Đề cương Kinh tế Vi mô

HỌC VIỆN NGÂN HÀNG
BAN CHUYÊN MÔN – LIÊN CHI ĐOÀN CHẤT LƯỢNG CAO
ĐỀ CƯƠNG
KINH TẾ HỌC VI MÔ
GROUP: HỖ TRỢ HỌC TẬP SINH VIÊN CHẤT LƯỢNG CAO HVNH
(HTTPS://WWW.FACEBOOK.COM/GROUPS/380600739603628/)
2022
Ban Chuyên môn LCĐ Chất lượng Cao Học viện Ngân Hàng
TABLE OF CONTENT
THEORY ................................................................................................................................................. 2
CHAPTER 1: INTRODUCTION ...................................................................................................... 2
CHAPTER 2: SUPPLY AND DEMAND .......................................................................................... 3
CHAPTER 3: CONSUMERS, PRODUCERS AND EFFICIENCY OF MARKETS .................. 8
CHAPTER 4: THE THEORY OF CONSUMER CHOICE ......................................................... 10
CHAPTER 5: FIRM BEHAVIOR AND ORGANIZATION OF INDUSTRY ........................... 12
EXERCISE ............................................................................................................................................ 15
CHAPTER 1: INTRODUCTION .................................................................................................... 15
CHAPTER 2: SUPPLY AND DEMAND ........................................................................................ 21
CHAPTER 3 : CONSUMERS, PRODUCERS AND EFFICIENCY OF MARKETS ............... 28
CHAPTER 4: THE THEORY OF CONSUMER CHOICE ......................................................... 34
CHAPTER 5: FIRM BEHAVIOR AND ORGANIZATION OF INDUSTRY ........................... 38
Chương trình “Hỗ trợ học tập” 1

THEORY
CHAPTER 1: INTRODUCTION
1. Economists study:
 How people decide how much they work, what they buy, how much they save, and how they
invest their savings
 How firms decide how much to produce and how many workers to hire
 How society decides how to divide its resources between national defense, consumer goods,
protecting the environment, and other needs
2. Individual decision making:
 People face trade-offs among alternative goals.
 The cost of any action is measured in terms of forgone opportunities.
 Rational people make decisions by comparing marginal costs and marginal benefits.
 People change their behavior in response to the incentives they face.
3. Interactions among people:
 Trade and interdependence can be mutually beneficial.
 Markets are usually a good way of coordinating economic activity among people.
 Governments can potentially improve market outcomes by remedying a market failure or by
promoting greater economic equality.
4. The economy as a whole:
 Productivity is the ultimate source of living standards.
 Growth in the quantity of money is the ultimate source of inflation.
 Society faces a short-run trade-off between inflation and unemployment.
5. Economists are scientists.
 Make appropriate assumptions and build simplified models
 Use the circular-flow diagram and the production possibilities frontier
6. Others:
 Microeconomists study decision making by households and firms and their interactions in
the Marketplace.
 Macroeconomists study the forces and trends that affect the economy as a whole.
 A positive statement is an assertion about how the world is.
 A normative statement is an assertion about how the world ought to be.
 As policy advisers, economists make normative statements.
 Economists sometimes offer conflicting advice.
 Differences in scientific judgments
 Differences in values

CHAPTER 2: SUPPLY AND DEMAND

I. DEMAND
 Economists use the model of supply and demand to analyze competitive markets.
 Many buyers and sellers, all are price takers
 The demand curve shows how the quantity of a good demanded depends on the price.
 Law of demand: as the price of a good falls, the quantity demanded rises; the D
curve slopes downward
 Shift vs. Movement Along the Demand Curve
 Change in demand:
 A shift in the demand curve
 Occurs when a non-price determinant of demand
changes (like income or number of buyers...)
 Shifts in the demand curve are caused by changes in:
 Number of buyers
 Income
 Prices of related goods
 Tastes
 Expectations
 Change in the quantity demanded:
 A movement along a fixed demand curve
 Occurs when the price changes
II. SUPPLY
 The supply curve shows how the quantity of a good supplied depends on the price.
 Law of supply: as the price of a good rises, the quantity supplied rises; the S curve slopes
upward.
 Shift vs. Movement Along the Supply Curve
 Change in supply:
 A shift in the supply curve
 Occurs when a non-price determinant of supply
changes (like technology or costs)
 Shifts in the supply curve are caused by changes
in:
 Input prices
 Technology

 Number of sellers
 Expectations about the future
 Government’s policy (taxes, subsidies)
 Change in the quantity supplied:

 A movement along a fixed supply curve
 Occurs when the price changes
III. SUPPLY AND DEMAND TOGETHER

 The intersection of the supply and
demand curves determines the market
equilibrium.
 At the equilibrium price, quantity
demanded = quantity supplied
 The behavior of buyers and sellers
naturally drives markets toward their
equilibrium.
 When the market price is above the
equilibrium price, there is a surplus of
the good, which causes the market price
to fall.
 When the market price is below the
equilibrium price, there is a shortage,
which causes the market price to rise.
IV. ELASTICITY
1. The Elasticity of Demand
 The price elasticity of demand
 Measures how much the quantity demanded responds to changes in the price.
 Is the percentage change in quantity demanded divided by the percentage change in price.

 Q2  Q1  /  Q2  Q1  / 2
Price elasticity of demand 
 P2  P1  /  P2  P1  / 2
The Variety of Demand Curves
• Demand is perfectly inelastic:
– Price elasticity of demand = 0
• Demand is inelastic:
– Price elasticity of demand < 1
• Demand has unit elasticity:

– Price elasticity of demand = 1
• Demand is elastic:
– Price elasticity of demand > 1
• Demand is perfectly elastic:

– Price elasticity of demand = infinity
=====> The greater the price elasticity of demand –The flatter the demand curve
 Demand tends to be more elastic if
 Close substitutes are available
 The good is a luxury rather than a necessity
 The market is narrowly defined
 Buyers have substantial time to react to a price change.
 Total revenue (PxQ), total amount paid for a good
 Moves in the same direction as P (inelastic D)
 Moves in the opposite direction as P (elastic D)
 The cross-price elasticity of demand
 Measures how much the quantity demanded of one good responds to changes in the price
of another good
 The income elasticity of demand
 Measures how much the quantity demanded responds to changes in consumers’ income
2. The Elasticity of Supply
 Price elasticity of supply
 How much the quantity supplied of a good responds to a change in the price of that good
 Percentage change in quantity supplied divided by the percentage change in price
 The variety of the price elasticity of supply
 If < 1, inelastic supply: quantity supplied moves proportionately less than the price
 If > 1, elastic supply: quantity supplied moves proportionately more than the price
 Depends on the time horizon under consideration. In most markets, supply is more
elastic in the long run than in the short run.
3. Supply, Demand, and Government Policies
 A price ceiling is a legal maximum on the price of a good or service. Example: rent control.
 Binding if below the equilibrium price: causing shortage.
 Sellers must in some way ration the good or service among buyers.
 A price floor is a legal minimum on the price of a good or service. Example: minimum
wage.
 Binding if above the equilibrium price: causing surplus.
 Buyers’ demands for the good or service must in some way be rationed among sellers.

4. Elasticity and Tax Incidence – Conclusion

Tax burden falls more heavily on the side of the market that is less elastic:
 Small elasticity of demand: Buyers do not have good alternatives to consuming this good.
Buyers bear most of the burden of the tax.
 Small elasticity of supply: Sellers do not have good alternatives to producing this good.
Sellers bear most of the burden of the tax.
 When the government levies a tax on a good, the equilibrium quantity of the good falls.
 The tax places a wedge between the price paid by buyers and the price received by sellers.
 Buyers pay more for the good and sellers receive less for it.
 Buyers and sellers share the tax burden.
 The incidence of tax depends on the price elasticities of supply and demand.
 Most of the burden falls on the side of the market that is less elastic.

CHAPTER 3: CONSUMERS, PRODUCERS AND

EFFICIENCY OF MARKETS
I. Consumer surplus (CS)
 CS reflects benefits buyers receive from
 participating in a market.
 CS = WTP – P-> Buyers’ willingness to pay for
a good minus the actual price.
 WTP (willingness to pay):
 Is the maximum amount the buyer will pay for
that good.
 Reflects how much the buyer values the good
 Area below the D curve and above P
II. Producer surplus (PS)

 Measures the benefits sellers receive from
participating in a market
 PS = P – cost/WTS
 Amount a seller is paid for a good minus the
seller’ cost of providing it.
 Price received minus willingness to sell
 Cost vs. WTS (Willingness to sell)
 WTS: The lowest price accepted by a seller
for one unit of a good or service
 The cost is a measure of willingness to sell:
produce and sell the good/service only if the
price > cost
 Area below P and above the S curve
III. Market Efficiency

 Total surplus = CS + PS
 CS: Buyers’ gains from buying in the market
 PS: Sellers’ gains from selling in the market
 CS = Value to buyers – Amount paid by buyers
 PS = Amount received by sellers – Cost to sellers
Total surplus = Value to buyers – Cost to sellers
 An allocation of resources that maximizes total surplus is said to be efficient
 Policymakers are concerned with the efficiency, as well as the equality of economic
outcomes.
 Equilibrium of S and D maximizes total surplus
 The invisible hand of the marketplace leads buyers and sellers to allocate resources
efficiently.
 Markets do not allocate resources efficiently in the presence of market failures (market
power or externalities)

CHAPTER 4: THE THEORY OF CONSUMER CHOICE

I. UTILITY DEFINITIONS
 Utility (U) is the amount of satisfaction obtained from the consumption of a good or service.
 Total utility (TU) is the total amount of satisfaction obtained from consumption of all goods
or services.
 Marginal utility (MU) is the additional satisfaction gained by the consumption of one more
unit of a good or service.
★ Assume that a person’s utility can be measured in utils, where a util is one unit of satisfaction.
➔ Therefore,
MU = ∆TU / ∆Q
TU = MU1 + MU2 + ... + MUN
II. THE BUDGET CONSTAINT
1. Definition
 A consumption bundle is a particular combination of goods, e.g..30 apples and 13 flowers.
 Budget constraint: the limit on the consumption bundles that a consumer can afford
2. The Slope of the Budget Constraint
 The slope of the budget constraint equals the
relative price of the goodon the X axis.
 Slope =Rise / Run
 For example:
 rise = –200 mangos
 run = +50 fish
 Slope = – 4.
 It means that consumer must give up 4 mangos to
get one fish.
 Notice * A fall in income shifts the budget constraint down
* An increase in the price of one good pivots the budgets constraint in ward
III. INDIFFERENCE CURVE
1. Definition
 Indifference curve: shows consumption bundles that give
the consumer the same level of satisfaction
2. Four Properties of Indifference Curves
 Indifference curves are downward- sloping.
 Higher indifference curves are preferred to lower ones.
 Indifference curves cannot cross.
 Indifference curves are bowed inward.
3. The Marginal Rate of Substitution
 Marginal rate of substitution (MRS): the rate at which a consumer is willing to trade one good
for another.

 MRS = slope of indifference curve
 One Extreme Case: Perfect Substitutes
 Perfect substitutes: two goods with straight-line indifference curves, constant MRS
 Perfect complements: two goods with right-angle indifference curves
 Indifference curves for close substitutes are not very bowed
 Indifference curves for close complements are very bowed
IV. The Optimal Choice of the Consumer
 At the optimum, slope of the indifference curve equals slope of the budget constraint:
MRS = Px/Py
 The consumer optimizes by choosing the point on her budget constraint that lies on the highest
indifference curve. At this point, the marginal rate of substitution equals the relative price of
the two goods.
 When the price of a good falls, the impact on the consumer’s choices can be broken down into
two effects, an income effect and a substitution effect.
V. The Effects of a Price Change
 The Income and substituties effects
 Income effect: When a price change moves the consumer to higher or lower indifference curve
 Substituties effect: When a price change moves the consumer a long a given indifference curve
to point with a new marginal rate of substituties

CHAPTER 5: FIRM BEHAVIOR AND ORGANIZATION OF

INDUSTRY
I. THE COST OF PRODUCTION
❖ Total revenue, total cost, profit:
Profit = Total revenue - Total cost
 Total revenue: The amount that firm receives for the sale of its output.
 Total cost: The amount that the firm pay to buy inputs.
 Profit: a firm’s total revenue minus its total cost
 Profit-maximizing rule: MC = MB
II. FIRM IN PERFECTLY COMPETITIVE MARKET
 Perfect competitive market (no buyers ot sellers have market power – ablility to
manipulate prices)
CHARACTERISTICS THE COMPETITIVE FIRM
i, There are many buyers and A. A competitive firm is a powerless

many sellers in the market. firm, or a price taker.
ii, The goods offered by the B. Competitive firms have no incentive
various sellers are identical. to increase or decrease prices.
iii, Firms can freely enter or exit the
market.

❖ Perfect competitive market (no buyers or sellers have market power - ability to manipulate
prices)
 Characteristics of verfect competition
 Many puvers and many sellers.
 The goods offered for sale are largely the same.
 Firms can freelv enter or exit the market
 The Revenue of a Competitive Firms
 Total revenue (TR): TR = P x Q
 Average revenue (AR): AR = TR / Q
 Marginal revenue (MR): MR = ATR / AQ
 The change in TR from selling one more unit
 MR = P for a Competitive Firm
 competitive firm can keep increasing its output without affecting the market price.
 Each one-unit increase in Q causes revenue to rise by P
 MR = P is only true for firms in competitive markets.
 Protir Maximization
 IT O Increase by one unit, revenue rises by MR, cost rises by MC.
 At any Q with MR > MC, increasing Q raises profit.
 At any Q with MR < MC, reducing Q raises profit.
III. MONOPOLY
1. Definition
 A monopoly is a firm that is the sole seller of a product without close substitutes.
 The difference between monopoly firm and competitive firm ∙ Monopoly firm: has market
power
 Competitive firm: has no market power
 The fundamental cause of monopoly is barriers to entry: other firm cannot enter the
market and compete with it.
2. Why monopolies arise?
a. Monopoly resources
 When a single firm own a key resource.
b. Government regulation
 When the government give one person or firm the exclusive right to sell some good or
service.
c. Natural monopoly
 A single firm can produce the entire market Q at lower cost than could several firms.

3. Monopolist’s demand curve
 To sell a larger Q, the firm must reduce P
=> MR ≠ P.
 Monopoly firm: MR < P
 When a monopoly increases the amount it
sells, this action has 2 effects on TR (PxQ):
 The output effect: more output is sold, so
Q is higher=> increase TR
 The price effect: the P falls => decrease
TR
 MR could be negative if the P effect exceeds the output effect.
 A monopoly does not have an S curve:
 A monopoly firm is a “price- maker”, not a “price-taker”
 Q does not depend on P
4. Profit – maximization
 A monopolist maximizes profit by producing the quantity where
MR=MC
 When the monopolist identifies this quantity, it sets the highest price consumers are
willing to pay.
 It finds this price from D curve.
For a monopoly firm: P>MR=MC

5. The monopolist’s profit
Profit = TR-TC = (P-ATC)*Q

EXERCISE
CHAPTER 1: INTRODUCTION
1. Which of the following is a positive statement?

A. Raising the minimum wage leads to unemployment.
B. Teachers need to be well paid because they are very important to your child's future.
C. Professional athletes are overpaid.
D. Lower rent is required for students.
E. Need to help the unemployed more.
2. In the economic model,

A. firms always exchange goods for money.
B. households always exchange money for goods.
C. households are sellers in the factor market and buyers in the goods market.
D. Firms are buyers in the goods market and sellers in the factor market.
E. None is correct.
3. In the mixed economy model, basic economic problems are solved

A. through government plans.
B. through the market.
C. through markets and government plans.
D. None is correct.
E. All are correct
4. When a society cannot produce all the goods and services people wish to have, it is said that
the economy is experiencing
A. scarcity.
B. surpluses.
C. inefficiencies.
D. inequalities.
5. Economics is the study of

A. production methods.
B. how society manages its scarce resources.
C. how households decide who performs which tasks.
D. the interaction of business and government.
6. The adage, "There is no such thing as a free lunch," means

A. even people on welfare have to pay for food.
B. The cost of living is always increasing.

C. people face tradeoffs.
D. all costs are included in the price of a product.
7. The principle that "people face tradeoffs" applies to

A. individuals.
B. families.
C. societies.
D. All of the above are correct.
8. Sophia is planning her activities for a hot summer day. She would like to go to the local
swimming pool and see the latest blockbuster movie, but because she can only get tickets to
the movie for the same time that the pool is open she can only choose one activity. This
illustrates the basic principle that
A. people respond to incentives.
B. rational people think at the margin.
C. people face tradeoffs.
D. improvements in efficiency sometimes come at the expense of equality.
9. Efficiency means that

A. society is conserving resources in order to save them for the future.
B. society's goods and services are distributed equally among society's members.
C. society's goods and services are distributed fairly, though not necessarily equally, among
society's members.
D. society is getting the maximum benefits from its scarce resources.
10. When the government attempts to improve equality in an economy the result is often
A. an increase in overall output in the economy.
B. additional government revenue since overall income will increase.
C. a reduction in equality.
D. a reduction in efficiency.
11. In economics, the cost of something is

A. the dollar amount of obtaining it.
B. always measured in units of time given up to get it.
C. what you give up to get it.
D. often impossible to quantify, even in principle.
12. When computing the opportunity cost of attending a concert you should include
A. the price you pay for the ticket and the value of your time.
B. the price you pay for the ticket, but not the value of your time.

C. the value of your time, but not the price you pay for the ticket.
D. neither the price of the ticket nor the value of your time.
13. Ellie decides to spend two hours taking a nap rather than attending her classes. Her
opportunity cost of napping is
A. the value of the knowledge she would have received had she attended class.
B. the $24 she could have earned if she had worked at her job for those two hours.
C. the value of her nap less the value of attending class.
D. nothing, since she valued sleep more than attendance at class.
14. A rational decisionmaker

A. ignores marginal changes and focuses instead on “the big picture.”
B. ignores the likely effects of government policies when he or she makes choices.
C. takes an action only if the marginal benefit of that action exceeds the marginal cost of that
action.
D. takes an action only if the combined benefits of that action and previous actions exceed the
combined costs of that action and previous actions.
15. A rational decision maker takes an action only if the

A. marginal benefit is less than the marginal cost.
B. marginal benefit is greater than the marginal cost.
C. average benefit is greater than the average cost.
D. marginal benefit is greater than both the average cost and the marginal cost.
16. The marginal benefit Claire gets from purchasing a third pair of flip-flops is
A. the same as the total benefit of purchasing three pairs of flip-flops.
B. more than the marginal cost of purchasing the third pair of flip-flops.
C. the total benefit Claire gets from purchasing three pairs of flip-flops minus the total benefit
she gets from purchasing two pairs of flip-flops.
D. the total benefit Claire gets from purchasing four pairs of flip-flops minus the total benefit
she gets from purchasing three pairs of flip-flops.
17. Which of these terms are used interchangeably?

A. "goods and services" and "inputs"
B. "goods and services" and "factors of production"
C. "inputs" and "factors of production"
D. "land, labor, and capital" and "goods and services"
18. Another term for factors of production is

A. inputs.

B. output.
C. goods.
D. services.
19. In economics, capital refers to

A. the finances necessary for firms to produce their products.
B. buildings and machines used in the production process.
C. the money households use to purchase firms' output.
D. stocks and bonds.
20. When an economy is operating inside its production possibilities frontier, we know that
A. there are unused resources or inefficiencies in the economy.
B. all of the economy’s resources are fully employed.
C. economic growth would have to occur in order for the economy to move to a point on the
frontier.
D. in order to produce more of one good, the economy would have to give up some of the other
good.
21. Unemployment would cause an economy to

A. produce inside its production possibilities frontier.
B. produce on its production possibilities frontier.
C. produce outside its production possibilities frontier.
D. experience an inward shift of its production possibilities frontier.
22. The production possibilities frontier provides an illustration of the principle that
A. trade can make everyone better off.
B. governments can sometimes improve market outcomes.
C. people face trade-offs.
D. people respond to incentives.
23. Microeconomics is the study of

A. how money affects the economy.
B. how individual households and firms make decisions.
C. how government affects the economy.
D. how the economy as a whole works.
24. Macroeconomics is the study of

A. individual decision makers.
B. international trade.
C. economy-wide phenomena.

D. markets for large products.
25. For economists, statements about the world are of two types:
A. assumptions and theories.
B. true statements and false statements.
C. specific statements and general statements.
D. positive statements and normative statements.
26. Normative statements are

A. prescriptive, whereas positive statements are descriptive.
B. descriptive, whereas positive statements are prescriptive.
C. backward-looking, whereas positive statements are forward-looking.
D. forward-looking, whereas positive statements are backward-looking.
27. Positive statements are

A. prescriptive.
B. claims about how the world should be.
C. claims about how the world is.
D. made by economists speaking as policy advisers.
28. Normative statements are

A. descriptive.
B. claims about how the world should be.
D. made by economists speaking as scientists.
29. Positive statements are not

A. descriptive.
B. prescriptive.
D. made by economists speaking as scientists.
30. Normative statements are not

A. descriptive.
B. prescriptive.
C. claims about how the world should be.
D. made by economists speaking as policy advisers.

KEY EXERCISE CHAPTER 1

1.A 2.C 3.C 4.A 5.B 6.C 7.D 8.C 9.D 10.D
11.C 12.A 13.A 14.C 15.B 16.C 17.C 18.A 19.B 20.A
21.A 22.C 23.B 24.D 25.A 26.C 27.B 28.B 29.B 30.A

CHAPTER 2: SUPPLY AND DEMAND
1. An increase in quantity demanded

A. results in a movement downward and to the right along a demand curve.
B. results in a movement upward and to the left along a demand curve.
C. shifts the demand curve to the left.
D. shifts the demand curve to the right.
2. A movement upward and to the left along a demand curve is called a(n)
A. increase in demand.
B. decrease in demand.
C. decrease in quantity demanded.
D. increase in quantity demanded.
3. An increase in the price of a good will

A. increase demand.
B. decrease demand.
C. increase quantity demanded.
D. decrease quantity demanded.
4. “Other things equal, when the price of a good rises, the quantity demanded of the good falls,
and when the price falls, the quantity demanded rises.” This relationship between price and
quantity demanded
A. applies to most goods in the economy.
B. is represented by a downward-sloping demand curve.
C. is referred to as the law of demand.
5. The law of demand states that, other things equal,

when the price of a good
A. falls, the demand for the good rises.
B. rises, the quantity demanded of the good rises.
C. rises, the demand for the good falls.
D. falls, the quantity demanded of the good rises.
Figure 4-4
6. Refer to Figure 4-4. Which of the following would cause the demand curve to shift from
Demand B to Demand C in the market for DVDs in the United States?
A. a decrease in the price of DVDs
B. a decrease in the price of DVD players

C. a change in consumer preferences toward watching movies in movie theaters rather than at
home
D. a decrease in the number of people in the United States
Demand C to Demand A in the market for DVDs?
A. an increase in the price of DVDs
B. a decrease in the price of DVD players
C. a change in consumer preferences toward watching movies in movie theaters rather than at
home
D. an expectation by buyers that their incomes will increase in the very near future
Demand C to Demand A in the market for tennis balls in the United States?
A. an increase in the price of tennis balls
B. a decrease in the price of tennis racquets
C. an expectation by buyers that their incomes will increase in the very near future
D. a decrease in the number of people in the United States under age 70
Demand A to Demand B in the market for golf balls in the United States?
A. a decrease in the price of golf balls
B. an increase in the price of green fees
C. an expectation by buyers that their incomes will increase in the very near future
D. a change in consumer tastes away from golf and toward tennis
Demand A to Demand B in the market for oranges in the United States?
A. a freeze in Florida
B. a technological advance that allows oranges to ripen faster
C. a decrease in the price of apples
D. an announcement by the FDA that oranges prevent heart disease
11. Suppose you make jewelry. If the price of gold falls, then we would expect you to
A. be willing and able to produce less jewelry than before at each possible price.
B. be willing and able to produce more jewelry than before at each possible price.
C. face a greater demand for your jewelry.
D. face a weaker demand for your jewelry.
12. Workers at a bicycle assembly plant currently earn the mandatory minimum wage. If the
federal government increases the minimum wage by $1.00 per hour, then it is likely that the
A. demand for bicycle assembly workers will increase.
B. supply of bicycles will shift to the right.
C. supply of bicycles will shift to the left.

D. firm must increase output to maintain profit levels.
13. If car manufacturers begin using new labor-saving technology on their assembly lines, we
would not expect
A. a smaller quantity of labor to be used.
B. the supply of cars to increase.
C. the firms’ costs to fall.
D. individual car manufacturers to move up and to the right along their individual supply
curves.
14. Which of the following might cause the supply curve for an inferior good to shift to the
right?
A. an increase in input prices
B. a decrease in consumer income
C. an improvement in production technology that makes production of the good more
profitable
D. a decrease in the number of sellers in the market
15. If suppliers expect the price of their product to fall in the future, then they will
A. decrease supply now.
B. increase supply now.
C. decrease supply in the future but not now.
D. increase supply in the future but not now.
16. Refer to Figure 4-13. The shift from S to S’ is

called a(n)
A. decrease in supply.
B. decrease in quantity supplied.
C. increase in supply.
D. increase in quantity supplied. Figure 4-13
17. Refer to Figure 4-13. The shift from S to S’ could be caused by an
A. increase in the price of the good.
B. improvement in production technology.
C. increase in income.
D. increase in input prices.
18. Refer to Figure 4-13. The shift from S to S’ in the market for peaches could be caused by
a(n)
A. increase in the price of peaches.
B. decrease in the price of pears.
C. increase in income.

D. decrease in the labor costs of the workers who pick peaches.
19. Refer to Figure 4-13. The shift from S’ to S in the market for chocolate cake could be
caused by a(n)
A. decrease in the number of commercial bakers.
B. improvement in oven technology.
C. decrease in the price of butter.
D. decrease in the price of chocolate cake.
20. Refer to Figure 4-13. If the supply curves that are drawn represent supply curves for single-
family residential houses, then the movement from S to S’ could be caused by a(n)
A. increase in the price of apartments which are a substitute for single-family houses for many
people looking for a place to live.
B. newly-formed expectation by house-builders that prices of houses will increase significantly
in the next six months.
C. decrease in the price of lumber.
21. Equilibrium price must increase when demand

A. increases and supply does not change, when demand does not change and supply decreases,
and when demand decreases and supply increases simultaneously.
B. increases and supply does not change, when demand does not change and supply decreases,
and when demand increases and supply decreases simultaneously.
C. decreases and supply does not change, when demand does not change and supply increases,
and when demand decreases and supply increases simultaneously.
D. decreases and supply does not change, when demand does not change and supply increases,
and when demand increases and supply decreases simultaneously.
22. If a surplus exists in a market, then we know that the actual price is
A. above the equilibrium price, and quantity supplied is greater than quantity demanded.
B. above the equilibrium price, and quantity demanded is greater than quantity supplied.
C. below the equilibrium price, and quantity demanded is greater than quantity supplied.
D. below the equilibrium price, and quantity supplied is greater than quantity demanded.
23. Suppose roses are currently selling for $40 per dozen, but the equilibrium price of roses is
$30 per dozen. We would expect a
A. shortage to exist and the market price of roses to increase.
B. shortage to exist and the market price of roses to decrease.
C. surplus to exist and the market price of roses to increase.
D. surplus to exist and the market price of roses to decrease.
24. If, at the current price, there is a shortage of a good, then

A. sellers are producing more than buyers wish to buy.
B. the market must be in equilibrium.
C. the price is below the equilibrium price.
D. quantity demanded equals quantity supplied.
25. Years ago, thousands of country music fans risked their lives by rushing to buy tickets for
a Willie Nelson concert at Carnegie Hall. This behavior indicates
A. the ticket price was above the equilibrium price.
B. the ticket price was below the equilibrium price.
C. the ticket price was at the equilibrium price.
D. nothing about the equilibrium price.
26. Refer to Figure 4-15. At the equilibrium price,

A. 200 units would be supplied and demanded.
B. 400 units would be supplied and demanded.
C. 600 units would be supplied and demanded.
D. 600 units would be supplied, but only 200 would be
demanded. Figure 4-15
27. Refer to Figure 4-15. At a price of $35, there would be a
A. shortage of 400 units.
B. surplus of 200 units.
C. surplus of 400 units.
D. surplus of 600 units.
28. Refer to Figure 4-15. At what price would there be an excess supply of 200 units of the
good?
A. $15
B. $20
C. $30
D. $35
29. Refer to Figure 4-15. At a price of $15, there would be a
A. surplus of 400 units.
B. shortage of 200 units.
C. shortage of 400 units.
D. shortage of 600 units.
30. Refer to Figure 4-15. At what price would there be an excess demand of 200 units of the
good?
A. $15
B. $20
C. $30
D. $35

31. When the price of bubble gum is $0.50, the quantity demanded is 400 packs per day. When
the price falls to $0.40, the quantity demanded increases to 600. Given this information and
using the midpoint method, we know that the demand for bubble gum is
A. inelastic.
B. elastic.
C. unit elastic.
D. perfectly inelastic.
32. The midpoint method is used to compute elasticity because it

A. automatically computes a positive number instead of a negative number.
B. results in an elasticity that is the same as the slope of the demand curve.
C. gives the same answer regardless of the direction of change.
D. automatically rounds quantities to the nearest whole unit.
33. Suppose the price of potato chips decreases from $1.45 to $1.25 and, as a result, the quantity
of potato chips demanded increases from 2,000 to 2,200. Using the midpoint method, the price
elasticity of demand for potato chips in the given price range is
A. 2.00.
B. 1.55.
C. 1.00.
D. 0.64.
34. Using the midpoint method, the price elasticity of demand for a good is computed to be
approximately 0.75. Which of the following events is consistent with a 10 percent decrease in
the quantity of the good demanded?
A. a 7.5 increase in the price of the good
B. a 13.33 percent increase in the price of the good
C. an increase in the price of the good from $7.50 to $10
D. an increase in the price of the good from $10 to $17.50
35. Using the midpoint method, the price elasticity of demand for a good is computed to be
approximately 2. Which of the following events is consistent with a 0.1 percent increase in the
price of the good?
A. The quantity of the good demanded decreases from 250 to 150.
B. The quantity of the good demanded decreases from 200 to 100.
C. The quantity of the good demanded decreases by 0.05 percent.
D. The quantity of the good demanded decreases by 0.2 percent.

36. Refer to Table 5-2. Using the midpoint method, if the price falls
from $80 to $60, the absolute value of the price elasticity of demand
is
A. 20.
B. 10.
C. 2.33.
D. 0.43.
Table 5-2
37. Refer to Table 5-2. Using the midpoint method, if the price falls from $60 to $40, the
absolute value of the price elasticity of demand is
A. 0.4.
B. 1.
C. 4.
D. 20.
38. Refer to Table 5-2. Using the midpoint method, if the price falls from $40 to $20, the
absolute value of the price elasticity of demand is
A. 20.
B. 10.
C. 2.33.
D. 0.43.
39. Refer to Table 5-2. Using the midpoint method, if the price falls from $80 to $60, the price
elasticity of demand is
A. zero.
B. unit elastic.
C. inelastic.
D. elastic.
40. Refer to Table 5-2. Using the midpoint method, if the price falls from $60 to $40, the price
elasticity of demand is
A. zero.
B. inelastic.
C. unit elastic.
D. elastic.
1.A 2.C 3.D 4.D 5.D 6.B 7.C 8.D 9.C 10.D
11.B 12.C 13.D 14.C 15.B 16.C 17.B 18.D 19.A 20.C
21.B 22.A 23.D 24.C 25.B 26.B 27.C 28.C 29.C 30.B
31.B 32.C 33.D 34.B 35.D 36.C 37.B 38.D 39.D 40.C

CHAPTER 3: CONSUMERS, PRODUCERS AND

EFFICIENCY OF MARKETS
1. A consumer's willingness to pay directly measures

A. the extent to which advertising and other external forces have influenced the consumer’s
preferences.
B. the cost of a good to the buyer.
C. how much a buyer values a good.
D. consumer surplus.
2. Consumer surplus is
A. the amount a buyer is willing to pay for a good minus the amount the buyer actually pays for
it.
B. the amount a buyer is willing to pay for a good minus the cost of producing the good.
C. the amount by which the quantity supplied of a good exceeds the quantity demanded of the
good.
D. a buyer's willingness to pay for a good plus the price of the good.
3. In a market, the marginal buyer is the buyer

A. whose willingness to pay is higher than that of all other buyers and potential buyers.
B. whose willingness to pay is lower than that of all other buyers and potential buyers.
C. who is willing to buy exactly one unit of the good.
D. who would be the first to leave the market if the price were any higher.
4. A seller’s opportunity cost measures the

A. value of everything she must give up to produce a good.
B. amount she is paid for a good minus her cost of providing it.
C. consumer surplus.
D. out of pocket expenses to produce a good but not the value of her time.
5. Cost is a measure of the

A. seller's willingness to sell.
B. seller's producer surplus.
C. producer shortage.
D. seller's willingness to buy.
6. Total surplus in a market is equal to

A. value to buyers - amount paid by buyers.
B. amount received by sellers - costs of sellers.
C. value to buyers - costs of sellers.
D. amount received by sellers - amount paid by buyers.
Table 7-2
This table refers to five possible buyers' willingness to pay for a case of Vanilla Coke.
Buyer Willingness To Pay
David $8.50
Laura $7.00
Megan $5.50
Mallory $4.00
Audrey $3.50
7. Refer to Table 7-2. If the price of Vanilla Coke is $6.90, who will purchase the good?
A. all five individuals
B. Megan, Mallory and Audrey
C. David, Laura and Megan
D. David and Laura
8. Refer to Table 7-2. Which of the following is not true?
A. At a price of $9.00, no buyer is willing to purchase Vanilla Coke.
B. At a price of $5.50, Megan is indifferent between buying a case of Vanilla Coke and not
buying one.
C. At a price of $4.00, total consumer surplus in the market will be $9.00.
9. Refer to Table 7-2. If the market price is $5.50, the consumer surplus in the market will be
A. $3.00.
B. $4.50.
C. $15.50.
D. $21.00.
10. Refer to Table 7-2. If the market price is $3.80,
A. David’s consumer surplus is $4.70 and total consumer surplus for the five individuals is $9.50.
B. Megan’s consumer surplus is $1.70 and total consumer surplus for the five individuals is
$9.80.
C. David, Laura, and Megan will be the only buyers of Vanilla Coke.
D. the demand curve for Vanilla Coke, taking the five individuals into account, is horizontal.
Table 7-7
The following table represents the costs of five possible sellers.
Seller Cost
Abby $1,500
Bobby $1,200
Carlos $1,000
Dianne $750
Evalina $500
11. Refer to Table 7-7. If the market price is $1,000, the producer surplus in the market is
A. $700.
B. $750.
C. $2,250.
D. $3,700.
12. Refer to Table 7-7. If the market price is $900, the producer surplus in the market is
A. $350.
B. $550.
C. $750.
D. $1,000.
13. Refer to Table 7-7. If the market price is $1,100, the combined total cost of all participating
sellers is
A. $3,700.
B. $2,700.
C. $2,250.
D. $1,250.
14. Refer to Table 7-7. If the market price is $900, the combined total cost of all participating
sellers is
A. $3,700.
B. $2,700.
C. $2,250.
D. $1,250.
15. Refer to Table 7-7. If the price is $1,000,
A. Bobby is an eager supplier.
B. Dianne is an eager supplier.
C. Abby’s producer surplus is $500.
16. Refer to Table 7-7. If the price is $775, who would be willing to supply the product?
A. Abby and Bobby
B. Abby, Bobby, and Carlos
C. Carlos, Dianne, and Evalina
D. Dianne and Evalina
17. Refer to Table 7-7. Suppose each of the five sellers can supply at most one unit of the good.
The market quantity supplied is exactly 3 if the price is
A. $670.
B. $770.
C. $970.
D. $1,170.
18. Refer to Table 7-7. Suppose each of the five sellers can supply at most one unit of the good.
The market quantity supplied is exactly 4 if the price is

A. $770.
B. $970.
C. $1,170.
D. $1,370.
19. Refer to Table 7-7. Who is a marginal seller when the price is $1,200?
A. Bobby
B. Bobby and Abby
C. Carlos, Dianne, and Evalina
D. Carlos, Dianne, Evalina, and Bobby
20. Suppose consumer income increases. If grass seed is a normal good, the equilibrium price
of grass seed will
A. decrease, and producer surplus in the industry will decrease.
B. increase, and producer surplus in the industry will increase.
C. decrease, and producer surplus in the industry will increase.
D. increase, and producer surplus in the industry will decrease.
21. The welfare of sellers is measured by

A. consumer surplus.
B. producer surplus.
C. total surplus.
D. price.
22. Total surplus is

A. equal to producer surplus plus consumer surplus.
B. equal to the total cost to sellers minus the total value to buyers.
C. equal to consumers' willingness to pay plus producers’ cost.
D. greater than the sum of consumer surplus plus producer surplus.
23. Total surplus is equal to

A. value to buyers - profit to sellers.
B. value to buyers - cost to sellers.
C. consumer surplus x producer surplus.
D. (consumer surplus + producer surplus) x equilibrium quantity.
24. Total surplus is represented by the area below the

A. demand curve and above the price.
B. price and up to the point of equilibrium.
C. demand curve and above the supply curve, up to the equilibrium quantity.
D. demand curve and above the horizontal axis, up to the equilibrium quantity.

25. Efficiency is attained when
A. total surplus is maximized.
B. producer surplus is maximized.
C. all resources are being used.
D. consumer surplus is maximized and producer surplus is minimized.
26. The "invisible hand" refers to

A. the marketplace guiding the self-interests of market participants into promoting general
economic well-being.
B. the fact that social planners sometimes have to intervene, even in perfectly competitive
markets, to make those markets more efficient.
C. the equality that results from market forces allocating the goods produced in the market.
D. the automatic maximization of consumer surplus in free markets.
27. Raisin bran and milk are complementary goods. A decrease in the price of raisins will
A. increase consumer surplus in the market for raisin bran and decrease producer surplus in the
market for milk.
B. increase consumer surplus in the market for raisin bran and increase producer surplus in the
market for milk.
C. decrease consumer surplus in the market for raisin bran and increase producer surplus in the
market for milk.
D. decrease consumer surplus in the market for raisin bran and decrease producer surplus in the
market for milk.
28. PlayStations and PlayStation games are complementary goods. A technological advance
in the production of PlayStations will
A. increase consumer surplus in the market for PlayStations and decrease producer surplus in the
market for PlayStation games.
B. increase consumer surplus in the market for PlayStations and increase producer surplus in the
C. decrease consumer surplus in the market for PlayStations and increase producer surplus in the
D. decrease consumer surplus in the market for PlayStations and decrease producer surplus in
the market for PlayStation games.
29. Producer surplus is

A. measured using the demand curve for a good.
B. always a negative number for sellers in a competitive market.
C. the amount a seller is paid minus the cost of production.
D. the opportunity cost of production minus the cost of producing goods that go unsold.

30. Producer surplus measures the
A. benefits to sellers of participating in a market.
B. costs to sellers of participating in a market.
C. price that buyers are willing to pay for sellers’ output of a good or service.
D. benefit to sellers of producing a greater quantity of a good or service than buyers demand.

1.C 2.A 3.D 4.A 5.A 6.C 7.D 8.D 9.B 10.B
11.B 12.B 13.C 14.D 15.B 16.D 17.D 18.D 19.A 20.B
21.B 22.A 23.B 24.C 25.A 26.A 27.B 28.B 29.A 30.C

CHAPTER 4: THE THEORY OF CONSUMER CHOICE
1. Consider two goods, pizza and Pepsi. The slope of the consumer’s budget constraint is
measured by the
A. consumer’s income divided by the price of Pepsi.
B. relative price of pizza and Pepsi
C. consumer’s income divided by the price of pizza.
D. spending on pizza divided by the consumer’s income
2. If a consumer’s income decreases, the budget constraint for Pepsi and pizza will
A. shift outward, parallel to the old budget constraint.
B. shift inward, parallel to the old budget constraint.
C. rotate outward towards pizza because we can afford more pizza
D. rotate outward towards Pepsi because we can afford more Pepsi
3. If the relative price of a ticket to a concert is 3 times the price of a meal at a good restaurant,
the opportunity cost of a concert ticket is the
A. slope of the budget constraint.
B. slope of the indifference curve.
C. intercept on the concert axis.
D. intercept on the restaurant axis
4. When the price of a pair of jeans rises, the

A. quantity of jeans demanded falls.
B. quantity of jeans demanded rises.
C. quantity of jeans supplied falls.
D. demand for jeans falls.
5. The theory of consumer choice provides the foundation for understanding

A. the structure of a firm.
B. the profitability of a firm.
C. a firm’s product demand.
D. a firm’s product supply.
6. The theory of consumer choice can often provide insight into the behavior of
A. individuals who make rational choices.
B. individuals who make constrained choices.
C. individuals who are unaware of how to maximize their well-being.
D. irrational consumers

7. The theory of consumer choice examines
A. the determination of output in competitive markets.
B. the tradeoffs inherent in decisions made by consumers.
C. how consumers select inputs into manufacturing production processes.
D. the determination of prices in competitive markets
8. A budget constraint
A. shows the prices that a consumer chooses to pay for products he consumes.
B. shows the purchases made by consumers.
C. shows the consumption bundles that a consumer can afford.
D. represents the bundles of consumption that makes a consumer equally happy.
9. Assume that a college student spends her income on Coke and Snickers. The price of a
Snickers candy bar is $0.50, and a can of Coke is $0.75. If she has $20 of income, she could
choose to consume
A. 10 Snickers bars and 20 cans of Coke.
B. 15 Snickers bars and 18 cans of Coke
C. 22 Snickers bars and 14 cans of Coke.
D. 24 Snickers bars and 12 cans of Coke.
10. Assume that a college student spends her income on Coke and Snickers. During finals week,
the price of a Snickers candy bar is $0.75, and a can of Coke is $1.00. If she has $20 of income,
she could choose to consume
A. 8 Snickers bars and 15 cans of Coke.
B. 7 Snickers bars and 16 cans of Coke.
C. 4 Snickers bars and 17 cans of Coke.
D. 2 Snickers bars and 20 cans of Coke
11. Which of the graphs in the figure reflects a

decrease in the price of good X only?
A. graph (a)
B. graph (b)
C. graph (c)
D. graph (d)

12. Based on the figure, which of the following
statements is correct?
A. Point A is preferred equally to point E.
B. Point A is preferred equally to point C.
C. The bundle associated with point B contains more
Ho-Ho’s than that associated with point C.
D. The bundles along indifference curve I1 are
preferred to those along indifference curve
13. If the consumption of one good is reduced, how

must a consumer alter his consumption of another
good in order to remain indifferent between two
bundles?
A. He can reduce, increase or not change his consumption of another good
B. He must reduce his consumption of another good.
C. He must increase his consumption of another good.
D. He must not change his consumption of another good.
14. The slope of an indifference curve is

A. the rate of change of consumer’s preferences.
B. the marginal rate of preference.
C. the marginal rate of substitution.
D. always equal to the slope of the budget constraint.
15. The rate at which a consumer is willing to exchange one good for another, and maintain a
constant level of satisfaction, is called the
A. relative expenditure ratio.
B. value of marginal product.
C. marginal rate of substitution.
D. relative price ratio
16. All of the following are properties of indifference curves, EXCEPT indifference curves
A. are downward sloping
B. that are closer to the origin are preferable to higher indifference curves.
C. are bowed in toward the origin.
D. do not cross
17. The relationship between the marginal utility that George gets from eating a bag of cookies
and the number of bags he eats per month is as follows:

George receives 2 units of utility from the last dollar spent
on each of the other goods he consumes. If cookies cost
$4per bag, how many bags of cookies will he consume per
month if he maximizes utility?
A. 2
B. 3
C. 4
D. 5
18. A fall in the price of widgets leads consumers to buy

more widgets. From this information we can conclude that widgets
A. are normal goods.
B. are inferior goods.
C. are Giffen goods.
D. None of the above are correct
19. When two goods are perfect substitutes, the marginal rate of substitution
A. is constant
B. decreases as the scarcity of one good increases.
C. increases as the scarcity of one good increases.
D. increases as the abundance of one good increase
20. When two goods are perfect complements, the indifference curves are
A. positively sloped.
B. negatively sloped.
C. straight lines.
D. right angles
1.B 2.B 3.A 4.B 5.C 6.B 7.B 8.C 9.A 10.C
11.B 12.B 13.C 14.C 15.C 16.B 17.C 18.D 19.A 20.D

CHAPTER 5: FIRM BEHAVIOR AND ORGANIZATION OF

INDUSTRY
1. If a firm uses labor to produce output, the firm’s production function depicts the relationship
between
A. the number of workers and the quantity of output.
B. marginal product and marginal cost.
C. the maximum quantity that the firm can produce as it adds more capital to a fixed quantity of
labor.
D. fixed inputs and variable inputs in the short run.
2. On a 100-acre farm, a farmer is able to produce 3,000 bushels of wheat when he hires 2
workers. He is able to produce 4,400 bushels of wheat when he hires 3 workers. Which of the
following possibilities is consistent with the property of diminishing marginal product?
A. The farmer is able to produce 5,600 bushels of wheat when he hires 4 workers.
B. The farmer is able to produce 5,800 bushels of wheat when he hires 4 workers.
C. The farmer is able to produce 6,000 bushels of wheat when he hires 4 workers.
D. Any of the above could be correct.
3. If the total cost curve gets steeper as output increases, the firm is experiencing
A. diminishing marginal product.
B. increasing marginal product.
C. diseconomies of scale.
D. economies of scale.
4. In the short run, a firm that produces and sells cell phones can adjust
A. how many workers to hire.
B. the size of its factories.
C. where to produce along its long-run average-total-cost curve.
5. Economic profit is equal to total revenue minus the

A. opportunity cost of producing goods and services.
B. accounting cost of producing goods and services.
C. implicit cost of producing goods and services.
D. explicit cost of producing goods and services.
6. Economic profit
A. will never exceed accounting profit.
B. is most often equal to accounting profit.

C. is always at least as large as accounting profit.
D. is a less complete measure of profitability than accounting profit.
7. Total revenue minus only explicit costs is called

A. accounting profit.
B. economic profit.
C. implicit cost.
D. average total cost.
8. Total revenue minus only implicit costs is called

A. accounting profit.
B. economic profit.
C. opportunity cost.
D. None is correct.
9. Economists normally assume that the goal of a firm is to earn

(i) profits as large as possible, even if it means reducing output.
(ii) profits as large as possible, even if it means incurring a higher total cost
(iii) revenues as large as possible, even if it reduces profits.
A. (i) and (ii) only
B. (i) and (iii) only
C. (ii) and (iii) only
D. (i), (ii), and (iii)
10. If a competitive firm is currently producing a level of output at which marginal cost exceeds
marginal revenue, then
A. a one-unit decrease in output will increase the firm's profit.
B. a one-unit increase in output will increase the firm's profit.
C. total revenue exceeds total cost.
D. total cost exceeds total revenue.
11. In a competitive market, the actions of any single buyer or seller will
A. have no impact on the market price.
B. discourage entry by competitors.
C. influence the profits of other firms in the market.
D. influence the revenues earned by competing firms by adjusting his output.
12. A seller in a competitive market

A. can sell all he wants at the going price, so he has little reason to charge less.
B. will lose all his customers to other sellers if he raises his price.

C. considers the market price to be a “take it or leave it” price.
D. All are correct.
13. In a competitive market, no single producer can influence the market price because
A. consumers have more influence over the market price than producers do.
B. government intervention prevents firms from influencing price.
C. producers agree not to change the price.
D. many other sellers are offering a product that is essentially identical.
14. For an individual firm operating in a competitive market, marginal revenue equals
A. average revenue and the price for all levels of output.
B. average revenue, which is greater than the price for all levels of output.
C. average revenue, the price, and marginal cost for all levels of output.
D. marginal cost, which is greater than average revenue for all levels of output.
15. When a competitive firm doubles the quantity of output it sells, its
A. average revenue doubles.
B. marginal revenue doubles.
C. total revenue doubles.
D. profits must increase.
16. A profit-maximizing firm in a competitive market is currently producing 200 units of output.
It has average revenue of $9 and average total cost of $7. It follows that the firm's
A. average total cost curve intersects the marginal cost curve at an output level of less than 200
units.
B. average variable cost curve intersects the marginal cost curve at an output level of less than
200 units.
C. profit is $400.
D. All are correct.
17. A firm that shuts down temporarily has to pay

A. its fixed costs but not its variable costs.
B. its variable costs but not its fixed costs.
C. both its variable costs and its fixed costs.
D. neither its variable costs nor its fixed costs.
18. A firm will shut down in the short run if, for all positive levels of output,
A. its losses exceed its fixed costs.
B. its total revenue is less than its variable costs.
C. the price of its product is less than its average variable cost.

D. All are correct.
19. In a competitive market the current price is $7, and the typical firm in the market has ATC
= $7.50 and AVC = $7.15.
A. In the short run firms will shut down, and in the long run firms will leave the market.
B. In the short run firms will continue to operate, but in the long run firms will leave the market.
C. New firms will likely enter this market to capture any remaining economic profits.
D. The firm will earn zero profits in both the short run and long run.
20. Monopolies use their market power to

A. charge a price that is higher than marginal cost.
B. charge prices that equal minimum average total cost.
C. increase the quantity sold as they increase price.
D. dump excess supplies of their product on the market.
21. A profit-maximizing monopolist charges a price of $14. The intersection of the marginal
revenue curve and the marginal cost curve occurs where output is 15 units and marginal cost
is $7. What is the monopolist’s profit?
A. $90
B. $105
C. $180
D. Not enough information is given to determine the answer.
22. Which of the following is not correct?

A. A monopolist can alter the market price by adjusting the quantity that it produces.
B. A monopolist can charge any price and sell any quantity that it chooses.
C. The demand curve facing a competitive firm is perfectly elastic.
D. The demand curve facing a monopolist is the market demand curve.

1A 2A 3C 4A 5A 6A 7A 8D 9A 10A 11A
12D 13D 14A 15C 17A 18D 19A 20A 21D 22B

Đề cương Kinh tế Vi mô

Uploaded by

Copyright:

Available Formats

You might also like

Đề cương Kinh tế Vi mô

Uploaded by

Document Information

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

Đề cương Kinh tế Vi mô

Uploaded by

Copyright:

Available Formats

HỌC VIỆN NGÂN HÀNG

BAN CHUYÊN MÔN – LIÊN CHI ĐOÀN CHẤT LƯỢNG CAO

Chương trình “Hỗ trợ học tập” 1

Chương trình “Hỗ trợ học tập” 2

CHAPTER 2: SUPPLY AND DEMAND

Chương trình “Hỗ trợ học tập” 3

 Change in the quantity supplied:

III. SUPPLY AND DEMAND TOGETHER

Chương trình “Hỗ trợ học tập” 4

• Demand has unit elasticity:

• Demand is perfectly elastic:

Chương trình “Hỗ trợ học tập” 6

4. Elasticity and Tax Incidence – Conclusion

Chương trình “Hỗ trợ học tập” 7

CHAPTER 3: CONSUMERS, PRODUCERS AND

II. Producer surplus (PS)

III. Market Efficiency

Chương trình “Hỗ trợ học tập” 9

CHAPTER 4: THE THEORY OF CONSUMER CHOICE

Chương trình “Hỗ trợ học tập” 10

Chương trình “Hỗ trợ học tập” 11

CHAPTER 5: FIRM BEHAVIOR AND ORGANIZATION OF

i, There are many buyers and A. A competitive firm is a powerless

Chương trình “Hỗ trợ học tập” 12

Chương trình “Hỗ trợ học tập” 13

For a monopoly firm: P>MR=MC

Chương trình “Hỗ trợ học tập” 14

1. Which of the following is a positive statement?

2. In the economic model,

3. In the mixed economy model, basic economic problems are solved

5. Economics is the study of

6. The adage, "There is no such thing as a free lunch," means

Chương trình “Hỗ trợ học tập” 15

7. The principle that "people face tradeoffs" applies to

9. Efficiency means that

11. In economics, the cost of something is

Chương trình “Hỗ trợ học tập” 16

14. A rational decisionmaker

15. A rational decision maker takes an action only if the

17. Which of these terms are used interchangeably?

18. Another term for factors of production is

Chương trình “Hỗ trợ học tập” 17

19. In economics, capital refers to

21. Unemployment would cause an economy to

23. Microeconomics is the study of

24. Macroeconomics is the study of

Chương trình “Hỗ trợ học tập” 18

26. Normative statements are

27. Positive statements are

28. Normative statements are

29. Positive statements are not

30. Normative statements are not

Chương trình “Hỗ trợ học tập” 19

KEY EXERCISE CHAPTER 1

Chương trình “Hỗ trợ học tập” 20

CHAPTER 2: SUPPLY AND DEMAND

1. An increase in quantity demanded

3. An increase in the price of a good will

5. The law of demand states that, other things equal,