Demand and Supply Analysis quiz

Demand and Supply Analysis

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When goods are purchased for resale by a company using a periodic inventory system :

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A demand function for air conditioners is given by :

QD air conditioner = 10,000 – 2 P air conditioner + 0.0004 income + 30 P electric fan – 4 P electricity

At current average prices, an air conditioner costs 5,000 yen, a fan costs 200 yen, and electricity costs 1,000 yen. Average income is 4,000,000 yen. The income elasticity of demand for air conditioners is closest to:

3 / 22

When two goods are complements, the cross elasticity of demand is :

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When the price of a good decreases, and an individual’s consumption of that good also decreases, it is most likely that :

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If a firm’s long run average total cost increases by 6% when output is increased by 6%, the firm is experiencing :

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A company has estimated that the price elasticity of demand for its output is –1.1. If the company increases the price of its product by 5%, it is most likely that :

7 / 22

A firm’s average revenue is greater than its average variable cost and less than its average total cost. If this situation is expected to persist, the firm should :

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If the demand curve for a given product is a straight line with a slope of –5, this indicates that :

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Increasing the amount of one productive input while keeping the amounts of other inputs constant results in diminishing marginal returns :

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The demand for a product tends to be price inelastic if :

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If quantity demanded increases 15% when the price drops 1%, demand for this good :

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A firm in a perfectly competitive industry that seeks to maximize profit is most likely to continue production in the short run as long which of the following conditions exists? Price is equal to or greater than:

13 / 22

Suppose a price-taker firm produces baseball bats that sell at a price of $100 each. This firm's average total cost at the current level of production is $150 per bat, and the average fixed cost is $40 per bat. Which of the following statements is most accurate regarding this firm? They should:

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According to the law of diminishing returns, doubling the number of salespeople for a firm will most likely result in :

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Total revenue is greatest in the part of a demand curve that is :

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When the price of a good decreases, how do the income effect and the substitution effect change the quantity demanded of the good?

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A decrease in the price of Good Y can result in a decrease of the quantity of Good Y demanded by consumers if the substitution effect :

18 / 22

A distinction between Giffen goods and Veblen goods is that :

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A good is most likely to demonstrate higher price elasticity of demand :

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A good is classified as an inferior good if its :

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A firm that is experiencing diseconomies of scale should :

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If quantity demanded increases 20% when the price drops 2%, this good exhibits :

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