1. The best example of an economic goal of a firm is (Points : 3) providing good products/services to its customers. improving its public image. increasing employee morale. increasing shareholder wealth.

Question 2. 2. If the price of a good is decreased and total revenue received from the sale of this good does not change, then the price elasticity of demand for the good is (Points : 3) elastic. inelastic. ***** THIS WAS WRONG ***** unitary. None of these

Question 3. 3. Which of the following could cause a long-run shift in demand as part of the "guiding function of price"? (Points : 3) a change in tastes and preferences an increase in price caused by a shift in supply income shift caused by an economic recession an increase in number of buyers

Question 4. 4. Transaction costs include (Points : 3) costs of negotiating contracts with other firms. cost of enforcing contracts. the existence of asset-specificity. All of these

Question 5. 5. An increase in input prices will cause (Points : 3) supply to shift rightward, equilibrium price to rise, and equilibrium quantity to fall. supply to shift leftward, equilibrium price to rise, and equilibrium quantity to fall. supply to shift rightward, equilibrium price to fall, and equilibrium quantity to rise. supply to shift leftward, equilibrium price to fall, and equilibrium quantity to rise. **** THIS WAS WRONG ******

Question 6. 6. Suppose the price of crude oil drops from $150 a barrel to $120 a barrel. The quantity bought remains unchanged at 100 barrels. The coefficient of price elasticity of demand in this example would be (Points : 3) -0.5. infinity. -1.0. 0.

Question 7.