1. What conditions must be present before a product’s price will naturally move toward its equilibrium price?
a. price floors
b. high taxes
c. a free market
2. If you create a demand schedule for an individual and for a market for the same product, what will remain the same in both schedules?
a. prices of the goods or services
b. demand curve
c. percent difference at each price
d. quantity demanded
3. Why is a discounted airline ticket a form of price discrimination?
a. People do not always use discounts.
b. Only some travelers get discounts.
c. The discount reduces the cost of the ticket.
d. More people can buy tickets at lower prices.
4. How does a manufacturer set total output to maximize profit?
a. set production so that total revenue plus cost is greatest
b. set production at the point where marginal revenue is smallest
c. set production at the point where marginal revenue equals marginal cost
d. set production so that marginal revenue and profit are the same
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