Economics 15 MCQs Assignment

Question 1
If demand for a product falls at the same time supply rises, which of the following might
we expect?
a. Both the equilibrium price and the equilibrium quantity could rise or fall
b. Equilibrium price would fall, and equilibrium quantity could either rise or fall
c. Equilibrium price would rise, and the equilibrium quantity could rise or fall
d. Equilibrium price and quantity sold would fall
Question 2
If the market for a certain product experiences an increase in supply and a decrease in
demand, which of the following results is expected to occur?
a. Equilibrium price would rise, and the equilibrium quantity could rise or fall
b. Both equilibrium price and the equilibrium quantity could rise or fall
c. Equilibrium price would fall, and the equilibrium quantity could rise or fall
d. Equilibrium price would fall, and the equilibrium quantity would fall
Question 3
How does an increase in income affect the market of bus rides (inferior good)?
a. The demand curve for bus rides to shift to the left
b. The supply curve for bus rides to shift to the right
c. The demand curve for bus rides to shift to the right
d. The supply curve for bus rides to shift to the left
Question 4
How does an increase in income affect the market of ipads (normal good)?
a. The supply curve for ipads to shift to the left
b. The supply curve for ipads to shift to the right
c. The demand curve for ipads to shift to the left
d. The demand curve for ipads to shift to the right
Question 5
Movie theatres decided to increase the price of movie tickets. Holding other factors
constant, what happens to the demand for popcorn in the movie theatres?
a. Demand for popcorn shifts to the left because popcorn and movies are substitute goods

b. Demand for popcorn shifts to the right because popcorn and movies are
complementary goods
c. Demand for popcorn shifts to the right because popcorn and movies are substitute
goods
d. Demand for popcorn shifts to the left because popcorn and movies are complementary
goods
Question 6
In a competitive industry buffeted by demand supply shocks, prices increase and
decrease, but economic profits tend to revert to zero. Hence, profits are exhibiting:
a. Mean reversion
b. Positive earnings
c. None of the above
d. Above-average return
Question 7
In the long-run, which of the following outcomes is most likely for a firm?
a. Positive accounting profits and positive economic profits
b. Zero economic profits but positive accounting profits
c. Zero accounting profits but positive economic profits
d. Zero accounting profits
Question 8
A perfectly competitive firms profit maximizing price is $15. At MC=MR, the output is
100 units. At this level of production, average total costs are $12.
The firms profits are:
a. $500 in the short-run and long-run
b. $300 in short-run
c. $500 in the short-run
d. $300 in the short run and long run
Question 9
If a firm in a perfectly competitive industry is experiencing average revenues greater than
average costs, in the long-run:
a. Some firms will enter the industry and price will fall
b. Some firms will enter the industry and price will rise
c. Some firms will leave the industry and price will rise

d. Some firms will leave the industry and price will fall
Question 10
Profits of a monopoly are driven to zero:
a. In the long-run as all assets are mobile in the long-run
b. Immediately in the short-run as assets move from low-valued uses to high-valued uses
instantly
c. In the long run because the demand curve becomes more inelastic
d. In the short run because the demand curve becomes more elastic
Question 11
Industries with high barriers to entry:
a. help firms sustain profits
b. increases the likelihood of firms entering the industry
c. pushes profits to normal returns
d. increases the number of competitors
Question 12
For a firm to reduce competitive intensity, it should:
a. Lobby to the government
b. Enact barrier to entry
c. Acquire patents
d. All the above
Question 13
All of the following are example of entry barriers, except:
a. Lower costs driven by economies of scale
b. Strong brands
c. Low capital requirements for entry
d. Government protection through patents or licensing requirements
Question 14
Attractive industries have all the following, except:
a. Low buyer power
b. Low rivalry
c. High supplier power

d. High entry barriers
Question 15
Cost-reduction generate:
a. Increases in product differentiation
b. Increases in long-run profitability
c. Reduction in competitive intensity
d. Increases in long-run profitability only if the cost reduction is difficult to imitate