Microeconomics Practice Examination Solutions by James Chasey
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1. A production possibility curve might be shifted outward by each of the following …show more content…
5. If a legal price ceiling is established on a good above the existing equilibrium price, the effect would be to:
A. Raise the price of the good and lower the quantity purchased B. Have no effect on the price or quantity of the good C. Lower the price of the good and lower the quantity purchased D. Raise the price of the good and raise the quantity purchased E. Lower the price of the good and increase the quantity purchased Answer B. Have no effect on the price or quantity purchased James Chasey
6. Chasey Company Inc. is the only producer in a small town. Cost and revenue information for the Chasey Company are shown in Figure 3. Chasey Company would set the price of its product at;
A. $7.50 B. $6.00 C. $4.50 D. $3.75 E. $3.00 Answer A. $7.50 James Chasey (adapted from Baumol and Blinder (7e) Question 110 page 306)
7. In Figure 3 the Chasey Company would maximize profits by producing a quantity of;
A. 60 B. 100 C. 120 D. 140 E. 170 Answer B. 100 James Chasey (adapted from Baumol and Blinder (7e) Question 111 page 306 TEST BANK)
8. In Figure 3 the Chasey Company will make a profit of _______;
A. $750 B. $450 C. $300 D. $150 E. $150 loss Answer C. $300 James Chasey (adapted