If the price elasticity of supply for a good is 0.5, then an increase in price from $1 to $1.50 will: A. increase the quantity supplied by 5 percent. B. decrease the quantity supplied by about 10 percent. C. increase the quantity supplied by about 25 percent. D. decrease the quantity supplied by about 25 percent. Question 3 Points: 1.5 At the current production, output is 1000, total variable cost is $8,000, total fixed cost is $2,000, and total revenue is $10,000. The firm’s: A. Total cost is $9000. B. Price per unit is $8. C. economic profit is zero. D. Opportunity cost is $2000. Question 4 Points: 1.5 Allocative efficiency occurs when: A. Average total cost is equal to price. B. Price is equal to marginal cost. C. Marginal revenue is greater than Marginal cost. D. Total revenue is equal cost. Question 5 Points: 1.5 An increasing-cost industry can best be explained by which of the following situations: A. A contraction of the industry will cause the price per unit to increase. B. The unit costs of production will increase from $1 per unit, then $1.50 per unit, follow by $2 per unit, and so forth. C. The long run supply curve will be horizontal. D. The average fixed cost will remained unchanged as production goes up. Question 7 Points: 1.5 All the following statements are true of a monopolistically competitive industry except: A. Produce at P = minimum ATC in the long run. B. May generate profits or losses in the short run. C. produce output at P=MC in the long run. D. Low barriers of entry. Question 8 Points: 1.5 A newspaper reported that, “floods destroy much of the rice crop in the country.” This will cause a(n): A. decrease in the price and quantity of rice. B. increase in the price and quantity of rice. C. decrease in the price of rice and a rise in quantity purchased. D. increase in the price of rice and a decrease in quantity purchased. Question 10 Points: 1.5 The negative slope of the demand curve for a good means: A. Quantity and price are positively related. B. Quantity and price are inversely related. C. more product consumed will cause total utility to decrease. D. The income effect is greater than the substitution effect. Question 11 Points: 1.5 Given the income elasticity of demand for Roti Canai is +0.5. This means that: A. a 10% rise in income will raise the consumption of Roti canai by 5%. B. a 10% rise in income will raise the consumption of Roti Canai by more than 5%. C. a 10% rise in price will raise the consumption of Roti Canai by less than 5%. D. Roti Canai is an inferior good. Question 13 Points: 1.5 Which of the following statements indicates that a consumer will maximize utility when all income is spent: A. Total utility is equal for both goods. B. Marginal utility of product A is equal to marginal utility of product B. C. Both A and B products have the same marginal utility per dollar spent. D. Both A and B products have maximized marginal utility per dollar spent Question 14 Points: 1.5 A purely competitive firm current production shows that the average total cost is $30, average fixed cost is $10, price is $20, and output is 300. We can conclude that: A. The firm’s total variable cost is $5000. B. The firm’s total cost is $9000. C. The firm is making a loss of $3000. D. Both B and C.   Question 15 Points: 1.5 Compared with ordinary monopolist, a price discriminating monopolist will: A. make smaller economic profit than an ordinary monopolist. B. earn a larger profit than an ordinary monopolist. C. make similar profit as in the case of a nondiscriminating monopolist. D. sell all output at a lower price compared with a nondiscriminating monopolist.   Question 16 Points: 1.5 Assume demand of a product is inelastic, a 10 percent decrease in the price of the product will: A. increase the quantity supplied by more than 10 percent. B. increase the quantity demanded by less than 10 percent. C. increase the quantity of supplied by less than 10 percent. D. decrease the quantity of supplied by less than 10 percent.   Question 17 Points: 1.5 Which of the following is a private good? A. General hospital B. Light house C. Pos Malaysia D. National library   Question 18 Points: 1.5 There is a strongly-held belief that monopolies will charge the highest price in a monopolized market without fear of losing consumers. In fact, a profit-maximizing monopoly will set the output level at: A. Price = Marginal cost. B. Price = Marginal revenue. C. Price = minimum average total cost. D. Marginal cost = marginal revenue.   Question 19 Points: 1.5 An increase in the minimum wage will cause a purely competitive firm’s: A. Demand curve to shift to the right. B. average variable cost to shift up. C. average cost to shift down D. average fixed cost to shift up. Question 20 Points: 1.5 A monopolist is presently producing at an output level where marginal cost is $2 and  marginal revenue is $4.00. To maximize profit or minimize losses, the monopolist should: A. decrease both output and price. B. Do not make any changes. C. cut price and keep output unchanged. D. Increase output and keep price unchanged. Question 21 Points: 1.5 Which of the following statements is TRUE for command economy? A. Market forces determine the production and allocation of goods and services. B. Government determines the production of goods and services but the market decides on the allocation of goods and services. C. Market determines the production and of goods and services but the government decides on the allocation of goods and services. D. Government determines the production and allocation of goods and services. Question 22 Points: 1.5 Which of the following statements is TRUE for a linear demand curve: A. Price and quantity demand are directly related. B. Elasticity of demand is constant along the curve. C. Quantity demand is more elastic at low prices. D. Quantity demand is more elastic at high prices.   Question 23 Points: 1.5 Which of the following situations will likely encourage free riders: A. The public goods is essential for society. B. The good is nonexcludable and nonrivalrous and it is impossible to prevent nonpaying consumers from benefiting from it. C. Government can supply such goods at lower cost compare to private firms. D. Public goods are provided free for all by public enterprises.   Question 24 Points: 1.5 Two industries have similar concentration ratio but industry A has a very high Herfindahl-index compared to industry B, we can conclude that: A. Industry A has many competitive firms. B. Firms in industry B has equal market share C. There is a dominant firm in industry A. D. Both industries are very competitive.   Question 25 Points: 1.5 A perfectly inelastic supply schedule: A. is parallel to the horizontal axis. B. is totally unresponsive to any changes in price. C. is responsive to price increases but not price decreases. D. has a very steep slope.   Question 28 Points: 1.5 Lily is a popular private piano teacher, her market rate is $200 per hour, but Nancy is willing to pay $300 per hour for the lesson. However, Lily minimum acceptable rate is about $150 per hour for private piano lesson. Thus, we can conclude that: A. Nancy has a consumer surplus of $300. B. Lily has a producer surplus of $200. C. Nancy has a consumer surplus of $100 while Lily has a producer surplus of $50. D. Total consumer surplus is $150.   Question 29 Points: 1.5 A cartel that comprised of 3 firms currently is producing at an output level =10 where MR=MC, Price=$20, ATC=$10, MC=$5, we can conclude that: A. The cartel is making a profit of $200. B. The cartel is making a profit of $100. C. Competitors will ignore a price cut but follow a price increase. D. Total fixed cost is $100.