SOLVED

 How Markets Work 1) Gadgets, Inc. can increase its total revenue by raising the price of its product. From this result we can conclude that the A) price increase increases demand for the firm’s product. B) firm sells an inferior good. C) demand for the firm’s product is price inelastic. D) demand for the firm’s product is price elastic. 2) Widgets, Inc. can increase its total revenue by lowering the price of its product. From this result we can conclude that the A) decrease in price increases demand for the firm’s product. B) firm sells an inferior good. C) demand for the firm’s product is price inelastic. D) demand for the firm’s product is price elastic. 3) If OPEC cuts oil production to increase their total revenue, we know that A) the demand for gasoline will decrease. B) the price of gasoline will fall. C) the demand for oil in the global market is inelastic. D) OPEC faces a horizontal demand for oil curve. 4) If OPEC cuts oil production to increase their total revenue, we know that the A) demand for gasoline will decrease. B) price of gasoline will rise. C) demand for oil in the global market is elastic. D) supply of gasoline will increase. 5) If OPEC cuts oil production to increase their total revenue, we know that the A) demand for gasoline will decrease. B) price of gasoline will fall. C) demand for oil in the global market is elastic. D) supply of gasoline will decrease. 6) The figure above shows the market for digital cameras. If the price of film cameras falls, the efficient quantity of digital cameras will be ________ thousand cameras and the marginal cost of a digital camera will be ________. A) less than 300; less than $300 B) greater than 300; less than $300 C) 300; greater than $300 D) greater than 400; greater than $310 7) The figure above shows the market for digital cameras. If consumers’ incomes rise and a digital camera is a normal good, the efficient quantity of digital cameras to produce will be ________ thousand cameras and the marginal cost of a digital camera will be ________. A) less than 300; less than $300 B) greater than 300; less than $300 C) 300; greater than $300 D) greater than 300; greater than $300 8) The figure above shows the market for digital cameras. If consumers’ income rise and a digital camera is a normal good, the efficient quantity of digital cameras will be ________ thousand cameras and the equilibrium quantity will be ________ thousand cameras. A) less than 300; less than 300 B) greater than 300; less than 300 C) 300; greater than 300 D) greater than 300; greater than 300 9) The figure above shows the market for digital cameras. The price of film cameras falls. In the new equilibrium, the price of a digital camera will be ________ and the marginal benefit from the last digital camera purchased will be ________. A) less than $300; less than $300 B) greater than $300; less than $300 C) $300; greater than $300 D) greater than $300; greater than $300 10) The figure above shows the market for digital cameras. If there are technological advances in making digital cameras, the efficient quantity of digital cameras will be ________ thousand cameras and the equilibrium quantity will be ________ thousand cameras. A) less than 300; less than 300 B) greater than 300; less than 300 C) 300; greater than 300 D) greater than 300; greater than 300