Demand and Supply Analysis quiz

Demand and Supply Analysis

1 / 7

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

2 / 7

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 / 7

A good is classified as an inferior good if its :

4 / 7

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 :

5 / 7

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

6 / 7

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

7 / 7

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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