Question 1

If demand is inelastic, then total revenue would increase if price were raised.

Accepted Answer

A) True 
 B)False

Question 2

Which of the following is MOST likely to be competing in monopolistic competition?

Accepted Answer

A)   a soybean farmer
B)   a steel producer
C)   a restaurant
D)   an oil producer
E)   an electric utility company

Question 3

In which of the following situations would the seller(s)  be most likely to face a "kinked" demand curve?

Accepted Answer

A)   A medium-sized airport with one gift shop.
B)   A small town--some distance from any others--with three "off brand" gasoline stations at the major intersection.
C)   Men's clothing stores in downtown Las Vegas.
D)   A small community with one electric power company.
E)   A farmers' market with one farmer selling honey.

Question 4

Most supply curves slope upward, indicating that suppliers will be willing to offer greater quantities at higher prices.

Accepted Answer

A) True 
 B)False

Question 5

When a demand curve is INELASTIC:

Accepted Answer

A)   if price goes down, then total revenue stays the same.
B)   if price goes up, then total revenue stays the same.
C)   if price goes down, then total revenue goes down.
D)   if price goes up, then total revenue goes down.

Question 6

If total revenue remains the same when price is raised or lowered, then we have the special case of "unitary elasticity of demand."

Accepted Answer

A) True 
 B)False

Question 7

If a firm's total revenue DECREASES when the price of its product is raised from $50 to $55, the demand for this product between these two prices is:

Accepted Answer

A)   elastic.
B)   inelastic.
C)   unitary elastic.
D)   Cannot tell from what is given.

Question 8

The elasticity of demand for a particular product depends upon:

Accepted Answer

A)   the availability of substitutes.
B)   the producer's costs.
C)   the availability of raw materials.
D)   the quantity the producer is willing to supply.
E)   All of the above.

Question 9

In oligopoly situations:

Accepted Answer

A)   prices tend to be rigid and similar--because of price-fixing agreements.
B)   price wars may occur if a firm seeks to increase its market share by cutting price.
C)   a firm faces an INELASTIC demand curve if it raises price.
D)   the quantity offered changes a lot due to the lack of a fixed market price.
E)   All of the above are true.

Question 10

Most demand curves are upward-sloping--to the right.

Accepted Answer

A) True 
 B)False

Question 11

The elasticity of the firm's demand curve, the number and size of competitors, and the uniqueness of the firm's marketing mix all affect the nature of the competitive situation.

Accepted Answer

A) True 
 B)False

Question 12

A firm in monopolistic competition faces no competition, so it can set its price at any level.

Accepted Answer

A) True 
 B)False

Question 13

The equilibrium point is that point at which the quantity demanded would not change if price were either lowered or raised.

Accepted Answer

A) True 
 B)False

Question 14

"Kinked" demand curves:

Accepted Answer

A)   are sometimes found in pure competition.
B)   are inelastic above the "kink" and elastic below the "kink."
C)   are typical of monopolistic competition.
D)   tend to encourage a stable price in a product-market.
E)   both C and D are true.

Question 15

The availability of substitutes is one important factor affecting whether the demand for a product is elastic or inelastic.

Accepted Answer

A) True 
 B)False

Question 16

Which of the following statements about oligopoly situations is TRUE?

Accepted Answer

A)   "Price cutters" face fairly elastic demand curves.
B)   Cutting prices can lead to everyone losing sales revenue.
C)   Many large sellers are competing with each other.
D)   Essentially heterogeneous products are offered by many competitors.
E)   None of the above is true.

Question 17

A "demand schedule:"

Accepted Answer

A)   shows how much a firm is willing to sell at a particular price.
B)   is published regularly by the U.S. government and other governments.
C)   is a table which shows the relationship between price and quantity demanded in a market.
D)   is usually the same for all products.
E)   Both B and C are true.

Question 18

Rico Hardware is an industrial supply firm that sells standard screws, bolts, and other small hardware items to construction companies. Rico competes with many similar firms nationwide and sells its merchandise at "the going rate." Rico seems to be operating in an environment that is close to:

Accepted Answer

A)   pure competition.
B)   monopoly.
C)   monopolistic competition.
D)   oligopoly.

Question 19

Which of the following statements about elasticity of supply is TRUE?

Accepted Answer

A)   A product's elasticity of supply is calculated directly from its elasticity of demand.
B)   In the long run, the supply curve for most products is highly inelastic.
C)   If a product's demand curve is inelastic, then its supply curve also must be inelastic.
D)   In the very short run (after the growing season has begun) , the supply curve for most agricultural products is highly inelastic.
E)   All of the above are true.

Question 20

A FIRM faces an almost perfectly flat or horizontal demand curve in a(an)  ______________ market situation.

Accepted Answer

A)   monopolistic competition
B)   monopoly
C)   pure competition
D)   oligopoly
E)   None of the above--demand curves are always down-sloping.

Exam 22: Economics Fundamentals

Which of the following statements about elasticity of supply is TRUE?

Correct AnswerverifiedShow Answer

Which of the following is MOST likely to be competing in monopolistic competition?

Correct AnswerverifiedShow Answer

When a demand curve is INELASTIC:

Correct AnswerverifiedShow Answer

Most demand curves are upward-sloping--to the right.

Correct AnswerverifiedShow Answer

In which of the following situations would the seller(s) be most likely to face a "kinked" demand curve?

Correct AnswerverifiedShow Answer

The elasticity of demand for a particular product depends upon:

Correct AnswerverifiedShow Answer

Most supply curves slope upward, indicating that suppliers will be willing to offer greater quantities at higher prices.

Correct AnswerverifiedShow Answer

A FIRM faces an almost perfectly flat or horizontal demand curve in a(an) ______________ market situation.

Correct AnswerverifiedShow Answer

If total revenue remains the same when price is raised or lowered, then we have the special case of "unitary elasticity of demand."

Correct AnswerverifiedShow Answer

The elasticity of the firm's demand curve, the number and size of competitors, and the uniqueness of the firm's marketing mix all affect the nature of the competitive situation.

Correct AnswerverifiedShow Answer

A "demand schedule:"

Correct AnswerverifiedShow Answer

Which of the following statements about oligopoly situations is TRUE?

Correct AnswerverifiedShow Answer

Rico Hardware is an industrial supply firm that sells standard screws, bolts, and other small hardware items to construction companies. Rico competes with many similar firms nationwide and sells its merchandise at "the going rate." Rico seems to be operating in an environment that is close to:

Correct AnswerverifiedShow Answer

The equilibrium point is that point at which the quantity demanded would not change if price were either lowered or raised.

Correct AnswerverifiedShow Answer

"Kinked" demand curves:

Correct AnswerverifiedShow Answer

A firm in monopolistic competition faces no competition, so it can set its price at any level.

Correct AnswerverifiedShow Answer

The availability of substitutes is one important factor affecting whether the demand for a product is elastic or inelastic.

Correct AnswerverifiedShow Answer

If a firm's total revenue DECREASES when the price of its product is raised from $50 to $55, the demand for this product between these two prices is:

Correct AnswerverifiedShow Answer

If demand is inelastic, then total revenue would increase if price were raised.

Correct AnswerverifiedShow Answer

In oligopoly situations:

Correct AnswerverifiedShow Answer

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