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The Nature and Function of Product Markets
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The Nature and Function of Product Markets
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25 Questions

1. All of the following explain the downward slope of the demand curve EXCEPT
2. Suppose the market is in equilibrium for razor blades where the marginal benefit equals the marginal cost. If the government imposes a tax on razor blades and the marginal cost is greater than the marginal benefit, what may result?
3. Price elasticity of demand is an extremely useful tool in economics because
4. If the price of cigarettes is in equilibrium, what is needed to increase the price?
5. A government policy to tax producers is the possible result of
6. Which of the following shows the profit-maximizing point for all types of market structures?
7. If a firm owns a patent on a product, what may occur?
8. The difference between the interests of owners and managers in a firm would be considered what kind of problem?
9. When there is zero incentive for more firms to enter a perfectly competitive market, it is said that the market has reached
10. Why is the demand for fruit less price elastic than the demand for a boat?
11. Measuring efficiency through allocation of resources is best expressed in which formula?
12. Since the monopolist has many barriers to entry and no competition, he or she has price-setting ability. This is also known as
13. If new firms enter the market, what is most likely to occur?
14. Game theory fits best with which market structure?
15. At which point is the graph showing profit maximization?
16. How do economists know that a good is a viable substitute?
17. If a cartel comes into existence, the most likely outcome would be that
18. In a perfect competition, if P > ATC, which of the following will take place in the long run?
19. All of the following are examples of production inputs adjustable in the short run EXCEPT
20. It’s Theresa’s first trip to New York City. She goes and sees all the sights and finds herself walking through Times Square. She looks up and sees two billboards for the iPad and the BlackBerry tablet. Since Theresa is an excellent AP Economics student, she immediately realizes that these two different companies are
21. Danielle decides to withdraw her savings of $70,000 and invest in starting her own clothing business. She normally earns $3,000 in interest from her savings. If Danielle earned an accounting profit of $60,000 last year, what was her economic profit?
22. Businesses are required by law to set prices either on or relatively close to the costs that firms incurred to make the good or service. This idea is known as
23. A monopolistic competition has some market power because
24. The profit-maximizing rule states that to maximize profits a firm should produce where
25. If marginal cost falls in the beginning and then gradually rises as output increases, you would know that

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