5. When advertising encourages customers to become more informed about all frms in the market,
(A) demand curves for specifc brands in the market are likely to become less elastic.
(B) each firm is likely to have less market power.
(C) frms are able to foster stronger brand loyalty.
(D) the market power of individual frms is strengthened.

1. One would expect to observe diminishing marginal product of labor when (A) workers are discouraged about the lack of help from other workers. (B) crowded office space reduces the productivity of new workers. (C) union workers are told to reduce their work effort in preparation for a new round of collective bargaining talks. (D) only new workers are trained in using the most productive capital.

2. Comparing marginal revenue to marginal cost (i) reveals the contribution of the last unit of produetion to total profit. (ii) is helpful in making proft maximization production decisions. (iii) always reveals whether a frm is making an economic profit. (iv) tells a frm whether its fixed costs are too high. (A) (i) and (ii) only (B) (iii) only (C) (ii) and (ii) only (D) All of the above are correct.

3. The monopolist's proft-maximizing quantity of output is determined by the intersection of which of the following two curves? (A) marginal cost and demand (B) average cost and demand (C) marginal cost and marginal revenue (D) average cost and marginal revenue

4. One key difference between an oligopoly market and a competitive market is that (A) oligopolistic firms are interdependent while competitive firms are not. (B) oligopolistic firms sell completely unrelated products while competitive firms do not. (C) oligopolistic firms sell their product at a price equal to marginal cost while competitive firms do not. (D) oligopolistic frms are price takers while competitive firms are not.

6. David faces choices between Apple and Banana. He feels that having five apples and three bananas (5,3) is not different from having four apples and six bananas (4,6). Which following statement(s) is (are) possibly correct if Ethan's indifierent curves are downward-sloping? (i) Ethan feels (4, 4.8) is as good as (5, 3). (ii) Ethan feels (6, 2) is as good as (4, 6). (A) (i) (B) (ii) (C)(i) and (ii) (D) None of the above is correct. TS

7. John and Ethan both work eight hours a day. In one day, John can make 4 cakes or 8 ice cream, whereas Ethan can make 2 cakes or 5 ice cream. Given this, which statement(s) is (are) correct? (i) Ethan has a lower opportunity cost in producing ice cream than John. (ii) John has an absolute advantage in producing both goods. (iii) It is not beneficial for John to trade with Ethan. (A) (i) and (ii) (B) (i) and (ii) (C) (ii) and (ii) (D)(i),(ii), and (iii)

8. Which following statement(s) is (are) correct? (i) A Giffen good is always an inferior good. (ii) A Giffen good is a good that its income effect is larger than its substitution effect. (A) (i) (B) (ii) (C) (i) and (ii) (D) None of the above is correct.

9. John, Ethan, and Mary decide to buy a bike together and share the ownership. There willingness to pay for each choice is in the following table They will choose the bike that all three agree to buy.Which following statement(s) is(are) correct? (i) The bike will be a publie good among them.(ii) If three people share the cost and all bikes have the same price, $1500, the choice that maximizes aggregate surplus will be chosen. (A) (i) (B) (ii) (C) (i) and (ii) (D) None of the above is correct.

10. Suppose Country A proposes to impose a tax on a good. One report from an economist argues that this tax will increase producers' before-tax total revenue and make the producers bear relatively more tax burden than consumers. Which following statement is correct for the good? (A) The price elasticity of demand is 1.8； the price elasticity of supply is 0.8. (B) The price elasticity of demand is O.9； the price elasticity of supply is 0.3. (C) The price elasticity of demand is 0.6； the price elasticity of supply is 1.4. (D) There is not enough information to answer the question.

11. In a certain economy, when income is $1000, consumer spending is $800, The value of the multiplier for this economy is 2.5. It follows that, when income is $1060, consurner spending is (A) $815. (B) $836. (C) $900. (D) $950.