FBM 2019 MC

The relationship between quantity supplied and price is known as

• Supply curve

• Demand curve

• Derived demand

• Direct marketing

Suppose that the supply curve shifts to the right. What is the most likely effect on price and quantity?

• Price will increase and quantity may change

• Price will decrease and quantity may decrease

• Price will decrease and quantity will increase

• Price will increase and quantity will increase

At a price of $15, Jim buys 3 CD’s per month. When the price increases to $20, Jim buys 2 CD’s per month. John says that Jim’s demand for CD’s has decreased. Is John correct?

• Yes, John is correct

• No, John is NOT correct. Jim's demand has increased.

• No, John is NOT correct. Jim's quantity demanded has increase, but demand has stayed the same

• No, John is NOT correct. Jim's quantity demanded has decrease, but demand has stayed in the same

If the percentage change in quantity demanded is equal to the percentage change in price, demand is:

• inelastic

• unit elastic

• elastic

• perfectly elastic

The fewer the number of substitutes for a good, the

• lower its income elasticity demand

• higher its income elasticity of demand

• lower its price elasticity of demand

• higher its price elasticity of demand

Which of the following is NOT an assumption of the theory of perfect competition?

• Each firm produces and sells a differentiated product

• There are many sellers and buyers, none of which is large in relation to the total sales or purchases

• Buyers and sellers have all the relevant information with respect to prices

• There is easy entry and exit

A monopoly may exit because:

• Governments has refused to grant a public franchise

• The firm is so large and is currently experiencing such vast diseconomies of scale that it can out-compete all newcomers

• One firm has the exclusive ownership of a secure resource

• Both A and B

The profit maximizing quantity of output is where

• demand equals supply

• average total cost is at a minimum

• price equals average variable cost

• marginal revenue equals marginal cost

Pete’s Burgers has fixed costs of $100. When Pete’s Burgers makes 500 hamburgers, their variable costs are $100. When Pete’s makes 600 hamburgers, their variable costs are $200. What is the average total cost when they are making 600 hamburgers and what is the marginal cost for the range between 500 and 600 hamburgers?

• ATC = $0.20 ; MC = $1.00

• ATC = $0.50 ; MC = $1.00

• ATC = $0.40 ; MC = $1.00

• ATC = $0.50 ; MC = $2.00

Grocery stores do not often advertise sales prices on table salt because

• The demand for salt is elastic

• The demand for salt is unit elastic

• The demand for salt is inealstic

• The demand for salt is negative