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Microeconomics (ECON 1002) Exercise Questions Chapter 2

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Sandra Watson
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Johnson & Wales University

Microeconomics (ECON 1002)

in a market economy, a significant change in consumers’ desire for product x will

1. An economic system:
A. requires a grouping of private markets linked to one another.
B. is a particular set of institutional arrangements and a coordinating mechanism used to
respond to the economizing problem.
C. requires some sort of centralized authority (such as government) to coordinate
economic activity.
D. is a plan or scheme that allows a firm to make money at some other firm’s expense.
2. If competitive industry Z is making substantial economic profit, output will:
A. fall in industry Z and firms will likely leave the market.
B. fall in all industries except industry Z.
C. expand in industry Z as more resources will move to that industry.
D. expand in industry Z, but no new firms will enter the market.
3. In a market economy a significant change in consumers’ desire for product X will:
A. alter the profits or losses received by suppliers of product X.
B. cause a reallocation of scarce resources.
C. cause some industries to expand and others to contract.
D. do all of these.
4. If a competitive industry is neither expanding nor contracting, we would expect:
A. total revenue to be zero.
B. economic profits to be zero.
C. total opportunity cost to be zero.
D. more resources to flow to that industry.
5. The term dollar votes in a market system means:
A. Inflation will occur if consumers don’t spend wisely
B. Voters may be offered dollars to help elect certain political candidates
C. Government is responsible for determining what will be considered legal tender
D. Consumers “vote” for certain products to be produced by how they spend their

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Microeconomics (ECON 1002) Exercise Questions Chapter 2

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