Figure 2.1
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The figure given above shows the demand and supply curves of a commodity.
1. Refer to Figure 2.1. At a price of $70, the consumer surplus equals:
$6,000,000.
$8,000,000.
$5,000,000.
$10,000,000.
2. Refer to Figure 2.1. At a price of $70, the producer surplus equals:
$6,000,000.
$8,000,000.
$15,000,000.
$30,000,000.
3. To maximize profit a perfectly competitive firm supplies a good up to the point at which:
the marginal revenue is higher than the marginal cost.
the marginal cost of producing the good is zero.
the price of the good equals marginal cost.
the average revenue equals average cost.
4. Which of the following groups is most likely to be benefitted when a country engages in free trade?
All the domestic producers of the country
The manufacturers of exportable goods
The producers in the import-competing industries
The workers employed in the import-competing industries
5. Which of the following is an example of arbitrage?
A firm sells a box of cereal at $10 when the average cost of producing it is $6.
Thomas buys a new stock issued by a firm on the stock exchange.
A local salon charges 5 percent more for all its services than a competing salon in the same locality.
Romi buys a DVD from Wal-Mart at $10 and sells it on eBay for $20.
6. An increase in the imports of clothing into the United States from India will benefit the _____ and hurt the _____.
U.S. clothing producers; Indian clothing producers
Indian consumers; Indian clothing producers
the U.S. consumers; Indian clothing producers
the U.S. consumers; the U.S. clothing producers
7. Suppose country A and country B are the only two countries in the world. Country A imports good X from country B and exports good Y. In the absence of any transportation cost, at the world price of good X:
country Bs export supply curve is perfectly inelastic.
both country As import demand curve and country Bs export supply curve are positively sloped.
country As import demand curve will be perfectly inelastic.
country As import demand curve will intersect country Bs export supply curve.