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CHAPTER 2 MODELING THE MARKET PROCESS

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Question;9. According to the Law of Supply;a. price and quantity supplied are;positively related, c.p.b. firms produce less output;as the price of the product rises, ceteris;paribusc. marginal cost rises as the;firm contracts productiond. there is an inverse;relationship between output and price, holding all else constant;10. The supply curve is positively sloped because;a. profit levels always rise with output;b. MC rises as Q rises, so;firms must charge a higher P as Q increases;c. as Q increases, TC rises;proportionately faster than Q, so;price must rise with output;d. none of the above;e. both b. and c. are correct;11. Market supply for a private good is found;by;a. vertically summing all market prices;for a given quantity;b. horizontally summing the;quantity decisions of producers at each and every price;c. adding the price-quantity pairs;for all units sold;d. none of the above;12. Suppose that in the market for bottled water, the market;supply is QS = 14 + 20P and the market demand is QD = 74 ? 10P, then equilibrium price is;a. $2 b. $54 c. $6 d. none of the above;13. Assume that in the market for bottled water, the market supply;is QS = 14 + 20P and the market demand is QD = 74 ? 10P. This means that the equilibrium;quantity is;a. 2 b. 54 c. 6 d. none of the above;14. Assume that the market demand for organic tomatoes is modeled;as QD = 104 ? 2P and market supply is QS = 20 + 4P. If the actual price is set at $20 per;pound, there is a _________ of _______ units of the good.;a. surplus, 36 c. shortage, 10;b. surplus, 26;d. none of the above;15. Allocative efficiency in a market means;that resources are appropriated such that;a. the additional social benefits outweigh;the additional social costs;b. the additional social benefits;outweigh the additional private benefits;c. the marginal social benefits;are equal to the marginal social costs;d. the marginal social benefits;are greater than the marginal social costs;16. Marginal revenue is defined as;a. the accumulated revenue associated with;production;b.?TR/?Q;c. the change in profit associated;with another unit of output produced;d.?TC/?Q

 

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