1. …never coincides with the competitive equilibrium allocation.

2. …could only be created with government intervention.

3. …is an allocation such that it is possible to redistribute resources and move to another allocation which would make at least some economic agents better off and nobody worse off

4. More than one statement is correct.

5. None of the above.

13. If widgets were produced by an unregulated natural monopoly:

A. Equilibrium output would be Pareto-efficient.

B. Government should not regulate the widget market.

C. Perfect price discrimination would increase total welfare.

D. In equilibrium, marginal private benefit would be higher than marginal social benefit.

E. In equilibrium, marginal social cost would be higher than marginal private cost.

14.Which of the following is NOT a usual consequence of a per-unit subsidy paid to producers?

1. Increase in consumer surplus

2. Increase in the producer surplus

3. Increase in government spending

4. Increase in the society well-being

5. None, all of the above is usual consequence of the subsidy

15.Consumer surplus originates from

1. The difference between current and equilibrium price

2. The difference between the equilibrium quantity and current purchases

3. The amount spent by consumers on a certain good

4. The difference between the equilibrium price and the maximum price a consumer is eager to pay

5. The difference between the equilibrium quantity and the maximum quantity a consumer is ready to purchase at current price

16.Which of the following will occur if government introduces an effective (binding) price floor?

1. The quantity sold will exceed the equilibrium quantity

2. The total revenue will decrease if the demand is price elastic

3. There will be shortage in the market

4. Price will be still equal to the marginal cost of producing the last unit sold

5. The number of firms will increase as price is above the equilibrium

17.If a profit-maximizing firm in a perfectly competitive industry produces output such that its marginal cost is equal to the average total cost then:

1. The number of firms in the long-run will increase

2. The firm earns normal economic profit

3. The firm suffer losses and must decrease output

4. The industry is in the long-run equilibrium

5. More than one answer is correct

18.If a profit-maximizing firm in a monopolistically competitive industry produces output such that its marginal cost is equal to the average total cost then:

6. The number of firms in the long-run will increase

7. The firm earns normal economic profit

8. The firm suffer losses and must decrease output

9. The industry is in the long-run equilibrium

10. More than one answer is correct

19.Which of the following will increase the demand for mobile phones?

1. An improvement in the production process

2. A decrease in the cost of fixed-line phones

3. An invention of new viruses which damage mobile operation systems

4. Lowering tariffs on the import of mobile phones

5. None of the above.

20.Suppose that the supply of a good is perfectly elastic while the demand is unit-elastic. In this situation an imposition of a per-unit subsidy to consumers will cause price and quantity to change in which of the following ways?

Price Quantity

1. Increase Decrease

2. No change Increase

3. Decrease No change

4. Decrease Increase

5. No change Decrease

21.Using the figure above, what will be the government revenue and the dead-weight loss if government imposes a per-unit tax on a good?

Government revenue Dead weight loss

1. AFGC GNF

2. BNHD NGH

3. BNGHD GNF

4. BNMC NGM

5. CGHD NGH

22.A per-unit tax, imposed on the producers of a good will unavoidably:

1. Decrease equilibrium quantity

2. Increase equilibrium price

3. Decrease producers surplus

4. All of the above

5. None of the above

23.If an increase in the demand for a good is accompanied by a decrease in the supply of the same good, then (assuming ‘normal’ shape and slope of both curves):

1. Price must increase

2. Quantity must decrease

3. Price must decrease

4. Quantity must increase

5. Both price and quantity must change

24. Which of the following statements is true:

1. Scarcity is a result of the excessive use of resources in the past.

2. Relative scarcity of the resource depends on a particular situation

3. Scarcity would not exist if the agents were fully rational

4. Scarcity of the resources is a problem mostly for developing countries.

25.Which of the following statements are TRUE?

1. In the case of oligopoly a firm may easily increase price for its output and retain its market share because consumers will continue to buy the product they used to consume

2. In a monopolistically competitive industry in the long run firms earn zero economic profit and thus prices charged by all firms are equal.

3. In a perfectly competitive industry all firms earn zero economic profit in the long run