ECO365 Week 3 Quiz Week Three Quiz Each Question worth .5 points. 5 points total Student Name: ___________________

1. If a 20% decrease in the price of long distance phone calls leads to a 35% increase in the quantity of calls demanded, we can conclude that the demand for phone calls is:

a. elastic. b. inelastic. c. unit elastic. d. stretchy elastic.

2. Which of the following pairs are examples of substitutes?

.a Popcorn & Pepsi .b Automobiles & Bicycles .c Boats & Fishing Tackle .d Wine & Cheese

3. When we say that a price in a competitive market is “too high to clear the market” we usually mean that (given upward-sloping supply curves).

.a no producer can cover the costs of production at that price .b quantity supplied exceeds quantity demanded at that price .c producers are leaving the industry .d consumers are willing to buy all the units produced at that price

4. Which of the following statements is incorrect? Assume upward-sloping supply curves.

.a If the supply curve shifts left and the demand remains constant, equilibrium price will rise. .b If the demand curve shifts left and the supply curve shifts right, equilibrium price will rise. .c If the supply curve shifts right and the demand curve shifts left, equilibrium price will fall. .d If the demand curve shifts right and the supply curve shifts left, price will rise.

5. What is the definition of an opportunity cost?

6. Economic Profit is

A) Total Revenue – all explicit accounting costs B) Total Revenue – all opportunity costs of all inputs. C) Total Revenue – Normal Profit D) Total Revenue – Average Total Cost

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Quiz 7. T/F Returns to Scale in the short run are analyzed by comparing variable inputs to existing fixed inputs.

8. Marginal cost = A) B) C) D) Total Costs divided by total quantity Change in quantity divided by change in costs Change in total costs divided by change in total quantity produced Change in costs divided by total quantity

9. If the total variable cost of 9 units of output is $90 and the total variable cost of 10 units of output is $120, then:

A) the average variable cost of 10 units is $10. B) the average fixed cost of 9 units is $10. C) the marginal cost of the tenth unit is $90. D) the firm is operating in the range of increasing marginal costs.

10. Economists have developed mathematical models generally called “Game Theory” that help explain collusive tendencies in WHAT KIND OF MARKET STRUCTURE? Page 2 eco212r1