1. The figure The Market for Gas Stations shows curves facing a typical gas station in a...

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Question:

1. The figure The Market for Gas Stations shows curves facing a typical gas station in a large town. The market is characterized by many firms, differentiated products, easy entry, and easy exit. If the gas station here is typical of others in the community, then in the long run, we would expect to observe:

A. A few gas stations leaving the market.

B. New gas stations entering the market.

C. Neither entry nor exit.

D. Many gas stations leaving the market.

2. Which of the panels in the figure Monopolistic Competition II shows a monopolistic competitor earning a loss in the short run?

A. Panel c

B. None of the panels show a loss in the short run.

C. Panel b

D. Panel a

3. General Snacks is a typical firm in a market characterized by the model of monopolistic competition. Initially, the market is initially in long-run equilibrium, and then there is an increase in demand for snacks. We expect that:

A. There will be a short-run increase in the number of firms, but in the long run the number of firms will return to the original level.

B. Firms will leave the market in the long run.

C. In the long run, new firms will enter the market.

D. Firms will shut down, but they will not leave the industry in the long run.

4.Which of the following will not shift the labor supply curve?

A. A change in the wage rate

B. Changes in expectations

C. Changes in a spouse's income

D. A change in attitude toward work

5. Scott's wage is $25 per hour and he works 50 hours a week, which is his optimal labor supply. At his optimal labor supply, his marginal utility of one hour of leisure is equal to:

A. The marginal utility he gets from less than $25 worth of goods.

B. The marginal utility he gets from $25 worth of goods.

C. The substitution effect.

D. The marginal utility he gets from more than $25 worth of goods.