1) For an economy to produce at a point beyond its current production possibility curve, the economy must:

A) reduce inputs.
B) be more efficient.
C) increase inputs.
D) waste less.

2) When a decrease in the price of good A causes an increase in demand for good B, the goods are:

A) inferior.
B) normal.
C) complements.
D) substitutes.

3) Which of the following might shift the demand curve for butter to the right?

A) An increase in the price of bread, a complement
B) An increase in income
C) A decrease in the price of margarine, a substitute
D) A decrease in the price of butter

4) A good harvest will cause:

A) a movement up along the supply curve of wheat.
B) a movement down along the supply curve of wheat.
C) a rightward shift in the supply curve of wheat.
D) a leftward shift in the supply curve of wheat.

5) If total expenditure remains constant after price is increased, demand is:

A) inelastic.
B) perfectly elastic.
C) unitarily elastic.
D) perfectly inelastic.

6) The short run, as microeconomists use the phrase, is characterised by:
A) a period where the law of diminishing returns does not hold.
B) no variable inputs - that is all of the factors of production are fixed.
C) all inputs being variable.
D) at least one fixed factor of production and firms neither leaving nor entering the industry.

7) Philippa grows lettuces to sell. This is a perfectly competitive business and Philippa faces a perfectly elastic demand curve. If she wants to try to increase revenues she should:

A) lower the price of her lettuce to try to sell more.
B) keep the price the same but produce more to increase sales.
C) do nothing; there is nothing she can do to increase revenues.
D) raise the price of her lettuces to make more per sale.

8) For a profit maximising monopolist to sell more