Economics MCQs

Page No. 250

If the price of good is below the equilibrium price ?


athere is a shortage and the price will rise

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

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cthere is a shortage and the price will fall

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d there is a surplus and the price will rise

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


aan advance in the technology used to manufacture watches

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ban increase in the price of watches

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

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da decrease in the wage of workers employed to manufacture watches

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A monopolistic market has ?


amany buyers and sellers

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bnone of these answers

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cfirms that are price takers

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donly one seller

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View Answer only one seller

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


a none of these answers

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bincreases the quantity supplied of that good

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c increase the supply of that good

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ddecrease the demand for the good

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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

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b inferior goods

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c normal goods

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dSubstitutes

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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

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

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cdecreasing average cost curve marginal cost lies above average cost

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ddecreasing average cost curve, marginal cost lies below average cost

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


avertical merger

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b horizontal merger

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cconglomerate merger

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dhostile takeover

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View Answer horizontal merger

The social costs of monopoly power arises because ?


amarginal cost is set equal to marginal revenue

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b price is less than marginal cost

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cmarginal consumer benefit is less than marginal revenue

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dthere is too little output at too high a cost

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


areduce , reduce

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b increase, increase

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c increase, reduce

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dreduce, increase

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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

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b demand, supply

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cmarginal cost, marginal revenue

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dmarginal cost, average cost

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