Economics MCQs

Page No. 250

If the price of good is below the equilibrium price ?


athere is a shortage and the price will rise


b the quantity demanded is equal to the quantity supplied and the price remains unchanged


cthere is a shortage and the price will fall


d there is a surplus and the price will rise



All of the following shift the supply of watches to the right except ?


aan advance in the technology used to manufacture watches


ban increase in the price of watches


cAll of these answers cause an increase in the supply of watches


da decrease in the wage of workers employed to manufacture watches



A monopolistic market has ?


amany buyers and sellers


bnone of these answers


cfirms that are price takers


donly one seller


View Answer only one seller

The law of supply states that an increase in the price of a good ?


a none of these answers


bincreases the quantity supplied of that good


c increase the supply of that good


ddecrease the demand for the good



If an increase in the price of blue jeans leads to an increase in the demand for tennis shoes, then blue jeans and tennis shoes are ?


aComplements


b inferior goods


c normal goods


dSubstitutes


View Answer Substitutes

The problem posed by a natural monopoly is that it faces a _____ This means that _______?


a increasing average cost curve, marginal cost lies above average cost


b increasing average cost curve, marginal cost lies below average cost


cdecreasing average cost curve marginal cost lies above average cost


ddecreasing average cost curve, marginal cost lies below average cost



If two firms doing the same thing in the same industry join together, this is known as a ?


avertical merger


b horizontal merger


cconglomerate merger


dhostile takeover


View Answer horizontal merger

The social costs of monopoly power arises because ?


amarginal cost is set equal to marginal revenue


b price is less than marginal cost


cmarginal consumer benefit is less than marginal revenue


dthere is too little output at too high a cost



The effect of a tax to offset a negative externality will be to ____ price and ______ quantity?


areduce , reduce


b increase, increase


c increase, reduce


dreduce, increase


View Answer increase, reduce

Taxes creates a wedge between the sales price and purchase price that prevents the price system equating ____ and ______?


amarginal costs, marginal benefits


b demand, supply


cmarginal cost, marginal revenue


dmarginal cost, average cost



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