Fall 2012 Econ 2003 Test 4VERSION AName _______________________________Banner…

Fall 2012 Econ 2003 Test 4VERSION AName _______________________________Banner _______________________________Signature _______________________________Date _______________________________Section _______________________________By taking this Exam you are Agreeing to the Following PolicyThe University expects every student to maintain a high standard of individual integrity. Scholastic dishonesty is aserious offense that includes, but is not limited to, cheating on a test or other class work, plagiarism (the appropriation ofanother’s work and the unauthorized incorporation of that work in one’s own work), and collusion (unauthorizedcollaboration with another person in preparing college work offered for credit). In cases of scholastic dishonesty, thefaculty member responsible for the case may initiate disciplinary proceedings against the student. BY TAKING THISTEST YOU ARE AGREEING TO THE ABOVE POLICY AND ALSO TO WORK BY YOURSELF ON THIS TEST.PLEASE BRING BOTH THE PRINTED EXAM AND A PROPERLY FILLED OUT F-1712 PAR-L 200 QUESTION FORM____ 1. The demand for a product is the amount thata. sellers are willing to sell at a particular priceb. buyers are willing to purchase at a given pricec. buyers purchase in the marketd. buyers are willing and able to purchase at alternative pricese. buyers are able to purchase at a specific price____ 2. A demand curve shows how quantity demanded changes as the price changes. It implies thata. economists are concerned only with moneyb. it is impossible to show how anything but price affects demandc. only a change in price can shift a demand curved. quantity demanded is unrelated to pricee. everything else that affects demand is assumed to be constant____ 3. If pretzels are a normal good, the income effect of a price change means thata. as income increases, the demand curve for pretzels shifts rightwardb. as the price of pretzels increases, income increasesc. as income increases, the quantity demanded increases along the demand curve for pretzelsd. as the price of pretzels increases, the real income of individuals who demand pretzelsdecreases, so the quantity demanded of pretzels decreasese. as income increases, the demand curve for pretzels shifts leftward____ 4. A demand curve usually has aa. positive slope because price and quantity demanded are inversely relatedb. negative slope because as price rises, demand fallsc. positive slope because price and quantity demanded are positively relatedd. slope of zero because there is no change along a demand curve when everything else isheld constante. negative slope because price and quantity demanded are inversely related____ 5. The demand curve for spinach shows the quantity demanded of spinacha. as income increasesb. as income decreasesc. only at the equilibrium price of spinachd. at each possible price of spinache. at each possible price of a substitute good____ 6. Studies show that the demand curve for peas has shifted. Which of the following explanations would youreject first?a. The demand for string beans has changed.b. The price of peas has changed.c. The income of consumers has changed.d. The demand for corn has changed.e. The price of string beans has changed.____ 7. The effect of a decrease in the price of personal computers, other things constant, is likely to be bestrepresented by which of the following?a. a rightward shift of the demand curveb. a movement leftward along the demand curvec. a rightward shift of the supply curved. a leftward shift of the demand curvee. a movement rightward along the demand curve____ 8. If we say that demand has increased, we mean that there has beena. a rightward shift of the demand curveb. an increase in the slope of the demand curvec. a leftward movement along the demand curved. a rightward movement along the demand curvee. a leftward shift of the demand curve____ 9. A decrease in demand for a good could mean thata. the demand curve has shifted to the leftb. consumers are willing to pay a higher price for each quantity of the goodc. the demand curve has undergone a parallel shift to the rightd. consumers are willing to buy larger quantities of the good at each pricee. the demand curve has undergone a nonparallel shift to the right____ 10. A change in income willa. affect the quantity demanded of candy through the income effect of a price changeb. affect the demand for candy through the income effect of a price changec. affect quantity demanded only if candy is a normal goodd. have no effect on the demand for candy, because income is assumed constant along ademand curvee. shift the demand curve for candy____ 11. Which of the following is most likely to be an inferior good?a. soft drinksb. a subscription to the Wall Street Journalc. restaurant mealsd. airline travele. used clothing____ 12. Which of the following is most likely to be a normal good?a. bus ridesb. tickets to major league baseball gamesc. trips to the laundromatd. used paperback bookse. macaroni-and-cheese dinners____ 13. The difference between normal and inferior goods is thata. an increase in price will shift the demand curve for a normal good rightward and thedemand curve for an inferior good leftwardb. normal goods are of better quality than inferior goodsc. an increase in income will shift the demand curve for a normal good rightward and thedemand curve for an inferior good leftwardd. an inferior good is something that will not be demanded until quantities of the normalgood have been exhaustede. if the price of a normal good increases, individuals who buy it are poorer; for inferiorgoods, the opposite is true____ 14. Which of the following will cause the demand curve for gasoline to shift leftward?a. a rightward shift of the supply of carsb. a decrease in the price of bicyclesc. an increase in the price of gasolined. a decrease in the price of gasolinee. a leftward shift of the supply of gasoline____ 15. Two goods are considered substitutes only if a(n)a. decrease in the price of one leads to an increase in the demand for the otherb. decrease in the supply of one leads producers to switch to production of the otherc. increase in the price of one leads to an increase in the demand for the otherd. decrease in the demand for one leads to a decrease in the supply of the othere. increase in the demand for one leads to a decrease in the supply of the other____ 16. If the price of vanilla ice cream decreases, it is likely thata. demand for chocolate ice cream will increaseb. demand for vanilla ice cream will increasec. the quantity demanded of vanilla ice cream will decreased. demand for chocolate ice cream will decreasee. demand for vanilla ice cream will decrease____ 17. An increase in the price of butter, a substitute good, would be most likely to causea. a rightward shift of the demand curve for margarineb. the quantity of margarine demanded to increasec. the quantity of margarine demanded to decreased. a decrease in the price of margarinee. a leftward shift of the demand curve for margarine____ 18. Sugar and honey are viewed as substitutes for each other in many cooking applications. If the price of sugarrises, we would expecta. the quantity demanded of honey to decreaseb. the demand for honey to increasec. the demand for honey to decreased. the quantity demanded of honey to increasee. the price of honey to decrease____ 19. Which of the following is the best example of complements?a. hiking boots and athletic shoesb. CDs and DVDsc. film and film processing (developing)d. milk and cheesee. coffee and tea____ 20. If the price of potato chips increases, other things constant, demand for potato-chip dip willa. increase because the goods are substitutesb. decrease because the goods are substitutesc. not change; only quantity demanded will changed. decrease because the goods are complementse. increase because the goods are complements____ 21. If good B is a complement to good A, then a decrease in the price of Ba. increases the demand for Ab. decreases the demand for Ac. will cause the demand for B to increased. decreases the quantity demanded of Ae. increases the quantity demanded of A____ 22. If good B is a complement to good A, then a rise in the price of Ba. decreases the demand for Ab. will cause the demand for B to increasec. decreases the quantity demanded of Ad. increases the demand for Ae. increases the quantity demanded of A____ 23. A decrease in the demand for peanut butter could be caused by a(n)a. increase in the price of peanut butterb. doubling of the price of breadc. drought in Georgia that destroyed 30 percent of the peanut cropd. increase in the supply of peanut buttere. increase in consumer income____ 24. An increase in the demand for peanut butter could be caused by a(n)a. increase in the supply of peanut butterb. decrease in the price of breadc. drought in Georgia that destroyed 30 percent of the peanut cropd. decrease in consumer incomee. decrease in the price of bologna____ 25. Which of the following statements about gold jewelry and round-trip bus tickets to Bismarck, North Dakota,is most likely to be correct?a. Their demand curves probably are quite similar.b. They are both inferior goods.c. They are unrelated.d. They are complements.e. They are substitutes.Exhibit 4-2____ 26. Refer to Exhibit 4-2. A shift from demand curve D to D’ illustrates a(n)a. decrease in quantity demandedb. increase in quantity demandedc. increase in supplyd. decrease in demande. increase in demand____ 27. Refer to Exhibit 4-2. Which of the following would cause a shift of demand from D’ to D?a. an increase in the price of a substitute goodb. a decrease in the price of a complementary goodc. an increase in the number of consumersd. a decline in consumers’ incomes if it is a normal goode. an increase in consumers’ incomes if it is a normal good____ 28. In Exhibit 4-2, which of the following could not cause the shift from D to D’?a. an increase in the price of a substituteb. a decrease in the price of a complementc. an increase in the number of consumersd. a decrease in income if the good in question is an inferior goode. a decrease in the price of the good in question____ 29. If the tea harvest is bad in a particular year, the supply of tea willa. decrease, its price will decrease, and the quantity demanded of coffee will increaseb. decrease, its price will increase, and the quantity demanded of coffee will decreasec. increase, its price will increase, and the quantity demanded of coffee will increased. decrease, its price will decrease, and the quantity demanded of coffee will decreasee. decrease, its price will increase, and the quantity demanded of coffee will increase____ 30. A rightward shift of a supply curvea. would cause an excess quantity supplied at the previous equilibrium priceb. might be caused by a price ceilingc. might be caused by a decrease in demandd. might be caused by an increase in demande. represents a decrease in supply____ 31. A decrease in supply will cause a(n)a. decrease in quantity demandedb. decrease in equilibrium pricec. increase in quantity demandedd. decrease in demande. increase in demand____ 32. An increase in supply will cause equilibrium price to __________ and equilibrium quantity to __________.a. increase; increaseb. decrease; decreasec. increase; decreased. decrease; increasee. remain constant; increase____ 33. An increase in supply will cause a(n)a. decrease in equilibrium quantity demandedb. decrease in demandc. increase in demandd. increase in quantity demandede. increase in equilibrium price____ 34. A new hormone will increase the amount of milk each cow produces. If this hormone is adopted by manydairies, what will be the effect on the milk market?a. an increase in supply, lower equilibrium price, and higher equilibrium quantityb. a decrease in supply, lower equilibrium price, and higher equilibrium quantityc. an increase in supply, higher equilibrium price, and higher equilibrium quantityd. an increase in supply, higher equilibrium price, and lower equilibrium quantitye. a decrease in supply, lower equilibrium price, and lower equilibrium quantity____ 35. A decrease in the supply of chocolate chips would usually result in aa. higher equilibrium price and a higher equilibrium quantityb. higher equilibrium price and a lower equilibrium quantityc. lower equilibrium price and a lower equilibrium quantityd. lower equilibrium price and a higher equilibrium quantitye. decrease in the demand for chocolate chipsExhibit 4-4____ 36. In Exhibit 4-4, suppose a price floor is established at $20.00. What is the result?a. a surplus of 20 unitsb. there is no change from the situation that exists at the equilibrium pricec. a shortage of 10 unitsd. a shortage of 20 unitse. a surplus of 10 unitsExhibit 4-12____ 37. Refer to exhibit 4-12. An increase in the price of baby formula would cause which of the following tohappen?a. move from b on demand curve D1 to c on demand curve D2b. move on demand curve D2 from d to cc. demand shift from D2 to D1d. move on demand curve D1 from a to be. demand shift from D1 to D2____ 38. Refer to exhibit 4-12. A decrease in the price of baby formula would cause which of the following tohappen?a. a movement from a to b on demand curve D1b. demand shift from D1 to D2c. movement from c to d on demand curve D2d. demand shift from D2 to D1e. either a or b____ 39. Refer to exhibit 4-12. The discovery that breast milk provides more protection against disease than babyformula will cause which of the following to happen?a. a movement from a to b on demand curve D1b. a demand shift from D1 to D2c. movement from c to d on demand curve D2d. demand shift from D2 to D1e. either a or b____ 40. Refer to exhibit 4-12. An increase in consumer income will cause which of the following to happen if babyformula is an inferior good?a. demand shift from D1 to D2b. movement from b to a on demand curve D1c. movement from d to c on demand curve D2d. demand shift from D2 to D1e. none of the above____ 41. Refer to exhibit 4-12. An increase in the birth rate would cause which of the following to happen?a. movement from b to a on demand curve D1b. movement from d on demand curve D2 to a on demand curve D1c. demand shift from D2 to D1d. demand shift from D1 to D2e. movement from d to c on demand curve D2Exhibit 4-13____ 42. Refer to exhibit 4-13. An increase in the price of baby formula will cause which of the following to occur?a. a movement from a to b on supply curve S1b. a movement from b to a on supply curve S1c. supply shift from S2 to S1d. a movement from d to c on supply curve S2e. supply shift from S1 to S2____ 43. Refer to exhibit 4-13. A decrease in the price of baby formula will cause which of the following to happen?a. movement from c to d on supply curve S2b. movement from b to a on supply curve S1c. supply shift from S2 to S1d. supply shift from S1 to S2e. none of the above____ 44. Refer to exhibit 4-13. The discovery that breast milk offers greater health protection to babies than babyformula will cause which of the following to happen?a. supply shift from S2 to S1b. supply shift from S1 to S2c. movement from a to b on supply curve S1d. movement from d to c on supply curve S2e. movement from c to d on supply curve S2____ 45. Refer to exhibit 4-13. The development of more efficient production technologies for baby formula willcause which of the following to happen?a. movement from c to d on supply curve S2b. supply shift from S1 to S2c. movement from b to a on supply curve S1d. movement from a to b on supply curve S1e. supply shift from S2 to S1____ 46. Refer to exhibit 4-13. An increase in the number of firms producing baby formula will cause which of thefollowing to happen?a. supply shift from S1 to S2b. movement from c to d along supply curve S2c. movement from d to c along supply curve S2d. a movement from a to b along supply curve S1e. supply shift from S2 to S1Exhibit 4-14____ 47. Refer to exhibit 4-14. If the market for baby formula is given by the demand curve D1 and the supply curveS1, what is the equilibrium price and quantity?a. P1, Q2b. P4, Q3c. P1, Q1d. P2, Q1e. P3, Q4____ 48. Refer to exhibit 4-14. If the market demand for baby formula is given by demand curve D2 and the supply isgiven by supply curve S2, which of the following is the market equilibrium?a. P1, Q1b. P4, Q3c. P2, Q1d. P1, Q1e. P3, Q4____ 49. Refer to exhibit 4-14. The market demand curve is given by D1 and the supply by S1. Equilibrium price isP2 and equilibrium quantity is Q1. What will the new equilibrium price and quantity be if there is an increasein the birth rate?a. P3 and Q4b. P2 and Q2c. P1 and Q2d. P4 and Q3e. P2 and Q1____ 50. In which of the following situations will the effect upon the equilibrium price of wheat be indeterminate?a. supply decreases and demand increasesb. supply decreases and demand decreasesc. demand remains constant and supply increasesd. supply remains constant and demand increasese. demand decreases and supply increasesExhibit 6-7 Cost schedule for a firmQuantity Total Cost Marginal Cost0 $ 2001 9002 $9003 3,000____ 51. In Exhibit 6-7, by filling in the blanks it can be determined that the fixed costs area. 3,000.b. 200.c. 900.d. 0.e. 1,000.____ 52. In Exhibit 6-7, by filling in the blanks it can be determined that the marginal cost of the first unit of output is:a. 700.b. 1,000.c. 200.d. 900.e. 3,000.____ 53. In Exhibit 6-7, by filling in the blanks it can be determined that the total cost of the second unit of output is:a. 0.b. 1,800.c. 1,000.d. 700.e. 1,200.____ 54. In Exhibit 6-7, by filling in the blanks, it can be determined that the marginal cost of the third unit of outputis:a. 700.b. 200.c. 2,000.d. 1,200.e. 0.Exhibit 6-8 Costs schedules for producing pizzaPizzasFixedCostVariableCostTotalCostMarginalCost0 $ $ $ $1 52 133 104 100 1405 206 857 215____ 55. By filling in the blanks in Exhibit 6-8, the total cost of producing zero pizzas is shown to be equal to:a. $5.b. $95.c. $100.d. zero.e. $105.____ 56. By filling in the blanks in Exhibit 6-8, the total cost of producing 3 pizzas is shown to be equal to:a. $23.b. $100.c. $113.d. $105.e. $123.____ 57. By filling in the blanks in Exhibit 6-8, the total cost of producing 5 pizzas is shown to be equal to:a. $113.b. $100.c. $160.d. $105.e. $123.____ 58. By filling in the blanks in Exhibit 6-8, the variable cost of producing 4 pizzas is shown to be equal to:a. $185.b. $60.c. $40.d. $100.e. $85.____ 59. By filling in the blanks in Exhibit 6-8, the fixed cost of producing 6 pizzas is shown to be equal to:a. $200.b. $150.c. $185.d. $100.e. $85.____ 60. By filling in the blanks in Exhibit 6-8, the average variable cost of producing 4 pizzas is shown to be equal to:a. $10.b. $40.c. $85.d. $15.e. $20.____ 61. By filling in the blanks in Exhibit 6-8, the average total cost of producing 5 pizzas is shown to be equal to:a. $160.b. $12.c. $32.d. $15.e. $85.____ 62. By filling in the blanks in Exhibit 6-8, the marginal cost of the fourth pizza is shown to be equal to:a. $10.b. $17.c. $23.d. $40.e. $15.____ 63. By filling in the blanks in Exhibit 6-8, the marginal cost of the sixth pizza is shown to be equal to:a. $15.b. $25.c. $10.d. $20.e. $85.Exhibit 6-9 Cost schedule for firm XOutputQuantityTotal FixedCostTotal VariableCost0 $100 $ 01 100 502 100 843 100 1084 100 1275 100 150____ 64. As shown in Exhibit 6-9, the total cost of producing 4 units is:a. $250.b. $100.c. $227.d. zero.____ 65. As shown in Exhibit 6-9, the total cost of producing 5 units is:a. $227.b. $100.c. $250.d. zero.____ 66. As shown in Exhibit 6-9, the marginal cost of producing the third unit is:a. $50.b. $16.c. $23.d. $24.Exhibit 6-12 Cost schedule for producing pizzaPizzasFixedCostVariableCostTotalCost0 $ $ $1 482 173 274 785 406 647 80____ 67. By filling in the blanks in Exhibit 6-12, the AFC of 4 pizzas is shown to be equal to:a. $10.b. $9.50.c. $78.d. $19.50.e. $40.____ 68. By filling in the blanks in Exhibit 6-12, the AFC of 3 pizzas is shown to be equal to:a. $13.33.b. $9.c. $10.d. $40.e. $22.33.____ 69. By filling in the blanks in Exhibit 6-12, the AVC of 4 pizzas is shown to be equal to:a. $19.50.b. $40.c. $10.d. $78.e. $9.50.____ 70. By filling in the blanks in Exhibit 6-12, the AVC of 3 pizzas is shown to be equal to:a. $40.b. $13.33.c. $9.d. $10.e. $22.33.____ 71. By filling in the blanks in Exhibit 6-12, the ATC of 3 pizzas is shown to be equal to:a. $40.b. $10.c. $13.33.d. $22.33.e. $9.____ 72. By filling in the blanks in Exhibit 6-12, the ATC of 4 pizzas is shown to be equal to:a. $9.50.b. $10.c. $78.d. $40.e. $19.50.____ 73. By filling in the blanks in Exhibit 6-12, the marginal cost of the fourth pizza is shown to be equal to:a. $11.b. $12.c. $10.d. $13.e. $14.____ 74. By filling in the blanks in Exhibit 6-12, the marginal cost of the third pizza is shown to be equal to:a. $12.b. $11.c. $13.d. $10.e. $14.____ 75. Market structure is defined as the:a. number of firms in each industry.b. ease of entry into and exit from the market.c. similarity of the product sold.d. all of the above.____ 76. Perfectly competitive markets are characterized by:a. firms selling a homogeneous product.b. very strong barriers to entry and exit.c. a small number of very large producers.d. all of the above.____ 77. Because a competitive firm is a price taker, it faces a demand curve that is:a. perfectly elastic.b. perfectly inelastic.c. relatively elastic.d. relatively inelastic.____ 78. A firm operating in a perfectly competitive market is a price taker because:a. setting a price higher than the going price results in zero sales.b. no firm has a significant market share.c. no firm’s product is perceived as different.d. all of the above.____ 79. Under perfect competition, a firm is a price taker because:a. each firm’s product is perceived as different.b. setting a price higher than the going price results in profits.c. setting a price higher than the going price results in zero sales.d. each firm has a significant market share.____ 80. The point of maximum profit for a business firm is where:a. MR = AR.b. P = AC.c. TR = TC.d. TR = MR.e. MR = MC.____ 81. If a firm decreases output when MR > MC, then:a. profit will decrease.b. profit will equal zero.c. profit will increase.d. the firm is minimizing losses.e. profit will remain the same.____ 82. If a firm increases output when MR < MC, then:a. profit will equal zero.b. profit will decrease.c. profit will remain the same.d. profit will increase.e. the firm is minimizing losses.____ 83. If a business firm is not operating at the point where MR = MC, then:a. it is not earning the maximum potential profit.b. it should shut down.c. it will incur losses.d. it cannot be earning a profit.e. its profit is zero.____ 84. If, at the point where MR = MC, the firm incurs losses, in the short run the firm should:a. increase output.b. decrease output.c. shut down.d. continue at its current output if P > AVC.e. continue at its current output if P > ATC.Exhibit 7-9 A firm’s cost and marginal revenue curves____ 85. In Exhibit 7-9, product price in this market is fixed at $14. This firm is currently operating where MR = MC.What do you advise this firm to do?a. This firm could increase profits by decreasing output.b. This firm should continue to operate at its current output.c. This firm could increase profits by increasing output.d. This firm should decrease price.e. This firm should shut down.____ 86. In Exhibit 7-9, product price in this market is fixed at $7. This firm is currently operating where MR = MC.What do you advise this firm to do?a. This firm should shut down.b. This firm should decrease price.c. This firm could increase profits by decreasing output.d. This firm could increase profits by increasing output.e. This firm should continue to operate at its current output.Exhibit 7-10 Price and cost data for a firmQ P AVC ATC MC0 $12 ? ? ?1 12 3 5 52 12 5 6 73 12 7.3 8 124 12 9.5 10 16____ 87. In Exhibit 7-10, following the rule regarding MR and MC, the most profitable output level is:a. 0.b. 1.c. 2.d. 3.e. 4.____ 88. In Exhibit 7-10, the maximum possible total profit is:a. $24.b. $36.c. $12.d. $20.e. $8.____ 89. In Exhibit 7-10, MR is the same as which column?a. ATC.b. MC.c. Q.d. P.e. AVC.Exhibit 7-11 A firm’s cost and marginal revenue curves____ 90. In Exhibit 7-11, the profit-maximizing output level at the price of $8 is:a. 0.b. 4.c. 8.d. 7.e. 10.____ 91. In Exhibit 7-11, when the price is $5, the firm:a. is breaking even.b. should produce output equal to 7.c. is making an economic profit of $21.d. should produce output equal to 10.e. should shut down.____ 92. In Exhibit 7-11, when the price is $2, the profit-maximizing (or loss-minimizing) firm:a. should try to produce more output.b. has total revenue equal to $20.c. should produce output equal to 4.d. should shut down and produce zero.e. is making an economic profit of $8.____ 93. In Exhibit 7-11, when the price rises from $5 to $8, the profit-maximizing (or loss-minimizing) firm goesfrom making a:a. loss to making a smaller loss.b. loss to making a larger loss.c. profit to making a loss.d. profit to making a larger profit.e. loss to making a profit.Exhibit 7-12 Marginal revenue and cost per unit curves____ 94. As shown in Exhibit 7-12, suppose the firm’s price is OB. The firm’s total economic profit at this price isequal to the area of:a. AEXD.b. zero.c. CGHD.d. BFHD.e. CJID.____ 95. As shown in Exhibit 7-12, the price that will yield zero economic profit is:a. OA.b. OC.c. OB.d. OD.____ 96. As shown in Exhibit 7-12, the firm will not produce in the short-run if the price is below:a. OD.b. OA.c. OC.d. OB.____ 97. As shown in Exhibit 7-12, if the price is OD, a perfectly competitive firm maximizes profit at which point onits marginal cost curve?a. F.b. E.c. I.d. Between E and I.____ 98. As shown in Exhibit 7-12, if the price is OB, the firm’s total cost of producing at its most profitable level ofoutput is:a. XL.b. YF.c. OYFB.d. OXEA.____ 99. As shown in Exhibit 7-12, if the price is OD, the firm’s total revenue at its most profitable level of output is:a. OXLD.b. OYFB.c. OZID.d. OYHD.____ 100. If price is equal to OD for the firm shown in Exhibit 7-12, total profit is maximized when:a. output is Y.b. output is X.c. output is greater than Z.d. output is Z.____ 101. The firm shown in Exhibit 7-12 will:a. not produce below a price of OA.b. be a price taker.c. produce where marginal cost equals marginal revenue.d. all of the above.____ 102. As shown in Exhibit 7-12, the firm’s supply curve is the:a. entire marginal cost curve.b. rising part of marginal cost beginning at E.c. rising part of marginal cost beginning at F.d. entire marginal revenue curve.____ 103. As shown in Exhibit 7-12, the firm will shut down in the short-run at a price below:a. OA.b. OB.c. OC.d. OD.Exhibit 7-15 Short-run cost curves for E-Z Care lawn mowing company____ 104. In Exhibit 7-15, if the market price of mowing lawns is $16 per lawn, then E-Z-Care will earn the biggestprofit by mowing:a. 7 lawns per day.b. 8 lawns per day.c. 5 lawns per day.d. as many lawns per day as is physically possible.____ 105. In Exhibit 7-15, what market price would cause E-Z-Care to just beak even?a. $8 per lawn.b. $6 per lawn.c. $12 per lawn.d. $16 per lawn.____ 106. In Exhibit 7-15, suppose the market price of mowing lawns falls to $10 per lawn. In this situation, E-Z-Carewill:a. earn a normal profit.b. shut down its operations, at least in the short run.c. continue to mow lawns despite its economic losses.d. permanently exit the industry.Exhibit 7-16 Short-run cost curves for a competitive firm____ 107. In Exhibit 7-16, suppose the firm faces a price of $80 per unit. How much should the firm produce to earn thelargest possible profit?a. 6 units per hour.b. 2 units per hour.c. 5 units per hour.d. 4 units per hour.____ 108. In Exhibit 7-16, the firm should shut down in the short run if the market price of its product falls below:a. $30 per unit.b. $80 per unit.c. $50 per unit.d. $20 per unit.____ 109. In Exhibit 7-16, if the market price of its product is $50 per unit, then the firm will:a. earn a positive economic profit.b. break even.c. shut down.d. exit the industry.Exhibit 7-17 Marginal revenue and cost per unit curves____ 110. As shown in Exhibit 7-17, if the product price is either $10, $15, $20, or $40, the firm’s economic profit ismaximum at an output of:a. 40 units per day.b. 60 units per day.c. 80 units per day.d. 20 units per day.____ 111. In Exhibit 7-17, if the price of the firm’s product is $20 per unit, the firm will produce:a. 20 units per day.b. 40 units per day.c. 80 units per day.d. 60 units per day.____ 112. As shown in Exhibit 7-17, the price at which the firm earns zero economic profit in the short-run is:a. $15 per unit.b. $20 per unit.c. more than $20 per unit.d. $10 per unit.e. $40 per unit.____ 113. If the price of the firm’s product in Exhibit 7-17 is $15 per unit, the firm should:a. continue to operate because it is earning a positive economic profit.b. stay in operation for the time being even though it is making a pure economic loss.c. shut down temporarily.d. shut down permanently.____ 114. As shown in Exhibit 7-17, the firm will produce in the short run if the price is at least equal to:a. $40 per unit.b. $15 per unit.c. $30 per unit.d. $20 per unit.e. $10 per unit.____ 115. As shown in Exhibit 7-17, the short-run supply curve for the firm corresponds to which segment of itsmarginal cost curve?a. C and all points above.b. B and all points above.c. A and all points above.d. A to C only.e. B to D only.____ 116. A monopoly is:a. the only seller of a good for which there are no good substitutes in a market with highbarriers to entry.b. the only buyer of a unique raw material.c. the producer of a product subsidized by the government.d. a seller of a highly advertised and differentiated product in a market with low barriers toentry in the long run.____ 117. The demand curve any monopolist uses in making output decisions is:a. horizontal, because there are no close substitutes for its product.b. perfectly inelastic.c. the same as the market demand curve.d. the same as the demand curve facing a perfectly competitive firm.e. vertical, because there are no close substitutes for its product.____ 118. The demand curve for a monopolist is:a. the demand curve for the industry.b. the sum of the demand curves of the perfectly competitive firms in the industry.c. below the marginal revenue curve.d. less than the market demand curve.e. nonexistent.____ 119. For a monopolist:a. price is above marginal revenue.b. marginal revenue equals zero.c. marginal cost equals zero.d. average total cost equals marginal cost.e. price equals average total cost.Exhibit 8-3 Demand and cost curves for GeneTech, a monopolist with a patented vaccine____ 120. In Exhibit 8-3, how much vaccine should GeneTech produce to maximize its profit?a. 400 doses per hour.b. Between 400 and 500 doses per hour.c. 500 doses per hour.d. 300 doses per hour.____ 121. As shown in Exhibit 8-3, in order to maximize its profit, what price should GeneTech charge for its vaccine?a. $35 per doseb. $25 per dose.c. $50 per dose.d. $20 per dose.____ 122. In Exhibit 8-3, what is the maximum hourly profit that GeneTech can earn from its vaccine?a. $10,500.b. $4,500.c. $3,000.d. $1,500.Exhibit 8-4 Demand and cost curves for a monopolist____ 123. As shown in Exhibit 8-4, in order to maximize its profit (or minimize its loss), how much output should themonopoly produce?a. 6 units per hour.b. 2 units per hour.c. 8 units per hour.d. 4 units per hour.____ 124. As shown in Exhibit 8-4, in order to maximize its profit (or minimize its loss), what price should themonopoly charge for its product?a. $90 per unit.b. $60 per unit.c. $120 per unit.d. $150 per unit.Exhibit 8-6 Monopoly____ 125. The maximum possible total monopoly profit in Exhibit 8-6 is:a. $12.b. $60.c. $18.d. $24.e. $36.____ 126. When the monopolist is maximizing total profit in Exhibit 8-6, the average total cost of producing that outputlevel is:a. $4.b. $7.c. $10.d. $6.e. $8.____ 127. The goal of any monopolist is to maximize:a. consumer welfare.b. normal profits.c. price.d. economic profits.e. output.Exhibit 8-8 Profit maximizing for a monopolist____ 128. As shown in Exhibit 8-8, the profit-maximizing price for the monopolist is:a. OP1.b. OP2.c. OP3.d. OP4.e. OP5.____ 129. As shown in Exhibit 8-8, the monopolist’s total cost is which of the following areas?a. P1AEP5.b. P4DEP5.c. P3CDP5.d. P2BDP4.e. None of the above.____ 130. The profit-maximizing output for the monopolist in Exhibit 8-8 is:a. zero.b. OQ1.c. OQ2d. OQ3.____ 131. As shown