Exhibit 5-1 Demand curve
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In Exhibit 5-1, between points a and b, the price elasticity of demand is:
A. 0.67.
B. 1.5.
C. 2.0.
D. 1.0.
Answer: D
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If it is possible to make a change that will help some people without harming others, then the situation is:
A. efficient. B. inefficient. C. unfair. D. fair.
Answer the following statement(s) true (T) or false (F)
1. Inputs owned by the firm are included when calculating its costs. 2. If marginal cost rises when output is increased, then the average cost of production is also rising. 3. When labor is the only variable input in the short run, average variable cost equals the wage rate times the average product of labor. 4. The marginal cost curve crosses average variable cost at the bottom of the average cost U. 5. Average Variable Cost can always be expressed as the ratio of the price of labor to the Average Product of Labor.
When Bob's willingness to pay for a cup of coffee is $1, and the price of a cup of coffee is $1:
A. Bob is indifferent about purchasing the coffee. B. Bob will get no surplus by purchasing the coffee. C. Bob will get the same surplus whether he purchases the coffee or not. D. All of these are true.
If a price ceiling of $8 were placed in the market in the graph shown:
A. some surplus is transferred from consumer to producer.
B. some surplus is transferred from producer to consumer.
C. all consumers are made better off.
D. all producers are made better off.
AACSB: Knowledge Application