Demand and Supply Analysis quiz Economic Quiz بواسطة admin في أبريل 10, 2023 24 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 : A) economies of scale B) diseconomies of scale C) constant returns to scale Increasing long run average total cost as a result of increasing output demonstrates diseconomies of scale. 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: A) 40,000 B) 0.0004 C) 0.444 Substituting current values for the independent variables other than income, the demand function becomes : QD air conditioner = 10,000 – 2 (5,000) + 0.0004 income + 30 (200) – 4 (1,000) QD air conditioner = 0.0004 income +2,000 The slope of income is 0.0004, and for an income of 4,000,000 yen, QD = 3,600. Income elasticity = I0 / Q0 × ∆Q / ∆I = 4,000,000 / 3,600 × 0.0004 = 0.444 3 / 7 A good is classified as an inferior good if its : A) income elasticity is negative B) cross price elasticity is negative C) own price elasticity is negative An inferior good is one that has a negative income elasticity of demand . 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 : A) shut down in the short run but operate in the long run B) shut down in the short run and in the long run C) operate in the short run but shut down in the long run If a firm is generating sufficient revenue to cover its variable costs and part of its fixed costs, it should continue to operate in the short run. If average revenue is likely to remain below average total costs in the long run, the firm should shut down . 5 / 7 Total revenue is greatest in the part of a demand curve that is : A) inelastic B) elastic C) unit elastic Total revenue is maximized at the quantity at which own price elasticity equals –1 . 6 / 7 Increasing the amount of one productive input while keeping the amounts of other inputs constant results in diminishing marginal returns : A) in all cases B) when it causes total output to decrease C) when the increase in total output becomes smaller Productive inputs exhibit diminishing marginal returns at the level where an additional unit of input results in a smaller increase in output than the previous unit of input . 7 / 7 When the price of a good decreases, and an individual’s consumption of that good also decreases, it is most likely that : A) the income effect and substitution effect are both negative B) the income effect is negative and the substitution effect is positive C) the substitution effect is negative and the income effect is positive The substitution effect of a price decrease is always positive, but the income effect can be either positive or negative. Consumption of a good will decrease when the price of that good decreases only if the income effect is both negative and greater than the substitution effect. Your score is LinkedIn Facebook Twitter VKontakte Send feedback Demand and Supply Analysis quiz 24 شارك FacebookTwitterWhatsAppPinterestFacebook MessengerLinkedinTelegram
