Question

You have taken this quiz and received a grade of 3 out of a possible 10 points (F). You are allowed to take a second version of this quiz. If you score 7 or more, you can raise your score to a 7 (C). You will need to study for the second version. In making a rational decision as to whether or not to retake the test, you should a) Always retake the quiz b) Consider only the marginal benefits from of retaking the quiz (four extra points) c) Consider only the marginal opportunity costs from taking the quiz (the time spent studying and taking the quiz) d) Consider both the marginal benefits and the marginal opportunity costs of retaking the quiz

40. The law of demand states that: a) As the quantity demanded rises, the price rises b) As the price rises, the quantity demanded rises c) As the price rises, the quantity demanded falls d) As supply rises, the demand rises

41. Community Colleges desired to increase revenues. They decided to raise fees paid by students with Bachelors degrees to $50 per unit because they believed this would result in greater revenues. But in reality, total revenues fell. Therefore, the demand for Community College courses by people with Bachelors degrees must have actually been: a) Relatively inelastic b) Unit elastic c) Relatively elastic d) Perfectly elastic

42. The demand for a product would be more inelastic: a) The greater is the time under consideration b) The greater is the number of substitutes available to buyers c) The less expensive is the product in relation to incomes d) All of the above

43. In pure monopoly, what is the relation between the price and the marginal revenue? a) The price is greater than the marginal revenue b) The price is less than the marginal revenue c) There is no relation d) They are equal

44. In order to maximize profits, a monopoly company will produce that quantity at which the: a) Marginal revenue equals average total cost b) Price equals marginal revenue c) Marginal revenue equals marginal cost d) Total revenue equals total cost

Answer 1

40)Law of demand says as price rises , quantity demanded falls ,given other factors remain unchanged.and vice versa.

OPTION C is correct

41)As college Increase fees ,but result in Decrease in total revenue.This tells that percentage Increase in fee result in higher percentage Decrease in quantity demanded of bachelor degree . So demand is relatively elastic.

42)The greater is the time under consideration

43)The monopoly equilibrium at MR=MC

And monopolist face a downward sloping demand curve,which means marginal revenue will fall faster than price. So at each quantity marginal revenue will be lower than price. So price is greater than marginal revenue.

44) Monopoly Profit Maximizing at ,where marginal revenue equal to marginal cost.