MBA 651 - QUIZ #7 QUESTIONS ANSWERED CORRECTLY LATEST UPDATE 2026
If a shortage exists in a market, the natural tendency is for: - Answers price to increase.
Suppose the demand for X is given by Q xd = 100 - 2PX + 4PY + 10M + 2A, where PXrepresents the
price of good X, PY is the price of good Y, M is income and A is the amount of advertising on good X.
Based on this information, we know that good Y is - Answers a substitute for good X.
The own-price elasticity of demand for apples is -1.2. If the price of apples falls by 5%, what will
happen to the quantity of apples demanded? - Answers It will increase 6%.
If the price of good X decreases, what will happen to the budget line? - Answers It will become flatter.
Constant returns to scale exist when long-run average costs - Answers remain constant as output is
increased.
You are a manager in a perfectly competitive market. The price in your market is $14. Your total cost
curve is C(Q) = 10 + 4Q + 0.5 Q2. What level of profits will you make in the short-run? - Answers $40.
You are the manager of a monopoly that faces a demand curve described by P = 230 - 20Q. Your costs
are C = 5 + 30Q. Your firm's maximum profits are - Answers 495
You are the manager of a firm that sells its product in a competitive market at a price of $48. Your
firm's cost function is C = 60 + 2Q2. Your firm's maximum profits are - Answers $228.
You are the manager of a monopoly that faces a demand curve described by P = 230 - 20Q. Your costs
are C = 5 + 30Q. The profit-maximizing output for your firm is - Answers 5
The source(s) of monopoly power for a monopoly may be: - Answers economies of scale, economies
of scope, and patents.
Which of the following is not a basic feature of a monopolistically competitive industry? - Answers
Each firm owns a patent on its product
Suppose good X is a normal good. Then a decrease in income would lead to - Answers an inward shift
of the demand curve.
A price ceiling is - Answers the maximum legal price that can be charged in a market
The elasticity of variable G with respect to variable S is defined as - Answers the percentage change in
variable G that results from a given percentage change in variable S.
Given that income is $500 and PX = $20 and PY = $5, what is the market rate of substitution between
goods X and Y? - Answers -4
The marginal rate of technical substitution - Answers is the absolute value of the slope of the
isoquant.
You are the manager of a firm that sells its product in a competitive market at a price of $60. Your
firm's cost function is C = 33 + 3Q2. The profit-maximizing output for your firm is - Answers 10
Suppose that initially the price is $50 in a perfectly competitive market. Firms are making zero
economic profits. Then the market demand shrinks permanently and some firms leave the industry
and the industry returns back to a long run equilibrium. What will be the new equilibrium price,
assuming a constant cost industry (horizontal long run supply curve)? - Answers $50.
In a competitive industry with identical firms, long run equilibrium is characterized by - Answers MR =
MC.
You are the manager of a monopoly that faces a demand curve described by P = 85 - 5Q. Your costs
are C = 20 + 5Q. The profit-maximizing output for your firm is - Answers 8
There is no market supply curve in - Answers a monopolistically competitive market and a
monopolistic market.
When government imposes a price floor above the market price, the result will be that - Answers
surpluses occur.
The management of Local Cinema has estimated the monthly demand for tickets to belnQ = 22,328
- .41 lnP + 0.5 lnM - .33 lnA + 100 lnPvcr, where Q = quantity of tickets demanded, P = price per ticket,
M = income, A = advertising outlay, and Pvcr = price of a VCR tape rental. It is known that P = $5.50, M
= $9,000, A = $900, and Pvcr = $3.00. Determine the own-price elasticity of demand for movie tickets.
- Answers -.41
The total earnings of a worker are represented by E = 100 + $10(24 - L), where E is earnings and L is
the number of hours of leisure. How many hours of leisure are consumed if this worker's total
earnings are $160? - Answers 18 hours.
The marginal cost curve - Answers intersects the ATC and AVC at their minimum points.
If a shortage exists in a market, the natural tendency is for: - Answers price to increase.
Suppose the demand for X is given by Q xd = 100 - 2PX + 4PY + 10M + 2A, where PXrepresents the
price of good X, PY is the price of good Y, M is income and A is the amount of advertising on good X.
Based on this information, we know that good Y is - Answers a substitute for good X.
The own-price elasticity of demand for apples is -1.2. If the price of apples falls by 5%, what will
happen to the quantity of apples demanded? - Answers It will increase 6%.
If the price of good X decreases, what will happen to the budget line? - Answers It will become flatter.
Constant returns to scale exist when long-run average costs - Answers remain constant as output is
increased.
You are a manager in a perfectly competitive market. The price in your market is $14. Your total cost
curve is C(Q) = 10 + 4Q + 0.5 Q2. What level of profits will you make in the short-run? - Answers $40.
You are the manager of a monopoly that faces a demand curve described by P = 230 - 20Q. Your costs
are C = 5 + 30Q. Your firm's maximum profits are - Answers 495
You are the manager of a firm that sells its product in a competitive market at a price of $48. Your
firm's cost function is C = 60 + 2Q2. Your firm's maximum profits are - Answers $228.
You are the manager of a monopoly that faces a demand curve described by P = 230 - 20Q. Your costs
are C = 5 + 30Q. The profit-maximizing output for your firm is - Answers 5
The source(s) of monopoly power for a monopoly may be: - Answers economies of scale, economies
of scope, and patents.
Which of the following is not a basic feature of a monopolistically competitive industry? - Answers
Each firm owns a patent on its product
Suppose good X is a normal good. Then a decrease in income would lead to - Answers an inward shift
of the demand curve.
A price ceiling is - Answers the maximum legal price that can be charged in a market
The elasticity of variable G with respect to variable S is defined as - Answers the percentage change in
variable G that results from a given percentage change in variable S.
Given that income is $500 and PX = $20 and PY = $5, what is the market rate of substitution between
goods X and Y? - Answers -4
The marginal rate of technical substitution - Answers is the absolute value of the slope of the
isoquant.
You are the manager of a firm that sells its product in a competitive market at a price of $60. Your
firm's cost function is C = 33 + 3Q2. The profit-maximizing output for your firm is - Answers 10
Suppose that initially the price is $50 in a perfectly competitive market. Firms are making zero
economic profits. Then the market demand shrinks permanently and some firms leave the industry
and the industry returns back to a long run equilibrium. What will be the new equilibrium price,
assuming a constant cost industry (horizontal long run supply curve)? - Answers $50.
In a competitive industry with identical firms, long run equilibrium is characterized by - Answers MR =
MC.
You are the manager of a monopoly that faces a demand curve described by P = 85 - 5Q. Your costs
are C = 20 + 5Q. The profit-maximizing output for your firm is - Answers 8
There is no market supply curve in - Answers a monopolistically competitive market and a
monopolistic market.
When government imposes a price floor above the market price, the result will be that - Answers
surpluses occur.
The management of Local Cinema has estimated the monthly demand for tickets to belnQ = 22,328
- .41 lnP + 0.5 lnM - .33 lnA + 100 lnPvcr, where Q = quantity of tickets demanded, P = price per ticket,
M = income, A = advertising outlay, and Pvcr = price of a VCR tape rental. It is known that P = $5.50, M
= $9,000, A = $900, and Pvcr = $3.00. Determine the own-price elasticity of demand for movie tickets.
- Answers -.41
The total earnings of a worker are represented by E = 100 + $10(24 - L), where E is earnings and L is
the number of hours of leisure. How many hours of leisure are consumed if this worker's total
earnings are $160? - Answers 18 hours.
The marginal cost curve - Answers intersects the ATC and AVC at their minimum points.
