MBA 651 Final Exam
If a monopolistically competitive firm's marginal cost increases, then in order to maximize profits the firm will A. reduce output and increase price. B. increase output and decrease price. C. increase both output and price. D. reduce both output and price.
A.
Joe consumes 10 units of food and 12 units of clothing. Since food is an inferior good, a gift to Joe of a $12 gift certificate at a food store will A. induce Joe to eat more than 10 units of food. B. make Joe better off than a gift of $12 in cash. C. induce Joe to eat less than 10 units of food. D. none of the above.
A.
Suppose that good X is a substitute for good Y. Then an increase in the price of good Y leads to A. an increase in the demand of good X. B. a decrease in the demand of good X. C. a decrease in the supply of good X. D. an increase in the supply of good X.
A.
The demand for good X is estimated to be Q xd = 10,000 - 4PX + 5PY + 2M + AX, where PX is the price of X, PY is the price of good Y, M is income and AX is the amount of advertising on X. Suppose the present price of good X is $50, PY = $100, M = $25,000, and AX = 1,000 units. Based on this information, the cross price elasticity between goods X and Y is A. 0.008. B. -0.08. C. -0.8. D. -8.
A.
The demand for video recorders has been estimated to be Qv = 134 - 1.07Pf + 46Pm - 2.1Pv - 5I, where Qv is the quantity of video recorders, Pf denotes the price of video recorder film, Pm is the price of attending a movie, Pv is the price of video recorders, and I is income. Based on the estimated demand equation we can conclude: A. video recorders are inferior goods. B. video recorder film is a substitute for video recorders. C. the demand for video recorders is inelastic. D. none of the above.
A.
The demand for which of the following commodities is likely to be more price inelastic? A. food. B. hamburgers. C. Big Mac's. D. sandwiches.
A.
The minimum average cost of producing alternate levels of output, allowing for optimal selection of all variables of production is defined by the: A. Long run average total cost curve. B. Short run average fixed cost curve. C. Short run marginal cost curve. D. Long run marginal cost curve.
A.
The minimum wage A. is an example of floor price. B. leads to an increase in the number of people employed in unskilled jobs. D. leads to a decrease in the number of people employed in skilled jobs. C. causes an increase in social welfare.
A.
When government imposes a price floor above the market price, the result will be that A. surpluses occur. B. shortages become a problem. C. supply and demand will shift up to the new equilibrium. D. A price floor set above the equilibrium price will have no effect on the market equilibrium.
A.
Which of the following would not shift the demand for good A? A. drop in price of good A. B. drop in price of good B. C. consumer income. D. change in the level of advertising of good A.
A.
You are the manager of a firm that sells its product in a competitive market at a price of $60. Your firm's cost function is C = 50 + 3Q2. Your firm's maximum profits are A. 250. B. 400. C. 450. D. 500
A.
t is easier to sustain tacit collusion in an infinitely repeated game if A. the present value of cheating is lower than collusion. B. there are many players. C. the interest rate is higher. D. both a and c.
A.
If the cross-price elasticity between ketchup and hamburgers is -1.2, a 4% increase in the price of ketchup will lead to a: A. 4.8% drop in quantity demanded of ketchup. B. 4.8% drop in quantity demanded of hamburgers. C. 4.8% increase in quantity demanded of ketchup. D. 4.8% increase in quantity demanded of hamburgers.
B.
If the income elasticity for lobster is .4, a 40% increase in income will lead to a: A. 10% drop in demand for lobster. B. 16% increase in demand for lobster. C. 20% increase in demand for lobster. D. 4% increase in demand for lobster.
B.
If the price of an input rises, producers are willing to produce A. more output at each given price. B. less output at each given price. C. the same output at each given price. D. none of the above.
B.
If the price of good X becomes lower, then the level of consumer surplus becomes A. lower. B. higher. C. unchanged. D. lower in the short-run but higher in the long run.
B.
If you advertise and your rival advertises, you each will earn $4 million in profits. If neither of you advertise, you will each earn $10 million in profits. However, if one of you advertises and the other does not, the firm that advertises will earn $1 million and the non advertising firm will earn $5 million. If you and your rival plan to hand your business down to your children (and this "bequest" goes on forever) then a Nash equilibrium is A. for each firm to not advertise until the rival does, and then to advertise for ever. B. for each firm to never advertise. C. for each firm to always advertise. D. for each firm to advertise until the rival does not advertise, and then not advertise forever.
B.
If you sell an inferior good, offering to sell gift certificates to those looking for a gift may result in A. a greater quantity sold than before the customer is given a gift certificate. B. a greater quantity sold than if the customer resorts to giving a cash gift. C. the same quantity sold than before the customer is given a gift certificate. D. the same quantity sold as if the customer resorts to giving a cash gift.
B.
If you wish to open a store and you do not like risk, it would be wise to sell: A. only normal goods. B. a mix of normal and inferior goods. C. all inferior goods. D. none of the above.
B.
If your demand for renting videos is Q = 5 - 2P, should you purchase the annual membership from a video store that charges $0.5 per rental, plus an annual membership fee of $12? A. definitely yes. B. definitely no. C. probably yes. D. cannot be decided
B.
If your demand for renting videos is Q = 5 - 2P, should you purchase the annual membership from a video store that charges $0.5 per rental, plus an annual membership fee of $12? A. definitely yes. B. definitely no. C. probably yes. D. cannot be decided.
B.
In a competitive market, the market demand is Qd = 60 - 6P and the market supply is Qs = 4P. A price ceiling of $3 will result in A. A shortage of 18 units. B. A shortage of 30 units. C. A surplus of 30 units. D. A surplus of 12 units. E. neither a shortage nor a surplus.
B.
Non-fed ground beef is an inferior good. In economic booms, grocery managers A. should increase their orders of non-fed ground beef. B. should reduce their orders of non-fed ground beef. C. should not change their orders of non-fed ground beef. D. none of the above.
B.
Spot exchange typically involves A. no transaction costs. B. some transaction costs. C. extremely high transaction costs. D. long-term contracts.
B.
Suppose good X is a normal good. Then a decrease in income would lead to A. an outward shift of the demand curve. B. an inward shift of the demand curve. C. no shift of the demand curve. D. a movement along the demand curve
B.
Suppose that there are two industries, A & B. There are five firms in industry A with sales at $5 million, $2 million, $1 million, $1 million, and $1 million, respectively. There are 4-firms in industry B with equal sales of $2.5 million for each firm. The four-firm concentration ratio for industry B is: A. 0.9. B. 1. C. 0.8. D. 0.7.
B.
Suppose the demand for good X is given by Qdx= 10 + ax Px + ay Py + aM M. If aM is negative, then good x is: A. a normal good. B. an inferior good. C. a complement. D. a substitute.
B.
Suppose the demand for good x is lnQ xd = 21 - .8 lnPx - 1.6 lnPy + 6.2 lnM + .4 lnAx . Then we know goods x and y are: A. substitutes. B. complements. C. normal goods. D. inferior goods.
B.
Suppose the production function is Q = min {3K, L}. How much output is produced when 6 units of labor and 3 units of capital are employed? A. 3 B. 6 C. 9 D. none of the above.
B.
The demand for good X has been estimated to be lnQ xd = 100 - 2.5 lnPX + 4 lnPY + lnM. The cross price elasticity of demand between goods X and Y is A. -2.5. B. 4. C. -2.5%. D. 4%.
B.
The demand for which of the following commodities is likely to be more inelastic? A. Soft drinks. B. Beverages. C. Cola drinks. D. Pepsi Cola.
B.
The difference between a price decrease and an increase in income is that A. A price decrease does not affect the consumption of other goods while an increase in income does. B. An increase in income does not affect the slope of the budget line while a decrease in price does change the slope. C. A price decrease decreases real income while an increase in income increases real income. D. A price decrease leaves real income unchanged while an increase in income increases real income. E. None of the above.
B.
The lower the standard error, A. the less confident the manager can be that the parameter estimates reflect the true values. B. the more confident the manager can be that the parameter estimates reflect the true values. C. the more precisely the parameter estimates the true values. D. the less precisely the parameter estimates the true values.
B.
The marginal product of an input is defined as A. change in average output attributable to the last unit of an input. B. change in total output attributable to the last unit of an input. C. change in total input attributable to the last unit of an output. D. change in average output attributable to the last unit of an output.
B.
Which of the following is not the important factor that affects the magnitude of the own price elasticity of a good? A. available substitutes. B. supply of the good. C. time. D. expenditure share.
B.
You are a manager in a perfectly competitive market. The price in your market is $14. Your total cost curve is C(Q) = 10 + 4Q + 0.5 Q2. What price should you charge in the short-run? A. $12. B. $14. C. $16. D. $18.
B.
You are the manager of a firm that sells its product in a competitive market at a price of $48. Your firm's cost function is C = 60 + 2Q2. Your firm's maximum profits are A. $192. B. $228. C. $348. D. $576.
B.
You are the manager of a monopoly that faces an inverse demand curve described by P = 200 - 15Q. Your costs are C = 15 + 20Q. The profit-maximizing price is A. $20. B. $110. C. $135. D. $290.
B.
n a competitive market, the market demand is Qd = 60 - 6P and the market supply is Qs = 4P. A price ceiling of $3 will result in A. A shortage of 18 units. B. A shortage of 30 units. C. A surplus of 30 units. D. A surplus of 12 units. E. neither a shortage nor a surplus.
B.
ou are the manager of a firm that sells its product in a competitive market at a price of $40. Your firm's cost function is C = 60 + 4Q2. The profit-maximizing output for your firm is A. 4. B. 5. C. 10. D. 15.
B.
Holding the mean value of a gamble constant, the larger the standard deviation, the A. higher the utility will be from the gamble. B. less risky the gamble will be. C. more risky the gamble will be. D. none of the above.
C.
If the demand function for a particular good is Q = 25 - 10P, then the price elasticity of demand (in absolute value) at a price of $1 is A. 8. B. 2. C. 2/3. D. 1/8. E. none of the above.
C.
In a Cournot oligopoly with N-firms and identical marginal costs, the relationship between the price elasticity of market demand and that of the firm is: A. EM = EF. B. EM = NEF. C. EM = EF/N. D. No deterministic relationship.
C.
In a competitive market, the market demand is Qd = 60 - 6P and the market supply is Qs = 4P. The full economic price under a price ceiling of $3 is A. 6. B. 7. C. 8. D. 9.
C.
Large firms can produce a product at lower average cost than small firms when A. Economies of scope exist. B. Diseconomies of scale exist. C. Economies of scale exist. D. Cost complementarities exist.
C.
Suppose P = 20 - 2Q is the market demand function for a local monopoly. The marginal cost is 2Q. The local monopoly tries to maximize its profits by equating MC = MR and charging a uniform price. What will be the equilibrium price and output? A. $6.33, 3.33. B. $6.33, 5. C. $13.33, 3.33. D. $10, 5.
C.
Suppose compensation is given by W = 450,000 + 220 P + 15S, where W = total compensation of the CEO, P = company profits (in millions) = $300, and S = Sales (in millions) = $500. What percentage of the CEO's total earnings is tied to profits of the firm? A. 6.0% B. 7.9% C. 12.6% D. 43.4%
C.
Suppose the production function is given by Q = 2K + 5L. What is the marginal product of labor when 15 units of capital and 10 units of labor are employed? A. 2 B. 5 C. 25 D. 50
C.
Suppose the production function is given by Q = 3K + 4L. What is the average product of capital when 5 units of capital and 10 units of labor are employed? A. 3. B. 4. C. 11. D. 45.
C.
Suppose the production function is given by Q = K1/2L1/2, and that Q = 30 and K = 25. How much labor is employed by the firm? A. 49. B. 6. C. 36. D. 25.
C.
Suppose you are a manager of a factory. You purchase five (5) new machines at one million dollars each. If you can resell two of the machines for $500,000 and three of the machines for $200,000, what are the sunk costs of purchasing the machines? A. $5 million. B. $500,000. C. $3.4 million. D. $1.6 million.
C.
The HHI of a local market is usually _____________ that of national markets. A. lower than. B. the same as. C. higher than. D. twice.
C.
The absolute value of the slope of the indifference curve is called the: A. marginal revenue. B. average rate of substitution. C. marginal rate of substitution. D. marginal cost.
C.
The average product of labor depends on A. how many units of labor are used. B. how many units of capital are used. C. how many units of labor and capital are used. D. none of the above.
C.
The cross-price elasticity of demand for textbooks and copies of old exams is -3.5. If the price of copies of old exams increase by 10 percent, the quantity demanded of textbooks will A. fall by 3.5 percent. B. rise by 3.5 percent. C. fall by 35 percent. D. rise by 35 percent.
C.
The demand for good X is given by lnQ xd = 120 - 0.9 lnPx + 1.5 lnPy - 0.7 lnM. Which of the following statements is correct? A. X has constant income elasticity. B. An increase in income will increase demand for X. C. A 20% increase in income would increase demand for X by 14%. D. A 15% increase in income would increase demand for X by 10.5%. E. a and b are correct.
C.
What is the maximum amount of good Y that can be purchased if X and Y are the only two goods available for purchase and Px = $10, Py = $15, X = 30, and M = 600? A. 10 B. 15 C. 20 D. 25
C.
When an effective price ceiling is in place A. every consumer is better off. B. every consumer is worse off. C. some consumers are better off and others are worse off. D. on average the net change in consumer surplus is zero.
C.
When quantity demanded exceeds quantity supplied A. there exists a surplus of a good. B. the price tends to fall. C. the price is below the equilibrium price. D. there is no excess demand.
C.
Which of the following is the major means to signal good quality of goods by firms? A. sales. B. advertisement. C. warranties/guarantees. D. both a and b.
C.
The source(s) of monopoly power for a monopoly may be: A. economies of scale. B. economies of scope. C.patents. D. all of the above.
D.
The special cost structure that is necessary for a firm to adopt a peak-load pricing policy is? A. economies of scale. B. economies of scope. C. constant marginal cost. D. limited capacity.
D.
What is implied when the total cost of producing Q1 and Q2 together is less than the total cost of producing Q1 and Q2 separately? A. Economies of scale. B. Diminishing average fixed costs. C. Cost complementarity. D. Economies of scope.
D.
Which of the following is (are) basic feature(s) of a perfectly competitive industry? A. Buyers and sellers have perfect information. B. There are no transaction costs. C. There is free entry and exit in the market. D. all of the above.
D.
Which of the following is not a feature of Sweezy oligopoly? A. There are a few firms in the market serving many consumers. B. The firms produce differentiated products. C. Each firm believes that rivals will cut their prices in response to a price reduction, but will not raise their prices in response to a price increase. D. Free entry and exit occurs in the market.
D.
You are a hotel manager, and are considering four projects that yield different payoffs, depending upon whether there is an economic boom or recession. There is a $50% probability of a boom and a 50% probability of a recession. The potential payoffs and corresponding payoffs are Project A makes $20 in a boom and -$10 in a recession, Project B makes -$10 in a boom and $20 in a recession, Project C make $30 in a boom and -$30 in a recession, and Project D makes $50 in both a boom and a recession. A risk-neutral manager will prefer project A. B. C. D.
D.
Which of the following is a correct representation of the profit maximization condition for a monopoly? P = MR. MC = MR. P = ATC + MR. MR = MC + ATC.
MC=MR
You are a manager in a perfectly competitive market. The price is $14. Your total cost curve is C(Q) = 10 + 4Q + 0.5 Q2. What level of output should you produce in the short-run? A. 5. B. 8. C. 10. D. 15.
C.
If the price of good X is $10 and the price of good Y is $5, how much of good X would the consumer purchase if her income is $15? 0. 1. 2. 3. Cannot tell based on the above information.
Cannot tell based on the above information
You are a manager in a perfectly competitive market. The price in your market is $14. Your total cost curve is C(Q) = 10 + 4Q + 0.5 Q2. What level of profits will you make in the short-run? $20. $40. $60. $80.
$40
The demand for good X has been estimated by Q xd =12 - 3Px + 4Py. Suppose that good X sells at $2 per unit and good Y sells for $1 per unit. Calculate the own price elasticity. -0.2. -0.3. -0.4. -0.5. -0.6.
-0.6
A cash gift causes the budget line A. to shift to the right in a parallel fashion. B. to shift to the left in a parallel fashion. C. to rotate clockwise. D. none of the above.
A.
A perfectly competitive firm faces: A. a perfectly elastic demand function. B. a perfectly inelastic demand function. C. a demand function with unitary elasticity. D. none of the above.
A.
An apple farmer must decide how many apples to harvest for the world apple market. He knows that there is a one-third probability that the world price will be $1, a one-third probability that it will be $1.5, and a one-third probability that it will be $2. His cost function is C(Q) = .01Q2. What is the expected price in the world apple market? A. $1.5. B. $1.8. C. $2.0. D. $1.4.
A.
An increase in the price of steak will probably lead to: A. an increase in demand for chicken. B. an increase in demand for steak. C. no change in the demand for steak or chicken. D. an increase in the supply for chicken.
A.
Consider the following information for a simultaneous move game: If you advertise and your rival advertises, you each will earn $5 million in profits. If neither of you advertise, you will each earn $10 million in profits. However, if one of you advertises and the other does not, the firm that advertises will earn $15 million and the non advertising firm will earn $1 million. If you and your rival plan to be in business for 10 years, then the Nash equilibrium is A. For each firm to advertise every year. B. For neither firm to advertise in early years, but to advertise in later years. C. For each firm to not advertise in any year. D. For each firm to advertise in early years, but not advertise in later years.
A.
Demand shifters do not include the A. price of the good. B. consumer's tastes and preferences. C. the price of the other related goods. D. consumer's expectations about future prices of the good.
A.
For the cost function C(Q) = 100 + 2Q + 3Q2, the total variable cost of producing 2 units of output is A. 16. B. 12. C. 4. D. none of the above.
A.
A finitely repeated game differs from an infinitely repeated game in that: A. The former needs a lower interest rate to support collusion than the latter needs. B. There is an "end-of-period" problem for the former. C. A collusive outcome can usually be sustained in the former but not the latter. D. All of the above.
B.
A local video store estimates their average customer's demand per year is Q = 7 - 2P, and knows the marginal cost of each rental is $0.5. How much should the store charge for each rental if it engages in optimal two-part pricing? A. $0.35. B. $0.5. C. $0.7. D. $1.0.
B.
A new firm enters a market which is initially serviced by a Cournot duopoly charging a price of $20. What will the new market price be should the three firms co-exist after the entry? A. $20. B. below $20. C. above $20. D. none of the above.
B.
Advertising provides consumers with information about the underlying existence or quality of a product. These types of advertising messages are called A. persuasive advertising. B. informative advertising. C. green advertising. D. influential advertising.
B.
Bertrand model of oligopoly reveals that A. capacity constraints are not important in determining market performance. B. perfectly competitive prices can arise in markets with only a few firms. C. changes in marginal cost do not affect prices. D. all of the above.
B.
Changes in the price of an input cause: A. Isoquants to become steeper. B. Slope changes in the isocost line. C. Parallel shifts of the isocost lines. D. Changes in both the isoquants and isocosts of equal magnitude.
B.
Consumers spend a lot more time searching for good bargains during recessions because: A. goods are more expensive during recessions and hence expected benefits of a search are higher. B. In recessions, many individuals are out of work, which lowers their opportunity cost of time. C. both a and b. D. none of the above.
B.
For the cost function C(Q) = 100 + 2Q + 3Q2, the average fixed cost of producing 2 units of output is A. 100. B. 50. C. 3. D. 2.
B.
If a consumer is given a $10 gift certificate, good for items in store X and all items in store X are inferior goods, then consumer desires to consume A. more goods in store X. B. less goods in store X. C. the same amount of goods in store X. D. none of the above.
B.
If money income doubles and the prices of all goods triples, then A. the budget line remains unchanged. B. the consumer is worse off due to inflation. C. the consumer will buy more of normal goods. D. the budget line will shift out.
B.
If the cross-price elasticity between good A & B is negative, we know the goods are: A. inferior goods. B. complements. C. inelastic. D. substitutes.
B.
The marginal rate of technical substitution A. determines the rate at which a producer can substitute between two inputs in order to increase one additional unit of output. B. is the absolute value of the slope of the isoquant. C. is the absolute value of marginal revenue. D. is constant along the isoquant curve.
B.
The supply function: A. describes how much of good X will be produced at an alternative price of good X, given all the other variables being constant. B. recognizes that the quantity of a good produced depends on its price and supply shifters. C. shows the relationship between the quantity supplied of X and variables other than its price D. does not include technology.
B.
What is the horizontal intercept of the budget line, given that M = $1,000, PX = $50, and PY = $40? A. 2000.0. B. 20.0. C. 25.0. D. 11.11.
B.
What is the immediate result of applying the Clean Air Act to a previously non-regulated industry? A. price decreases and production is reduced. B. price increases and production is reduced. C. price decreases and production is enlarged. D. price increases and production is enlarged.
B.
When the owner runs the business A. He does not bear the full cost of a bad decision. B. there is not a principal-agent problem. C. he does not receive the full benefit nor the full cost of any decision. D. he has only limited liability for the actions of the business.
B.
Which of the following can explain an increase in the demand for housing in retirement communities? A. a drop in real estate prices. B. an increase in the population of the elderly. C. a drop in the average age of retirees. D. mandatory government legislation.
B.
Which of the following factors would not affect the own-price elasticity of a good? A. time. B. price of an input. C. available substitutes. D. expenditure share.
B.
Which of the following is not a feature of Sweezy oligopoly? A.There are two firms in the market serving many consumers. B. The firms produce homogenous products. C. Each firm believes that rivals will cut their prices in response to a price reduction, but will not raise their prices in response to a price increase. D. Barriers to entry exist.
B.
A coordination problem arises whenever: A. there is no Nash equilibrium in a game. B. there is a unique Nash equilibrium but it is not very desirable. C. there are multiple Nash equilibria. D. there are no dominant strategies for both player
C.
A downward sloping, linear demand function exhibits: A. constant demand elasticity. B.more elastic demand as output increases. C. less elastic demand as output increases. D. insufficient information to determine
C.
A production function A. defines the minimum amount of output that can be produced with inputs such as capital and labor. B. defines the average amount of output that can be produced with inputs such as capital and labor. C. represents the technology available for turning inputs into output. D. is determined only by the expenditures on R&D.
C.
A study has estimated the effect of changes in interest rates and consumer confidence on the demand for money to be: lnM = 14.666 + .021 lnC - .036 lnr, where M denotes real money balances, C is an index of consumer confidence, and r is the interest rate paid on bank deposits. Based on this study, a 5% increase in interest rates will cause the demand for money to: A. drop by 1.8%. B. increase by 1.8%. C. drop by .18%. D. increase by .18%
C.
An ad valorem tax shifts the supply curve A. down by the amount of the tax. B. up by the amount of the tax. C. by rotating it counter-clockwise. D. by rotating it clockwise.
C.
Constant returns to scale exist when long-run average costs A. increase as output is increased. B. decrease as output is increased. C. remain constant as output is increased. D. none of the above.
C.
Consumer surplus: A. is the value consumers get from a supplier. B. is the value consumers do not pay because of a discount by supplier. C. is the value consumers get from a good but do not pay for. D. is equal to the amount consumers pay for a good.
C.
Firms will often implement randomized pricing in an attempt to reduce A. only competitor price information. B. only consumer price information. C. Both customer and competitor information about price. D. Randomized pricing does not affect information available to consumers or competitors.
C.
Firms will often implement randomized pricing in an attempt to reduce A. only competitor price information. B. only consumer price information. C. both customer and competitor information about price. D. Randomized pricing does not affect information available to consumers or competitors.
C.
Each week Bill buys exactly 7 bottles of cola regardless of its price. Bill's own price elasticity of demand for cola in absolute value is: A. greater than one. B. less than one. C. one. D. zero.
D.
Good X is a normal good and its demand is given by Q xd = a0 + aXPX + aYPY + aMM + aHH.Then we know that A. aH > 0. B. aX > 0. C. aY > 0. D. aM > 0.
D.
If an increase in income causes a decrease in the consumption of good Y we know that good Y is: A. a normal good. B. a substitute. C. a complement. D. an inferior good.
D.
In the presence of pollution, the marginal cost of producing a good to society is: A. the horizontal sum of the supply curve and marginal cost of polluting. B. the vertical sum of the demand curve and the marginal cost of polluting. C. the horizontal sum of the demand curve and the marginal cost of polluting. D. the vertical sum of the supply curve and the marginal cost of polluting.
D.
Suppose a worker is offered a wage of $8 per hour, plus a fixed payment of $100 per day, and he can use 24 hours per day. What is the maximum total earnings the worker can earn in a day? A. $492. B. $392. C. $192. D. $292.
D.
Suppose the demand for X is given by Q xd = 100 - 2PX + 4PY + 10M + 2A, where PX represents the price of good X, PY is the price of good Y, M is income and A is the amount of advertising on good X. If advertising on good X increases by $10,000, then the demand for X will A. decrease by $20,000. B. decrease by $100,000. C. increase by $100,000. D. increase by $20,000.
D.
The combinations of goods X and Y that are affordable to the consumer are defined by the: A. consumption set. B. income line. C. budget constraint. D. budget set
D.
The concentration and Herfindahl indices computed by the U.S. Bureau of Census must be interpreted with caution because A. they may overstate the actual level of concentration in markets served by foreign firms. B. they may understate the degree of concentration in local markets. C. the definition of product classes used to define an industry affects the results. D. all of the above
D.
The management of Local Cinema has estimated the monthly demand for tickets to belnQ = 22,328 - .41 lnP + 0.5 lnM - .33 lnA + 100 lnPvcr, where Q = quantity of tickets demanded, P = price per ticket, M = income, A = advertising outlay, and Pvcr = price of a VCR tape rental. It is known that P = $5.50, M = $9,000, A = $900, and Pvcr = $3.00. Determine the own-price elasticity of demand for movie tickets. A. -.29. B. -.32. C. -.39. D. -.41. E. none of the above
D.
The marginal cost curve A. lies always below the average total cost curve (ATC). B. lies always above the average variable cost curve (AVC). C. intersects the ATC and AVC at their maximum points. D. intersects the ATC and AVC at their minimum points.
D.
The own-price elasticity of demand for apples is -1.2. If the price of apples falls by 5%, what will happen to the quantity of apples demanded? A. It will increase 5%. B. It will fall 4.3%. C. It will increase 4.2%. D. It will increase 6%.
D.
The primary difference between Monopolistic Competition and Perfect Competition is A. the ease of entry and exit into the industry. B. the number of firms in the market. C. all of the above. D. none of the above.
D.
You are the manager of a firm that sells its product in a competitive market at a price of $50. Your firm's cost function is C = 40 + 5Q2. Your firm's maximum profits are A. 125. B. 250. C. 100. D. 85.
D.
You are the manager of a firm that sells its product in a competitive market at a price of $60. Your firm's cost function is C = 33 + 3Q2. The profit-maximizing output for your firm is A. 3 B. 5 C. 6 D. 10
D.
You are the manager of a monopoly that faces a demand curve described by P = 63 - 5Q. Your costs are C = 10 + 3Q. The profit-maximizing output for your firm is A. 3. B. 4. C. 5. D. 6.
D.
Which curve(s) does the marginal cost curve intersect at the (their) minimum point? A. Average total cost curve. B. Average fixed cost curve. C. Average variable cost curve. D. All of the above. E. Answer a and c only.
E.