16, producer surplus is represented by the area A between the demand and supply
ID: 1208663 • Letter: 1
Question
16, producer surplus is represented by the area A between the demand and supply curves. B. below the demand curve and above price C. below the price and above the supply curve. D. below the demand curve and to the right of equilibrium price. 17. If the price elasticity of supply is 2.0, and a price t quantity supplied, then the price increase is about of supply is 20, and a price increase led to a 4% increase in A. 0.5%. 0% 1 .5%. D. 3.0%. -18. A curve, swe move downward and to the right along a linear, downward-sloping demand X A. both slope and elasticity remain constant B slope changes but elasticity remains constant C)both slope and clasticity change. D. slope remains constant but elasticity changes. 19. If a firm doubles all its inputs and output less than doubles as a result, the firm is experiencing A. diminishing returns to scale B. increasing returns to scale C. constant returns to scale economies of scale 20. All of the following are assumptions of Perfectly Competitive Markets escept A. Many Buyers B. Few Sellers Homogencous (identical) products No barriers to entry or exit 21-The demand curve that a monopolist faces is A. positive sloped B. perfectly inelastic perfectly elastic D,) the market demand 22. Monopoly price isthan perfect competition price, and monopoly output is than perfect competition output. A. lower, lower B. higher, higher C. higher, lower D. lower, higherExplanation / Answer
Answers:
16. Producer surplus is represented by the area
C) below the price and above the supply curve
17. If the price elasticity of supply is 2.0, and price increase led to a 4% increases in quantity supplied, then the price increases is about
B) 2.0%
Price elasticity of supply = % change in quantity supplied / % change in price
2.0 = 4/P
P = 4/2 = 2
18. As move downward and to the right along a linear, downward-sloping demand curve
D) slope remains constant and elasticity changes
The slope is constant because it is linear. Elasticity will change from elastic, unitary and inelastic.
19. If a firm doubles all its inputs and output less than doubles as a result, the firm is experiencing
D) economies of scale
Generally the additional inputs will decrease the output. That is an increasing scale as fixed costs are spread out over more units of output.
20. All of the following are assumptions of Perfectly Competitive Markets except:
B) Few Sellers
In Perfectly Competitive Markets has number of buyers and sellers.
21. The demand curve that a monopolist faces is:
D) the market demand
22. Monopoly price is higher than perfect competition price, and monopoly output is lower than perfect competition output.
In the perfectly competitive market the price is equals to MC at the equilibrium. Where as in the monopoly market, the price is greater than the AC. Generally the monopolist produces less output, but in the real case it depends on MC rising or falling or constant.
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