Question 1

Suppose the government imposes a price ceiling below the equilibrium price in the market for gasoline. Which of the following is the most likely outcome?

Accepted Answer

A shortage of gasoline will occur because quantity demanded will exceed quantity supplied.

Question 2

If the demand for a good is given by $$Q_d = 100 - 2P$$ and the supply is given by $$Q_s = 20 + 3P$$, what is the equilibrium price?

Accepted Answer

$$P = 16$$

Question 3

Which of the following best describes the concept of opportunity cost?

Accepted Answer

The value of the next best alternative foregone.

Question 4

A perfectly competitive firm will maximize profit by producing the quantity at which:

Accepted Answer

$$MR = MC$$

Question 5

If the cross-price elasticity of demand between two goods is positive, the two goods are:

Accepted Answer

Substitutes

Question 6

Suppose a firm’s total cost function is $$TC = 100 + 5Q + Q^2$. What is the marginal cost when Q = 10$?

Accepted Answer

$$MC = 20$$

Question 7

Which of the following is NOT a characteristic of a perfectly competitive market?

Accepted Answer

Firms can influence the market price.

Question 8

If a monopolist faces the demand curve $$P = 100 - 2Q$$ and has a constant marginal cost of $$MC = 20$$, what is the profit-maximizing quantity?

Accepted Answer

$$Q = 20$$

Question 9

Which of the following will cause a rightward shift in the supply curve for laptops?

Accepted Answer

A technological improvement in laptop production.

Question 10

If the price elasticity of demand for a product is $$-0.5$$, then a 10% increase in price will result in:

Accepted Answer

A 5% decrease in quantity demanded.

Question 11

Which of the following statements about public goods is correct?

Accepted Answer

They are non-excludable and non-rival in consumption.

Question 12

Suppose the government imposes a per-unit tax on sellers. Which of the following is true?

Accepted Answer

The supply curve shifts to the left.

Question 13

If a firm is producing at a level where $$MC \u003c MR$$, what should the firm do to maximize profit?

Accepted Answer

Increase output.

Question 14

Which of the following is an example of a positive externality?

Accepted Answer

Vaccination against infectious diseases.

Question 15

If the marginal product of labor is increasing, then:

Accepted Answer

Marginal cost is decreasing.

Question 16

Suppose the production function is $$Q = 10L$$^{0.5}$$K^{0.5}. If$$ $$L = 16$$ and $$K = 25$, what is the output?

Accepted Answer

$$Q = 20$$

Question 17

Which of the following is true in the long run for a perfectly competitive firm?

Accepted Answer

Firms earn zero economic profit.

Question 18

If the government subsidizes the production of electric cars, what will happen in the market for electric cars?

Accepted Answer

The supply curve will shift to the right, and equilibrium price will fall.

Question 19

Which of the following best describes diminishing marginal returns?

Accepted Answer

As more of a variable input is added to a fixed input, marginal product eventually decreases.

Question 20

If the government imposes a binding minimum wage above the equilibrium wage, what will likely result?

Accepted Answer

A surplus of labor (unemployment).

ECON 208 - PAST EXAM

Study Guide - Practice Questions

Study Guide - Flashcards