Question 1. (TCO1) Which of the following is considered to be an entrepreneur? 

1. (TCO1) Which of the following is considered to be an entrepreneur?
a. Self-employed person
b. MBA graduate hired by a firm to be its CEO
c. Production-line worker
d. Customer of a firm

2. (TCO1) A point outside the production possibilities curve is
a. attainable and the economy is efficient.
b. attainable, but the economy is inefficient.
c. unattainable, but the economy is inefficient.
d. unattainable and the economy is efficient.

3. (TCO1) Which would not be a characteristic of a capitalist economy?
a. Government ownership of most factors of production
b. Competition and unrestricted markets
c. Reliance on the market system
d. Freedom of enterprise and choice

4. (TCO2) The demand curve is a representation of the relationship between the quantity of a product demand and
a. supply
b. wealth
c. price
d. income

5. (TCO2) A decrease in supply and a decrease in demand will
a. increase price and affect the equilibrium quantity in an indeterminate way
b. decrease the equilibrium quantity and decrease price
c. increase the equilibrium quantity and affect price in an indeterminate way
d. decrease the equilibrium quantity and affect price in an indeterminate way

6. (TCO 2) When the price of movie tickets in a certain town was reduced, the movie theaters’ revenue did not change. This suggests that the demand for the movie tickets in that town has a price-elasticity coefficient of
a. 1.0
b. greater than 1
c. 0.5
d. zero

7. (TCO 2) The price of elasticity of demand increases with the length of the period considered because
a. consumers’ incomes will increase over time
b. the demand curve will shift outward as time passes
c. all prices will increase over time
d. consumers will be better able to find substitutes

8. (TCO 2) A purely competitive firm’s output is such that its marginal cost is $4 and marginal revenue is $5.
a. cut its price and raise its output
b. raise its price and cut output
c. leave price unchanged and raise output
d. leave price unchanged and cut output

9. (TCO 2) Consumers who clip redeem discount coupons
a. exhibit the same price elasticity of demand for a given product than consumers who do not clip and redeem coupons
b. exhibit the more price elasticity of demand for a given product than consumers who do not clip and redeem coupons
c. exhibit the less price elasticity of demand for a given product than consumers who do not clip and redeem coupons
d. cause total revenue to decrease for firms that issue coupons for their products

10. (TCO3) in the kinked demand model of oligopoly, if one firm increases its price, that most likely reaction of the other firms will be to

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