Which answer is correct? 1. You have an absolute advantage whenever you a. can p

Question

Which answer is correct?

1. You have an absolute advantage whenever you

a. can produce something at a lower opportunity cost than others.
b. are better educated than someone else.
c. can produce more of something than others with the same resources.
d. prefer to do one particular activity.

2.The primary purpose of ________is to encourage the expenditure of funds on research and development to create new products.

a. centrally planned economics
b. government-run hearth care
c. nationalizing oil companies
d. patents and copyrights.

3.When a perfectly competitive firm finds that its market price is below its minimum average variable cost, it will sell

a. any positive output the entrepreneur decides upon because all of it can be sold.
b. nothing at all; the firm shuts down
c. the output level where marginal revenue equals marginal cost.
d. the output where average total costs equal price.

4.As a consumer consumes more and more of a product in a particular time period, eventually marginal utility

a. fluctuates.
b. declines.
c. is constant.
d. rises.

5. _________ is the ability of an individual, a firm, or a country to produce a good or service at a lower opportunity cost than competitors.

a. Autarky
b. Absolute advantage
c. Comparative advantage.
d. Specialization

6. Cross- price elasticity of demand is calculated as the

a. percentage change in quantity demanded divided by percentage change in price of a good.
b. percentage change in quantity supplied divided by percentage change in price of a good.
c. percentage change in quantity sold divided by percentage change in buyers' incomes.
d. percentage change in quantity demanded of one good divided by percentage change in price of a different good.

7. The actual division of the burden of a tax between buyers and sellers in a market is called

a. tax incidence
b. tax bearer.
c. tax liability
d. tax parity.

8. A characteristic of the long run is

a. there are fixed inputs.
b. plant capacity cannot be increased of decreased.
c. there are both fixed and variable inputs.
d. all inputs can be varied.

9.With perfect discrimination there is

a. no deadweight loss.
b. no producer surplus.
c. one single price.
d. an increase in consumer surplus.

10. A monopoly is a seller of a product

a. without a close substitute.
b. with a perfectly inelastic demand.
c. with many substitutes.
d. without a well-defined demand curve.

Explanation / Answer

1)a. can produce something at a lower opportunity cost than others. 2)b. government-run hearth care 3)b. nothing at all; the firm shuts down 4)b. declines. 5)c. Comparative advantage. 6)c. percentage change in quantity sold divided by percentage change in buyers' incomes. 7)b. tax bearer 8)c. there are both fixed and variable inputs. 9) a. no deadweight loss. 10)c. with many substitutes.

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