D) may increase or decrease.

E) none of the above.

Cost

Marginal Cost

Average Total Cost

Average Variable Cost

Quantity

28. Student Vasya Pupkin draws the above graph to show the main cost curves in an economy where the government does not intervene.

A) The graph is correct.

B) The axes are marked incorrectly.

C) Marginal cost cannot be negative.

D) Marginal cost cannot be greater than the average total cost.

E) The graph is incorrect, but for a reason not mentioned above.

29. The slope of a budget constraint line reflects:

A) the ratio of the marginal utility of the good on the horizontal axis to that of the good on the vertical axis

B) the total amount of income that the individual has to spend

C) the principle of diminishing returns

D) the ratio of the price of the good listed on the horizontal axis to that of the good on the vertical axis

E) none of the above

30.All of the following will shift the demand for oil, EXCEPT

A) OPEC announcement of the cut in oil extraction next year

B) Development of bio-fuel technologies

C) Increase in the average real income of population

D) Extremely cold winter

E) Tornado destroyed oil platforms in the Gulf of Mexico

31.Which of the following statements are FALSE

I) If the supply and demand for some commodity both increase the change in price is ambiguous

II) A per-unit tax levied on producers always reduces their welfare

III) A per-unit tax levied on producers always reduces the quantity supplied.

A) None of the above

B) II and III

C) II only

D) I and III

E) I, II and III

32.Dead-weight loss associated with the imposition of a per-unit tax appears because of:

A) The loss of consumer surplus is not compensated by the loss of producer surplus.

B) Both consumers’ and producers’ surpluses fall.

C) Tax revenues are greater than the total loss of consumers and producers

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