 6

If Kraft dinners are an inferior good, what can be concluded about the income elasticity of demand?

Accepted Answer

The income elasticity of demand is negative

Question 7

When governments set a price in a market that is not an equilibrium price, the quantity actually sold at that price is:

Accepted Answer

Determined by whichever is less, quantity demanded or quantity supplied

Question 8

Which of the following is NOT a barrier to entry for Koraru swimwear?

Accepted Answer

Diversifying by also developing a dancewear line

Question 9

If the price of lumber rises and the quantity supplied remains the same, what is the price elasticity of supply and the shape of the supply curve?

Accepted Answer

Perfectly inelastic; vertical

Question 10

When comparing perfect competition and monopolistic competition, which statement is true?

Accepted Answer

Advertising plays a large role in monopolistic competition, unlike in perfect competition

Question 11

If the price of good A increases from $$24 to 36 $$and the quantity of good B purchased increases from 1,900 to 2,100, what is the cross-price elasticity of demand between goods A and B?

Accepted Answer

$$0.25$$

Question 12

In an oligopolistic market, the products or services are often:

Accepted Answer

Close substitutes

Question 13

If the price of a product is not affected by a sales tax, which statement is true?

Accepted Answer

Demand is perfectly inelastic

Question 14

A business has $$100 in explicit costs and sells output for 125. $$The normal profit rate is 10 percent. What are the implicit costs?

Accepted Answer

$$10$$

Question 15

Which statement is normative?

Accepted Answer

None of the above

Question 16

Which of the following statements is true regarding opportunity costs and economic profits?

Accepted Answer

Opportunity costs are greater than accounting costs; economic profits are less than accounting profits

Question 17

An industry is in short-run equilibrium and there are economic profits. What will NOT happen in the long run?

Accepted Answer

The equilibrium quantity produced by the industry will decrease

Question 18

After completing your studies, you start a website design business. You generate $$24,000 in revenue, incur 7$$,000 in financial costs, and your opportunity cost is $34,000. What is your economic profit?

Accepted Answer

$$-17,000$$

Question 19

If a price ceiling is set below the market-clearing rent for condo apartments, and both demand and supply are inelastic, what will happen to shortages and wait times?

Accepted Answer

Shortages and wait times will be worse

Question 20

A tech industry monopoly faces the ___ elasticity of demand and can sell more ___ their price.

Accepted Answer

Lowest; only by lowering

Microeconomics Test 2 – Step-by-Step Study Guidance

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