Eco 550 Week 4 Quiz 3, Chapter 5

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ECO 550 Week 4 Quiz 3, Chapter 5

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Download answer at http://www.examtutorials.com/course/eco-550-week-4-quiz-3-chapter-5/
Question 11. Assume that the world price of Good A is $8 per unit while its domestic price is $6, and the marginal cost incurred by domestic producers for producing one unit of Good A is $5. If the government imposes a tax of $3 per unit on domestic producers, which of the following situations will be observed?The tax will increase the price of Good A in the domestic market.The tax will increase the world price of Good A.The tax will decrease the profit earned by domestic producers.The tax will decrease the price of Good A in the domestic market.Question 21. The long-run supply curve of a perfectly competitive market is a:an upward rising step function.a downward sloping step function.a vertical line at the market price.a horizontal line at the market price.Question 31. When the existing firms in a competitive industry have different operating costs:the highest-cost firm in operation breaks even, while the low cost firms will earn profit.the highest-cost firm in operation breaks even, while the low cost firms leave the industry.the low cost firms earn a larger profit than the high-cost firms.the highest-cost firms will incur a deadweight loss.Question 41. Which of the following conditions define a perfectly competitive market?The transaction costs are very high.Information is available to participants at a high cost.The product is homogenous.There are limited number of buyers and sellers.Question 51. If there are only a few producers of substitutes for Good X, a merger between producers of Good X and any one of them could significantly _____ for Good X.decrease the elasticity of demand.increase the elasticity of supply.decrease the elasticity of supply.increase the elasticity of demand.Question 61. Refer to Table 5-1. Suppose initially 3,200 units are demanded at a price of $3 per unit. What will be the quantity of output supplied by each type of firm in the market?The following table gives the average cost of production for three different categories of firms producing the same product.Table 5-1Type of firms No. of firms Average Cost per unit Equilibrium outputA 350 $3 10 unitsB 400 $6 10 unitsC 550 $10 10 unitsType A and Type B will jointly supply 3,000 units while Type C will supply 200 units.Type A firms will supply 3,000 units, while the remaining 200 units will be supplied by Type B.Type A firms will supply the entire 3,200 units, while Type B and Type C firms will not enter the market.Type A and Type B will each supply 1,600 units, Type C will not enter the market.Question 71. If the long-run market supply curve is perfectly elastic, a decrease in variable cost will:shift the supply curve upward to a higher market-clearing price level.shift the supply curve downward to a lower market-clearing price level.shift the supply curve to the right to a higher market-clearing output.shift the supply curve to the left to a lower market-clearing output.Question 81. Which of the following conditions define the short-run for any industry?Firms do not incur a fixed cost.Firms incur both fixed as well as variable costs.Firms can easily enter and leave the market.Firms can enter but cannot leave the market.Question 91. Suppose beer producers in Munich became aware of the low price of one barrel of beer in the domestic market relative to that in the United States. What will be the impact of this price difference?Beer production in Munich will decline.Price of beer in the domestic market will increase.Beer production in the U.S. will increase.Beer consumption in the domestic market will increase.Question 101. In a perfectly competitive market, the demand curve faced by each firm is:Answerhighly inelastic.perfectly elastic.perfectly inelastic.less elastic.Question 111. Assume that the government of a nation rations the crude oil available to car owners each month which reduces the overall demand for petroleum. However, the nation continues to import oil from the world market. Which of the following will be observed in the oil market?The world price of petroleum would decline.The domestic price of petroleum would decline.The domestic price of petroleum would increase.The world price of petroleum will remain unaffected.Question 121. Suppose the cost of raw materials used by the cotton industry rises to a larger extent compared to the increase in demand in the market. Which of the following situations will arise?The incidence of the higher cost will fall completely on the consumers.The incidence of the higher cost will fall completely on the high cost firms.The incidence of the higher cost will fall completely on the low cost firms.The incidence of the higher cost will fall partially on the consumers and partially on the sellers.Question 131. Which of the following situations resulted from the North American Free Trade Agreement (NAFTA)?The cost of tortillas in Mexico decreased.Corn export to the U.S. from Mexico declined.Corn export to the U.S. from Mexico increased.The cost of tortillas in the U.S. increased.Question 141. Refer to Figure 5-3. What will be the shape of the long-run supply curve of land suitable for corn farming?In the figure given below, D1 and D2 represent the demand curves for land before and after the ethanol program respectively. SRS is the short-run supply curve of land.Figure 5-3AnswerThe long-run supply curve of land suitable for corn farming will be perfectly inelastic.The long-run supply curve of land suitable for corn farming will be perfectly elastic.The long-run supply curve of land suitable for corn farming will be less elastic than the short-run supply curve.The long-run supply curve of land suitable for corn farming will be more elastic than the short-run supply curve.Question 151. The short-run supply curve of a perfectly competitive industry with firms having identical costs is:a horizontal line at the market price.a vertical line at the equilibrium output.an upward rising curve.a downward sloping step function. 
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Question 11. Assume that the world price of Good A is $8 per unit while its domestic price is $6, and the marginal cost incurred by domestic producers for producing one unit of Good A is $5. If the government imposes a tax of $3 per unit on domestic producers, which of the following situations will be observed?The tax will increase the price of Good A in the domestic market.The tax will increase the world price of Good A.The tax will decrease the profit earned by domestic producers.The tax will decrease the price of Good A in the domestic market.Question 21. The long-run supply curve of a perfectly competitive market is a:an upward rising step function.a downward sloping step function.a vertical line at the market price.a horizontal line at the market price.Question 31. When the existing firms in a competitive industry have different operating costs:the highest-cost firm in operation breaks even, while the low cost firms will earn profit.the highest-cost firm in operation breaks even, while the low cost firms leave the industry.the low cost firms earn a larger profit than the high-cost firms.the highest-cost firms will incur a deadweight loss.Question 41. Which of the following conditions define a perfectly competitive market?The transaction costs are very high.Information is available to participants at a high cost.The product is homogenous.There are limited number of buyers and sellers.Question 51. If there are only a few producers of substitutes for Good X, a merger between producers of Good X and any one of them could significantly _____ for Good X.decrease the elasticity of demand.increase the elasticity of supply.decrease the elasticity of supply.increase the elasticity of demand.Question 61. Refer to Table 5-1. Suppose initially 3,200 units are demanded at a price of $3 per unit. What will be the quantity of output supplied by each type of firm in the market?The following table gives the average cost of production for three different categories of firms producing the same product.Table 5-1Type of firms No. of firms Average Cost per unit Equilibrium outputA 350 $3 10 unitsB 400 $6 10 unitsC 550 $10 10 unitsType A and Type B will jointly supply 3,000 units while Type C will supply 200 units.Type A firms will supply 3,000 units, while the remaining 200 units will be supplied by Type B.Type A firms will supply the entire 3,200 units, while Type B and Type C firms will not enter the market.Type A and Type B will each supply 1,600 units, Type C will not enter the market.Question 71. If the long-run market supply curve is perfectly elastic, a decrease in variable cost will:shift the supply curve upward to a higher market-clearing price level.shift the supply curve downward to a lower market-clearing price level.shift the supply curve to the right to a higher market-clearing output.shift the supply curve to the left to a lower market-clearing output.Question 81. Which of the following conditions define the short-run for any industry?Firms do not incur a fixed cost.Firms incur both fixed as well as variable costs.Firms can easily enter and leave the market.Firms can enter but cannot leave the market.Question 91. Suppose beer producers in Munich became aware of the low price of one barrel of beer in the domestic market relative to that in the United States. What will be the impact of this price difference?Beer production in Munich will decline.Price of beer in the domestic market will increase.Beer production in the U.S. will increase.Beer consumption in the domestic market will increase.Question 101. In a perfectly competitive market, the demand curve faced by each firm is:Answerhighly inelastic.perfectly elastic.perfectly inelastic.less elastic.Question 111. Assume that the government of a nation rations the crude oil available to car owners each month which reduces the overall demand for petroleum. However, the nation continues to import oil from the world market. Which of the following will be observed in the oil market?The world price of petroleum would decline.The domestic price of petroleum would decline.The domestic price of petroleum would increase.The world price of petroleum will remain unaffected.Question 121. Suppose the cost of raw materials used by the cotton industry rises to a larger extent compared to the increase in demand in the market. Which of the following situations will arise?The incidence of the higher cost will fall completely on the consumers.The incidence of the higher cost will fall completely on the high cost firms.The incidence of the higher cost will fall completely on the low cost firms.The incidence of the higher cost will fall partially on the consumers and partially on the sellers.Question 131. Which of the following situations resulted from the North American Free Trade Agreement (NAFTA)?The cost of tortillas in Mexico decreased.Corn export to the U.S. from Mexico declined.Corn export to the U.S. from Mexico increased.The cost of tortillas in the U.S. increased.Question 141. Refer to Figure 5-3. What will be the shape of the long-run supply curve of land suitable for corn farming?In the figure given below, D1 and D2 represent the demand curves for land before and after the ethanol program respectively. SRS is the short-run supply curve of land.Figure 5-3AnswerThe long-run supply curve of land suitable for corn farming will be perfectly inelastic.The long-run supply curve of land suitable for corn farming will be perfectly elastic.The long-run supply curve of land suitable for corn farming will be less elastic than the short-run supply curve.The long-run supply curve of land suitable for corn farming will be more elastic than the short-run supply curve.Question 151. The short-run supply curve of a perfectly competitive industry with firms having identical costs is:a horizontal line at the market price.a vertical line at the equilibrium output.an upward rising curve.a downward sloping step function. 
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