Clover Kingdom’s cost chart below indicates that if output price falls into the range from p

to $10, then

The firm should stay open until the long run.

The firm will exit the industry at the price of p.
The firm will shutdown at the price of $10.
No answer option that indicates realistic scenarios for the Clover Kingdom.
The firm should stay open in the short run.

Nighteye Agency pays an annual license to operate its business exclusively in UA City.
Recurring fixed cost

The type of cost that can be considered as an expense whether or not Karakura Inc. will
choose to proceed with its production plan.

Variable Cost
Fixed cost
Total Cost
Average Cost
Sunk Cost

Choji is buying a car that can run at his preferred speed, but can provide a high degree of safety
and comfort on the road. Given this, Choji will choose any car model on the basis that all the
features he prefer is in one car model. This can be explained by which assumption?

Transitivity

*Completeness

Monotonicity
Continuity

Below is a series of graphs pertaining to Labor Market Equilibrium, which panel indicates the
Labor Demand Curve and how it behaves in relation to wage?

Panel C
Panel F
Panel A
Panel D
Panel E
Panel B
Statement 1: Conditional input demand curves always slope down, but unconditional input
demand curves can slope up.

Statement 2: All input demand curves slope downwards in the long run.
Both statements are true.
Both statements are false.
Statement 2 is true while Statement 1 is false.
Statement 1 is true while Statement 2 is false.
Insufficient information to actually draw a conclusion.

The tangency of the short run average expenditure curves to the long run average cost curve
are
Often times at the lowest point.
Never at the lowest point.
Always at the lowest point.
Seldom at the lowest point.

Which of the following costs become variable in the long run?

Marginal Cost
Total Cost
Fixed Cost
Average Variable Cost

Which of the following statements is false?

Group of answer choices
In a perfectly competitive market with identical firms, all surplus will be consumer surplus in long
run equilibrium.
Demand curves with constant slopes must have different own-price elasticities as one moves
along the demand curve.
When price elasticity is less than -1, consumer spending increases as price falls.
The reduction in the market output resulting from the imposition of a price floor depends on both
the price elasticity of demand and the price elasticity of supply.

Which of the following statements is true?

Unless goods are Giffen goods, own-price elasticities of demand are always negative.
When own-price elasticity lies between 0 and -1, consumer spending decreases when price
increases.
When leisure is a normal good, the wage elasticity of labor supply is always positive.
When tastes over current and future consumption are homothetic, the interest rate elasticity of
savings supply is positive.

Statement 1: The increase in the wage will cause a short run reduction in the labor force until
the marginal revenue product of labor is equal to the new wage.

Statement 2: Since the new wage is higher and the output price is unchanged, that must mean
the marginal product of labor will be higher.

Group of answer choices

Statement 2 is the better explanation for the effects of higher wages.
*Statement 1 is the better explanation for the effects of higher wages.
Information insufficient to determine the accuracy of the effect of higher wages.
Both statements explain the effect of higher wages.
Statement 2 clearly supports Statement 1.

The demand curve can be derived from the

Group of answer choices
indifference curves
indifference curve map and budget line
isocost and isoquant curves
tangency of indifference curves to the production possibilities frontier

After Tetsutetsu Corp. makes short-run adjustments in its production plan following a wage
increase,
Group of answer choices
the marginal product of capital will be lower.
*the marginal product of labor will be lower.
the marginal product of labor will be higher.
the marginal product of capital will be higher.

Short-run average expenses incurred by the firm are likely higher than long run average costs.
*Information is insufficient to validate.
The statement is probably true.
The statement is false.
The statement is true.
The statement is probably false.

Nighteye Agency pays an annual license to operate its business exclusively in UA City. This
payment is considered to be
Avoidable cost
Sunk cost
Annual variable cost
Recurring fixed cost

The expense on capital is not a cost at least in the

Immediate short run
*Short run
Market period
Long run

Unlike perfectly competitive firms, monopolists produce where marginal revenue intersects
marginal cost. Gowther is a monopolist and his revenue increases with increases in price
specially when demand is relatively inelastic. Gowther will then produce on the inelastic part of
demand.
Group of answer choices
It is possible tht Gowther is not a pure monopolist. Given that the only consideration is price, he
can also be in the market structure of monopolistic competition.
This does not hold true for monopoly structure of market.
*The statement is contrary to what the a true monopoly is.
This explains clearly how monopolists react to chanes in prices.

The economic profit of Aizen Inc. is always positive. This could mean that
there is nothing it can do to make more profit.
all its opportunity cost , positive economic profit means the firm is doing better than it could be
doing if it did something else.
there is a lot of opportunities to make more profit

Chad’s business is making zero long run profit, this means that
Group of answer choices
short run profit cannot be negative
the cost side excludes the cost of capital in the long run but not in the short run
the revenue side of the profit calculation is different in the short and long run.
*short run profit is positive if and only if long run profit is any number between zero and one.

Suppose that it is a rule of thumb that regardless of how gasoline prices fluctuate, Kai will
always buy $20 of gasoline per week and then adjust his driving patterns accordingly. What can
be concluded?
Group of answer choices
Own-price elasticity of demand is equal to -1.
own-price elasticity is 0.
Her income elasticity of demand is -1.
income-elasticity of demand is 0.
he graph below shows what kind of disequilibrium situation?
Group of answer choices
Disequilibrium caused by a price ceiling creating a shortage scenario.
*Disequilibrium caused by a price ceiling creating a surplus scenario.
Disequilibrium caused by a price floor creating a surplus scenario.
Disequilibrium caused by a price floor creating a shortage scenario.

A decrease in the rental rate of capital can lead to a long run increase or decrease in the
number of firms in the industry. This is further explained by
Group of answer choices
drop in output prices
fewer firms that can provide more output in the long run equilibrium level
new firms entering the market because existing firms did not change production level.
constant returns to scale

The long run market supply curve is formed

Through the process of entry and exit of firms
Through the isoquant curves
By adding up all firms short run supply curves
By adding up individual firm supply curves in the industry

Long run average cost curves are downward sloping for increasing returns to scale
production technologies because it becomes easier to minimize cost.
Group of answer choices
This statement is not entirely false since there is cost minimization in the long run.
This statement is not entirely true, it should be “constant” returns to scale.
This statement suggests that cost minimization can be attributed to returns to scale.
This statement suggests that average cost decreases as production increases in the long run.

Which panel in the series of graphs below show how the marginal cost curve can be considered
as the same as the supply curve once it crosses the average cost curve?

Group of answer choices

Panel E
Panel C
Panel A
Panel D
Panel B
*Panel F
Statement 1: Long run marginal cost curves are increasing for decreasing returns to scale
production technologies. t

Statement 2: Decreasing returns to scale means it is getting harder and harder to produce
more -- implying that each additional unit is costing more and more to produce.

Group of answer choices

Both statements are true.
Statement 1 is true while Statement 2 is false.
Statement 2 is true while Statement 1 is false.
Both statements are false.
Insufficient information to actually draw a conclusion.

Hueco Mundo Town’s rental rate for commercial areas increased, what can possibly happen to
firms leasing space in Hueco Mundo?
Group of answer choices
Firms will exit the industry because commercial space rental is a recurring expense that will only
stop when the firm exits the industry.
Firms will shutdown in the short run and re-open in the long run.
Firms will produce less and use less capital in the long run.
Firms will just continue producing since price increases are inevitable.

When tastes are quasilinear in leisure, which of the following is true?

Group of answer choices
The wage elasticity of labor supply is negative while wage elasticity of demand is positive.
Both wage elasticity of labor supply and demand for labor are negative.
Both wage elasticity of labor supply and demand for labor are positive.
The wage elasticity of labor supply is positive while wage elasticity of demand is negative.

The graph shows Clover Kingdom’s cost chart. Yami, the owner, is trying to figure out at what
point he can temporarily shutdown his shop. Based on the cost chart, at what price will Clover
Kingdom should shutdown its business?
Group of answer choices
$10
200
A"
k=100
0
P

Which of the following is not true about increasing returns to scale production?
Group of answer choices
If the production technology has increasing returns to scale, short run marginal cost curves must
be upward sloping.
Increasing returns to scale is consistent with either increasing or diminishing marginal product of
capital.
If the production technology has increasing returns to scale, short run marginal cost curves must
be downward sloping.
Increasing returns to scale determines the marginal product that also determines whether the
short run marginal costs slope up or down.

Which panel in the series of graphs below contains the output market?
Group of answer choices
Panel B
Panel D
Panel F
Panel A
Panel C
Panel E

Below is a series of graphs pertaining to Labor Market Equilibrium, which panel indicates the
Labor Supply Curve and how it behaves as more output is produced?
Group of answer choices
Panel F
Panel E
*PAnel B
Panel D
Panel A
Panel C

Winry went shopping at Resembool to buy blouses and skirts. She was trying to decide which of
the colors and designs would be the best combinations to buy as long as she is willing to give
up 2 blouses for a skirt. How do you think will Winry make her choices?
Winry can choose a combination of blouses and skirts of up to 10 skirts only assuming no
blouses were bought and that exogenous income is $100.

Assuming that the price of blouse is $10 and a skirt is $20, Winry can have choice sets of (10,
5) and (8,4) assuming that she has $200 exogenous income.
*The opportunity cost for the blouse and skirts is 2 due to Winry’s combination choices.
The choice sets of Winry will be dependent on her tastes of colors and designs.
If Fat Gum Agency and Todoroki Company are identical firms, then
Group of answer choices
*whenever there are changes in cost, the lowest point of AC curves for both firms will change.
output prices will definitely change
output prices will never change.
long-run supply curve can cause a change in price.

Below are extreme cases of elasticity, identify.

Group of answer choices

The first graph is perfectly elastic while the second is perfectly inelastic.
The first graph is perfectly inelastic while the second is perfectly elastic.
These are not actually extreme cases because extreme cases can be determined if and only if
the type of goods are specified.
These are extreme cases only for gasoline and giffen goods.

Consider that Shell, Caltex, and Petron to be in an oligopoly, they should have
undifferentiated products and face identical constant marginal costs. Assume there is no
collusion in the market, these oil giants will price at marginal cost regardless of strategic
behavior.
Group of answer choices
This statement is false.
Not sure if data is insufficient to properly say whether statement is true or false.
This statement is probably true.
This statement is probably false.
This statement is true.

Which of the following do you deem as a relatively correct statement?

Group of answer choices
*The willingness to substitute good X1 for X2 changes relatively quickly along the lines of
indifference curves representing perfect complements.
The assumption of convexity where averages are better than extremes result in the
diminishing marginal returns.
Goods tend to be relatively substitutable depending on the inherent characteristics of
such goods in consideration.
The substitutability between good X1 and X2 can fall in between 2 extreme cases.

Often people do what they do because of the incentives they face, not because of any
inherent moral predisposition. This statement could mean that
Group of answer choices
Good behavior may arise out of good incentives only.
Bad behavior can be borne of bad incentives.
Perverse incentives such as taxes on welfare recipients when they land a job can cause
them to be lazy.
Outcomes of incentives are highly dependent on a person’s moral compass.

Combining the convexity and monotonicity assumptions, can you now conclude
something about the relationship between the pairs E and A and E and B if you do not
know how A and B are related?
Group of answer choices
No, because without knowing the relationship between points it is impossible to
conclude that either monotonicity or convexity assumption holds.
Yes, only if we assume which points are indifferent.
Yes, it will imply that by monotonicity and convexity point E is at least as good as points
A and B.
No, because the reference point E should be dependent on the relationship between
points A and B.

Statement 1: Suppose two economic models give the same predictions --- but one is
simplistic and unrealistic in its assumptions while the other is rich in detail and resembles
the real world more closely.

Statement 2: If the sole goal of the economist is to predict, then the economist should use the
simple and unrealistic model.
The first statement is true and the second statement is false.
*Both statements are false.
The first statement is false and the second statement is true.
Both statements are true.
Which of the following statements does not explain the degree of substitutability?
Group of answer choices
Elasticity of substitution captures the degree of substitutability built into an indifference
curve.
In the limit, as the indifference curves approach those for perfect complements, sigma
approaches zero.
In the limit, as the indifference curves approach those for perfect substitutes, sigma
approaches infinity.
The speed of the MRS along the indifference curve will depend on the ratio of X 2 to X1.

In the possibility of indifference curves crossing an axis, what can one assume?
Group of answer choices
When an indifference curve crosses the axis, it can be supposed that only one good is
consumed and this good can be considered essential.
Indifference curves cannot really cross any axis otherwise it will go against all the
rationality axioms.
When indifference curve crosses the axis, there is always a corner solution.
The possibility of indifference curves cannot be ruled out due to the fact that it can
extend beyond the intercept points.

Intertemporal budgets can be best applied in finance through

Group of answer choices
*Any method relevant to time value of money.
Discounting
Compounding of interest
Both discounting and compounding of interest
Which of the following statement best describes the graph above?
Group of answer choices
The graph represents quasilinear taste.
The graph illustrates an indifference map where rays are connecting points at the MRS.
The graph shows indifference curves where MRS determine the relative substitutability
of the goods.
The graph represents homothetic taste.

Statement 1: An "endowment" is something whose value is unknown.

Statement 2: Examples of such endowments are savings, mutual funds, real estate
investments and other assets.
Group of answer choices
Both statements are false.
Statement 1 is false and statement 2 is true.
Both statements are true.
Statement 1 is true and statement 2 is false.

Tastes are homothetic whenever

Group of answer choices
MRS of all other bundles are the same within a ray.
*Tastes exhibit the property that MRS at particular bundles depend only on how much of
one good relative to the other is contained in that bundle
Consumption significantly reduces income.
The amount of one good relative to the other remains the same the higher the
indifference curves are.
Julius is willing to trade shirts and pants one-for-one on the margin. This is best explained by
which of the following statements?
Group of answer choices
Changing bundles in equal intervals would translate to a one-for-one trade off.
Julius would change pants and shirts at the same intervals when he has equal number of pants
and shirts on hand.
Julius would be willing to trade very small quantities of pants and shirts one-for-one, not
necessarily 1 entire pair of pants for 1 entire shirt.
*Bundles with a marginal rate of substitution equivalent to -1 will always have a one-for-one ratio
of goods preferred.

Should there be a loser for every winner?

Group of answer choices
No, because there can be a trade-off where everyone is better off.
It will depend on the market activities where consumers and producers are in the position to
make an exchange that results in both parties being better off.
Yes, because the presence of winners in the market offsets the presence of losers.
*In the context of economics, there can be many situations in which everyone wins.

In the assumption of monotonicity, what does it mean when we say “more is better”?
Group of answer choices
More is at least as good.
More of each goods in a choice set is always better.
More of one good in a choice set is at least as good.
More choice sets is at least no worse.

What is the impact of an increase or decrease in the exogenous income of an individual?

Group of answer choices
An increase in exogenous income will shift the budget constraint to the left and does not
change the opportunity cost.
An increase in exogenous income will shift the budget constraint to the right and does
not change the opportunity cost.
A decrease in exogenous income will shift the budget constraint to the left provided
there is a proportional change in prices of goods.
A decrease in exogenous income will shift the budget constraint to the right provided
there is a proportional change in prices of goods.

How does government policy impact the labor market choice sets?
Employers can adjust the wage rates depending on the overtime regulation set by the
government.
The impact of government policy can be shown as a kink on the worker budget
constraint.
*Worker budget constraints can be affected by policies on overtime.
Worker budget constraints can be affected by the percentage of value added taxes
imposed on consumer goods.

If you invest $1,000 that can earn an annual compounding interest of 10%, then how
much will you be able to earn in 10 years’ time?
Group of answer choices
$5,200
$2,600
$11,000
$1,800

An individual’s taste and preferences can determine the bundle of goods to which he or
she is indifferent. To ensure that an individual is able to make choices, we assume
Group of answer choices
Completeness and convexity
Completeness and monotonicity
Completeness and transitivity
Completeness and continuity

Which of the following best explains relative substitutability?

Group of answer choices
*MRS changes slowly along each indifference curve to define how relatively
susbstitutable goods are.
Relative substitutability can be derived anywhere in between perfect substitutes and
perfect complements.
The curvature of indifference curves compared across various indifference maps can
determine the degree of substitutability.
Indifference curves that are linear can change to indifference curves that are almost L
shaped.

Asta likes to drink apple juice and would most of the time buy the brand Mott’s. However, if
Mott’s is not available he would buy Tree Top as a replacement. There are times that he would
also by 3 bottles of Mott’s and 3 bottles of Tree Top. Given this type of preference, we can
assume that for Asta the goods are considered to be:
*Perfect Substitutes
Substitutes
Complements
Perfect Complements

Slight changes in the consumer basket does not mean that there should be a significant
change in the consumer’s level of utility. Which assumption best explains this situation?
Completeness
*Continuity
Transitivity
Monotonicity

Statement 1: Individuals who earn income both now and in the future have an endowment
bundle that lies in the interior of the current and future consumptions’ graph.
Statement 2: If interest rates on saving are lower than on borrowing, this implies that the
budget will be shallow initially and then gets steep when borrowing commences and a
kink that points outward would emerge.
Group of answer choices
There is not enough information that can prove which statement is true or not.
Both statements are false.
Statement 1 is true, statement 2 is false.
Statement 1 is false, statement 2 is true.
Both statements are true.

Statement 1: Individuals who earn income both now and in the future have an endowment
bundle that lies in the interior of our current consumption/future consumption graph.
Anywhere to the left of this, they save -- and anywhere to the right of it they borrow.

Statement 2: If interest rates on saving are lower than on borrowing, this implies that the
budget will be shallow initially and then gets steep when borrowing commences. The kink
therefore points out, not in.
Group of answer choices
Both statements are true.
Statement 1 is true and statement 2 is false.
Statement 1 is false and statement 2 is true.
Both statements are false.

If interest rates are not the same for borrowers and savers, then
Group of answer choices
A change in interest rate for a saver will cause the intertemporal budget line to rotate
inward from the horizontal axis line.
A change in interest rate for a saver can cause a rotation through the endowment on the
vertical axis depending on the direction of change.
A change in interest rate for a borrower can cause a rotation through the endowment on
the vertical axis depending on the direction of change.
A change in interest rate for a borrower will cause the intertemporal budget line to rotate
inward from the horizontal axis line.

Yuno likes milktea and with every regular milktea order he makes he would prefer 100%
sugar to go with that order. Yuno prefers his drink 100% sweet. One day he went to the
Milk Clover Tea House and ordered his usual regular milk tea with 100% sugar. The
owner offered to give him 200% sugar because he knows Yuno is a sweet tooth but
Yuno refused. To Yuno, a regular milktea and sugar is:
Group of answer choices
Perfect Complements
Complements
Perfect Substitutes
Substitutes

Using the intertemporal budget equation with the assumption of earning $5,000 today and
$5,500 in the future and an interest rate of 1%, what is the future consumption denoted
by c2 ?
Group of answer choices
c2 = 10,000 – 1.1 c1
c2 = 11,000 – 1.1 c1
c2 = 10,000 – 1.01 c1
c2 = 11,000 – 1.01 c1

One of the fundamental lessons of economics is that there are many situations when
everyone can win. In a willing trade no one is hurt, and both of us are better off.
Group of answer choices
These statements best explain the concept of opportunity cost.
These statements best explain the concept of trade-off.
These statements are the basic foundations of economics.
These statements are encompassing of all the concepts of trade in economics.

One of the most commonly used utility functions is

Group of answer choices
Cobb Douglas
Hicksian
Quasi-linear
Spearman Rho
Light is working right now at a bank and he relatively gives up more hours of leisure so
that he can work more to earn more. His objective is to not spend that much to day so
that he can enjoy his retirement money. However, he still choose to buy his own house
today and a second hand car that would make it easier for him to go places whenever he
is assigned to different branches. This can be explained by
Group of answer choices
Continuity as there is no significant change in lifestyle from the current period towards
retirement which is a future period.
Completeness as he is indifferent to spend today and in the future.
Monotonicity where spending now for a house and car is at least as good as spending
for a vacation after retirement.
Convexity where averages are better than extreme since Light is not living in poverty
right now in order for him to enjoy 100% of his retirement money in the future.