ECO/561 ECO 561 ECO561 Week 1 Individual Assignment - Knowledge Check - A+ (100%) guaranteed!

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Revenue increases when

·         A.

producer surplus increases

·         B.

producer surplus decreases

·         C.

consumer surplus increases

·         D.

consumer surplus decreases

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2.

An increase in the price of an inelastic good

·         A.

decreases revenues

·         B.

decreases the percentage change in quantity less than the percentage change in price

·         C.

increases revenues

·         D.

increases the percentage change in quantity more than the percentage change in price

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3.

Price elasticity of Demand increases when

·         A.

the number of complementary goods decreases

·         B.

the number of substitute goods decreases

·         C.

people become more price sensitive over time

·         D.

people become less price sensitive over time

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4.

The purpose of a market in a market system is to

·         A.

allow government to control what is sold

·         B.

set constraints between buyers and sellers

·         C.

bring buyers and sellers into contact

·         D.

allow an organization to set prices in relation to their products

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5.

By specializing in the production of one good, a company is able to benefit from economies of scale which increases its revenue. Which of the following is an attribute of specialization?

·         A.

Reducing costs by creating a surplus

·         B.

Saving time by allowing a worker to focus on one task

·         C.

Encouraging workers to learn new skills

·         D.

Encouraging workers to learn a number of different skills

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6.

The market system promotes progress by

·         A.

creating incentive to continue to do things in the same way

·         B.

restricting the amount of capital directed to specific goods

·         C.

slowly adjusting to changes in the prices of resources

·         D.

providing incentive for technological advances

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12.

Because the goals of firms, entrepreneurs, and workers have different incentives, which of the following principles applies?

·         A.

Self-interest

·         B.

Invisible hand

·         C.

Moral hazard

·         D.

Free enterprise

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7.

Productive efficiency is achieved when

·         A.

the most valued combination of resources is used

·         B.

the best technology is used

·         C.

when production occurs at a fair cost per unit

·         D.

fewer resources are left for production of other goods

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8.

The market is said to be in equilibrium when

·         A.

there is potential for a shortage but not a surplus

·         B.

there is potential for a surplus but not a shortage

·         C.

neither a shortage nor a surplus exists

·         D.

the quantity sold equals the quantity purchased

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9.

The market will move to a higher equilibrium price if

·         A.

the decrease in supply is equal to the decrease in demand

·         B.

the increase in supply is greater than the increase in demand

·         C.

the decrease in demand is greater than the decrease in supply

·         D.

the increase in demand is greater than the increase in supply

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10.

The intersection of supply and demand will be at a lower equilibrium price but a higher equilibrium quantity if

·         A.

supply is constant and demand increases

·         B.

supply is constant and demand decreases

·         C.

demand is constant and supply decreases

·         D.

demand is constant and supply increases

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11.

When a price ceiling occurs

·         A.

the market price will be lower than the equilibrium price

·         B.

the market price will be higher than the equilibrium price

·         C.

the supply will exceed the demand

·         D.

buyers will not be willing to pay more than the ceiling price

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