Economics - Study Mode

[#1001] MU curve will intersect x-axis when
Correct Answer

(C) Both A and B

[#1002] In a market economy, the price system provides all of the following except which one?
Correct Answer

(D) A store of value

[#1003] If the price of good changes, but everything else influencing the supplier-planned sales remains constant, there is
Correct Answer

(D) Movement along the supply curve

[#1004] Marginal revenue is always less than price at all levels of output in
Correct Answer

(B) Monopoly

Explanation

Solution: Marginal revenue is always less than price at all levels of output in Monopoly. A monopolist's marginal revenue is always less than or equal to the price of the good. Marginal revenue is the amount of revenue the firm receives for each additional unit of output.

[#1005] What does price elasticity of demand measure?
Correct Answer

(C) The responsiveness of demand to price changes

Explanation

Solution: The price elasticity of demand measures the responsiveness of the quantity demanded to changes in the price. Demand is inelastic if it does not respond much to price changes, and elastic if demand changes a lot when the price changes. Necessities tend to have inelastic demand.