Consumer surplus measures:

• A) The benefit that consumers receive from a good or service beyond what they pay.
• B) The extra amount that a consumer must pay to obtain a marginal unit of a good or service.
• C) Gain or loss to consumers from price fixing.
• D) The excess demand that consumers have when a price ceiling holds prices below their equilibrium.

Which of the following costs always increase(s) as output increases?

• A) Average Variable Cost
• B) Average Fixed Cost
• C) Total Variable cost
• D) Fixed Cost

Which of the following measures the degree of economies of scope (SC)?

• A) SC = (C(Q1) + C(Q2) - C(Q1,Q2)) / C(Q1,Q2)
• B) SC = (C(Q1) - C(Q2) - C(Q1,Q2)) / C(Q1,Q2)
• C) SC = (C(Q1) + C(Q2) - C(Q1,Q2)) / C(Q1)
• D) SC = (C(Q1) - C(Q2) - C(Q1,Q2)) / C(Q1)

In a perfectly competitive firm, the profit maximizing output is found where:

• A) MC=MR and MC is decreasing.
• B) Price=MR and MC is constant.
• C) Price=MR and MC is decreasing.
• D) MC=MR and MC is increasing.

Cost-output elasticity can be calculated as:

• A) MC/AC.
• B) (AC)(MC)
• C) (AC)2(MC)
• D) AC/MC

Industry supply curve in short-run is horizontal summation of:

• A) Short-run marginal cost curves.
• B) Short-run average cost curves.
• C) Short-run total cost curves.
• D) Marginal transformation curves.

Ali knows average total cost and average variable cost for a given level of output. Which of the following costs can not be determined from this information?

• A) Fixed cost
• B) Variable cost
• C) Average fixed cost
• D) Marginal Cost

Producer surplus is measured as the:

• A) Area above the supply curve up to the market price.
• B) Area under the demand curve above the supply curve.
• C) Entire area under the supply curve.
• D) Area under the demand curve above market price.

In the long run under perfect competition a firm produces at a point where:

• A) Price is greater than long run average cost
• B) Price is less than long run average cost
• C) Price is greater than long run marginal cost
• D) Price is equal to long run average cost

What happens in a perfectly competitive industry when economic profit is greater than zero?

• A) New firms may enter the industry.
• B) All of the given options.
• C) Firms may move along their LRAC curves to new outputs.
• D) Existing firms may get larger.

The long-run supply curve of a decreasing cost industry is:

• A) Downward sloping.
• B) Vertical.
• C) Horizontal.
• D) Upward sloping.

A pricing strategy that requires consumers pay an up-front fee plus an additional fee for each unit of product purchased is a:

• A) Form of perfect price discrimination.
• B) Two-part tariff.
• C) None of the given options.
• D) Tying contract.

When people pay a monthly fee to have a hookup to the telephone company's line plus a fee for each call actually made, we would say that the telephone company is using:

• A) Limit pricing.
• B) A two-part tariff.
• C) Two stage price discrimination.
• D) Second-degree price discrimination.

Which of the following is NOT true for monopoly?

• A) The profit maximizing output is the one at which the difference between total revenue and total cost is largest.
• B) At the profit maximizing output level, price equals marginal cost.
• C) The monopolist's demand curve is the same as the market demand curve.
• D) The profit maximizing output is the one at which marginal revenue is equal to marginal cost.

In peak load pricing:

• A) Marginal revenue is equal in both periods.
• B) Marginal revenue in the peak period is less than in the off-peak period.
• C) The sum of the marginal revenues is greater than the sum of the marginal costs.
• D) Marginal revenue in the peak period is greater than in the off-peak period.

A monopsonist will buy _____ units of input than a competitor, and will pay _____ per unit.

• A) More; more
• B) Fewer; less
• C) More; less
• D) Fewer; more

The situation in which buyers are able to affect the price of a good is referred to as ______________ power.

• A) Countervailing
• B) Monopoly
• C) Monopsony
• D) Purchasing

Which of the following factors determine the firm's elasticity of demand?

• A) All of the given options.
• B) Number of firms.
• C) Elasticity of market demand.
• D) Nature of interaction among firms.

Competitive markets generate inefficient allocation of resources when there is/are:

• A) Lack of information.
• B) Externalities.
• C) Government intervene without market failure.
• D) All of the given options.

A price support may be pictured by:

• A) Shifting the demand curve to the left by the amount of the government purchase.
• B) Shifting the supply curve to the left by the amount of the government purchase.
• C) Shifting the supply curve to the right by the amount of the government purchase.
• D) Shifting the demand curve to the right by the amount of the government purchase.