1) Suppose that in the clothing market, production costs havefallen, but the equilibrium price and quantity purchased have bothincreased. Based on this information you can conclude that
A. the supply of clothing has grown faster than the demand forclothing
B. demand for clothing has grown faster than the supply ofclothing
C. the supply of and demand for clothing have grown by the sameproportion
D. there is no way to determine what has happened to supply anddemand with this information
2) Camille’s Creations and Julia’s Jewels both sell beads in acompetitive market. If at the market price of $5, both are runningout of beads to sell (they can’t keep up with the quantity demandedat that price), then we would expect both Camille’s and Julia’sto:
A. raise their price and reduce their quantity supplied
B. raise their price and increase their quantity supplied
C. lower their price and reduce their quantity supplied
D. lower their price and increase their quantity supplied
3) In which of the following industries are economies of scaleexhausted at relatively low levels of output?
A. Aircraft production
B. Automobile manufacturing
C. Concrete mixing
D. Newspaper printing
4) The average cost curves (AVC and ATC) should be minimized
A. where MC = ATC and MC = AVC
B. where FC = ATC and FC = AVC
C. where TC starts to increase at a faster rate
D. where ATC = AVC
5) If the wage rate increases,
A. a purely competitive producer will hire less labor, but animperfectly competitive producer will not
B. an imperfectly competitive producer will hire less labor, but apurely competitive producer will not
C. a purely competitive and an imperfectly competitive producerwill both hire less labor
D. an imperfectly competitive producer may find it profitable tohire either more or less labor
6) The real wage will rise if the nominal wage
A. falls more rapidly than the general price level
B. increases at the same rate as labor productivity
C. increases more rapidly than the general price level
D. falls at the same rate as the general price level
7) Construction workers frequently sponsor political lobbying insupport of greater public spending on highways and publicbuildings. One reason they do this is to
A. restrict the supply of construction workers
B. increase the elasticity of demand for construction workers
C. increase the demand for construction workers
D. increase the price of substitute inputs
8) Paying an above-equilibrium wage rate might reduce unit laborcosts by
A. permitting the firm to attract lower-quality labor
B. increasing the cost to workers of being fired for shirking
C. increasing voluntary worker turnover
D. increasing the supply of labor
9) A good real-world example of monopolistic competition is
A. lawyers
B. gas stations
C. Time Warner Cable
D. groceries stores
10) An industry comprising a small number of firms, each of whichconsiders the potential reactions of its rivals in makingprice-output decisions, is called
A. monopolistic competition
B. oligopoly
C. pure monopoly
D. pure competition
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