Question

1. In partial equilibrium analysis in a product market, a single market is being examined in isolation to understand the relationship between:

A. How a product's price coordinates economic transactions between at least one consumer and at least one firm.

B. How a product's price coordinates profit between at least one consumer and at least one firm.

C. How a product's price coordinates cost between at least one consumer and at least one firm.

D. How a product's price coordinates utility between at least one consumer and at least one firm.

2. In partial equilibrium analysis in a product market, the origin of demand for a product is derived from:

a. Consumers that maximize profit.

b. Consumers that minimize total cost.

c. Consumers that maximize utility subject to a budget constraint.

d. Consumers that minimize consumption.

3. In partial equilibrium analysis in a product market, the origin of supply of a product is derived from:

a. Firms that maximize profit.

b. Firms that maximize total cost.

c. Firms that maximize utility.

d. Firms that maximize price.

4. In partial equilibrium analysis in a product market, the equilibrium price is a price level that equates:

a. Quantity demand to quantity supply.

b. Profit to total cost.

c. Utility to profit.

d. Profit to zero.

5. In partial equilibrium analysis in a product market, the equilibrium price can depend on, or change because of,

a. Changes in consumer income.

b. Changes in the wage rate to labor.

c. Changes in the price of related goods.

d. Changes in the rental rate to capital.

e. Changes in firm technology.

f. All of the above.

g. None of the above.

6. In partial equilibrium analysis in a product market, the equilibrium price can increase from:

a. An increase in consumer income which increases demand (assuming a normal good).

b. A decrease in the rental rate to capital which increases supply.

c. An increase in firm technology which increases supply.

d. All of the above.

e. None of the above.

7. In partial equilibrium analysis in a product market, the equilibrium price can decrease from:

a. An increase in consumer income which increases demand (assuming a normal good).

b. A decrease in the price of a substitute good which increases demand.

c. An increase in the wage rate to labor which decreases supply.

d. A decrease in the rental rate to capital which increases supply.

e. All of the above.

f. None of the above.

8. Under perfect competition, factors that increase total cost that ultimately increase marginal cost will:

a. Decrease firm supply.

b. Increase firm supply.

c. Decrease consumer demand.

d. Increase consumer demand.

9.Under perfect competition, factors that decrease total cost that ultimately decrease marginal cost will:

a. Decrease firm supply.

b. Increase firm supply.

c. Decrease consumer demand.

d. Increase consumer demand.

Answer 1

1. Option A. How a product's price coordinates economic transactions between at least one consumer and at least one firm.

Explanation: In the partial equilibrium analysis, it is studied how the price coordinates economic transaction between at least one consumer and at least one firm.

2. Option C. Consumers that maximize utility subject to a budget constraint.

Explanation: Consumers which maximize their utility at a given budget constraint primarily creates demand.

3. Option A. Firms that maximize profit.

Explanation: Firms that maximize profit primarily creates a supply.

4. Option A. Quantity demand to quantity supply.

Explanation: At the market equilibrium, the quantity demanded equals the quantity supplied.