Economics Micro & Macro (CliffsAP)

Part IV: AP Macroeconomics & Microeconomics Tests

20. Question 20 refers to the following graph.

In order to increase profits, a monopolistic firm must produce where:

A. MC intersects D

B. D intersects S

C. The level of output is Q

D. The level of output is Q'

E. The level of output is Q"

Q

Q” Q’ Q

P

P

MC

A

E

D

B

C

AVC

21. Which of the following example is true for a giffen
    good?
    A. Substitution effect > Income effect>
    Price Effect
    B. Substitution effect > Price Effect >
    Income Effect
    C. Substitution effect > Income Effect >
    Price Effect
    D. Income Effect > Substitution Effect >
    Price Effect
    E. Price Effect > Income Effect > Substitution
    Effect