Multiple Choice Answers

If the international oil price keeps rising, then we can expect the supply curves of products using oil to _______________.
a. shift outward to the right
b. remain unchanged
c. shift inward to the left
d. the supply curve itself will still be the same, except that its slope tilts rightward

The concept of derived demand can best be illustrated by the statement:
a. An increase in the price of butter results in an increase in the demand for margarine.
b. A decrease in the price of automobiles results in greater demand for automobiles, and the greater demand in automobiles results in greater demand for automobile windshields.
c. The demand curve is derived from the law of supply.
d. The demand for clothes depends upon buyers’ incomes.

One way to view the law of diminishing marginal productivity is to say that ________________.
a. as more and more inputs (e.g., labor) are added to the production process, there will come a point where the marginal productivity will actually fall and even become negative
b. as more and more inputs are added to the production process, there will
not be a change to total productivity
c. adding inputs to the production process will cause marginal productivity to
keep rising infinitely, because, like money, there can never be enough supplies
d. as more and more units of input are added, the total product becomes ever lower

The costs of a firm that vary with the level of production are called ___________.
a. fixed costs
b. total costs
c. variable costs
d. sunk costs

A perfect competitor can reap an economic profit ________________.
a. in the short term
b. in the long term
c. never
d. in both the short term and long term