Microeconomics Final Study
Unit 7 Quiz 5-7: Figure 7.11 depicts the demand curve for Beautiful Cars, together with the marginal cost and isoprofit curves. The quantity-price combination at point E is (Q*, P*) = (32, 5,440). The average cost of producing 50 cars is the same as the average cost of producing 32. Suppose that the firm keeps the price at P = $5,440 but now produces 50 cars instead of 32. Which of the following is correct?
the firm's profit is now reduced
Unit 6 Q's Figure 6.6 depicts the efficiency wage equilibrium of a worker and a firm. According to this figure:
The slope of each isocost line is the number of units of effort per dollar.
Unit 6 Quiz 2-10: Figure 6.6 depicts the efficiency wage equilibrium of a worker and a firm. According to this figure:
The slope of each isocost line is the number of units of effort per dollar.
Unit 7 quiz 4-7: A shop sells 20 toy monkeys per week at $10 each. When it increases the price to $12, the number of toy monkeys sold falls to 15 per week. Which statement is correct?
the elasticity of demand is approximately 1.25
Unit 6 HW 2-5: Which of the following statements best describes the game played by the employer and the employee in the labor discipline model?
the worker selects the effort level that balances his desire to keep his job with his desire to not exhaust himself on the job
Unit 6 HW 3-5: Which of the following statements is correct regarding involuntary unemployment?
there must be involuntary unemployment in an efficiency wage equilibrium
Unit 20 Quiz 6-13: Innovation rents can drive progress, leading to technological breakthroughs that deliver substitutes for non-renewable resources.
true
Unit 20 Quiz 7-13: A healthy environment and degraded environment are both equilibria. The disequilibrium process is the movement from one equilibrium to another.
true
Unit 20 quiz 8-13: Natural resources means the estimated total amount of a substance in the earth's crust.
true
Unit 20 quiz 9-13: Distribution of mutual gains from abatement depends on relative bargaining power of groups.
true
Unit 6 Quiz 4-10: If unemployment benefits are increased, the minimum cost of a unit of effort for the employer will rise.
true
Unit 6 Quiz 5-10: If the wage doesn't change, employees will work harder in periods of high unemployment.
true
Unit 20 Q's The following table shows the present values of a $1 payment in the future, discounted at different rates. For example, $1 paid in 10 years' time is worth $0.82 today when discounted at 2% annually. DiscountRate%_____Years in the future __________________________0_____1_____10_____50______100 0.0%______________$1.00__$1.00__$1.00__$1.00__$1.00 1.0%______________$1.00__$0.99__$0.90__$0.61__$0.37 2.0%_____________$1.00__$0.98__$0.82__$0.37__$0.14 5.0%_____________$1.00__$0.95__$0.61__$0.09__$0.01 Based on this information, which of the following statements are correct?
-The divergence of the discounting effect between different discount rates is larger the longer the time to payment. -A discount rate of 0% means that payments are worth the same today and at all points in future.
Unit 7 hw 2-7: Which of the following events would contribute to economies of scale? A. large supermarkets being able to drive down the cost of purchasing milk as it increases its scale of business B. the expansion of the work force requiring extra layers of management for better performance monitoring C. a merger of 2 firms leading to savings on the cost of HR, IT, and legal departments D. the higher the number of users of Windows 10, the more likely it is that microsoft will be able to achieve a higher scale of its operating system
A. large supermarkets being able to drive down the cost of purchasing milk as it increases its scale of business B. the expansion of the work force requiring extra layers of management for better performance monitoring C. a merger of 2 firms leading to savings on the cost of HR, IT, and legal departments D. the higher the number of users of Windows 10, the more likely it is that microsoft will be able to achieve a higher scale of its operating system
Unit 20 Q's In Figure 20.20, points A and B are the two technologies available to a firm in its production. Specifically, technology A uses 4 tonnes of coal and 2 m² of solar panel to produce 100 metres of textiles, while technology B uses 1 tonne of coal and 6 m² of solar panel for the same output. Initially, the price of 1 tonne of coal is half that of the price of using 1 m² of solar panel. In its latest budget statement, the government proposes a tax on the use of coal such that the price ratio increases from 1/2 to 2. Based on this information, which of the following statements is correct?
After the implementation of the tax, the slope of the firm's isocost line steepens from −1/2 to −2.
Unit 20 Q's Consider a town with a single business that employs the entire labour force, whose toxic emissions are a threat to the health of the citizens. Figure 20.15 shows the business' 'shutdown' curve (the combination of wages and environmental quality offered by the firm that would just about keep the firm operating) and the citizens' indifference curves for the quality of environment and their wage income. The citizens' reservation indifference curve is also shown. Based on this information, which of the following statements is correct?
All points below the citizens' reservation indifference curve and above the business' 'shutdown' curve are infeasible.
Unit 20 HW 3-6: Which of the following statements regarding price-based and quantity-based policies is correct?
An advantage of quantity-based policies is that the implementation can be rapid and complete
Unit 20 Q's Which of the following statements is correct regarding valuation of the benefits of abatement?
Asking citizens for their willingness to pay for a 'greener' environment may result in policies that mostly affect the poor being valued less than those that raise the environmental quality experienced by the rich.
Unit 7 HW 1-7: The following diagram shows the market demand curve of Apple Cinnamon Cheerios, the isoprofit curves of the producer firm, and the firm's profit function curve. Based on the graph, which of the following statements are correct? *graph in screenshots* A. the highest profit that the firm can make is $60,000 B. the profit-maximizing choice for the firm is where the highest attainable isoprofit curve is tangent to the demand curve C. the profit-maximizing choice for the firm is where its Marginal Rate of Substitution (MRS) between the price charged and the quantity produced is equal to its Marginal Rate of Transformation (MRT) D. the profit-maximizing choice for the firm is at the peak of its profit function curve
B. the profit-maximizing choice for the firm is where the highest attainable isoprofit curve is tangent to the demand curve C. the profit-maximizing choice for the firm is where its Marginal Rate of Substitution (MRS) between the price charged and the quantity produced is equal to its Marginal Rate of Transformation (MRT) D. the profit-maximizing choice for the firm is at the peak of its profit function curve
Unit 6 HW 1-5: Which of the following statements are correct regarding the difference between markets and firms? A. it is possible to employ division of labor within firms. This is NOT possible in markts B. working in a firm involves accumulation of firm-specific assets that a worker will lose if the worker serves the connection to the firm C. markets involve a decentralization of power, while firms represent a concentration of economic power D. transactions within firms operate as contracts. Market transactions are NOT contracts.
B. working in a firm involves accumulation of firm-specific assets that a worker will lose if the worker serves the connection to the firm C. markets involve a decentralization of power, while firms represent a concentration of economic power
Unit 7 Quiz 1-7: Which is true?
Consumer surplus is the difference between the customer's willingness to pay and what they actually pay
Unit 20 Q's The following diagram shows a consumer's choice of the amount of air travel per year, using indifference curves between hours of free time per year and kilometres of air travel. The consumer cannot afford air travel when he chooses 6,960 hours of free time. The consumer's after-tax hourly wage is $50. *graph in e-book* Initially, the cost of a 1 km of air travel is $0.25. In its latest budget statement, the government proposes a fuel tax such that the cost of 1 km of air travel doubles to $0.50. Based on this information, which of the following statements is correct?
If the fuel tax reflects the social cost of the consumer's air travel, then the socially optimal level of travelling is 15,000 km per year.
Unit 6 Quiz 7-10: Which of the following statements is true?
In a labour contract, one side of the contract has the power to issue orders to the other side, but this power is absent from a sale contract.
Unit 20 Q's Figure 11.7 shows the world oil price (in 2014 prices) and global oil consumption. You also have the additional information that the world reserves of oil more than doubled to 1.7 trillion barrels between 1981 and 2014. More than 1 trillion barrels were extracted and consumed in the same period. Based on this information, which of the following statements is correct? *graph in e-book*
Julian Simon's forecast, that the discovery of technologies to find new resources and extract them more efficiently would outstrip increases in demand, was correct in the period 1981-2014.
Unit 20 hw 6-6: This graph shows the world oil price (in 2014 prices) and global oil consumption.You also have the additional information that the world reserves of oil more than doubled to 1.7 trillion barrels between 1981 and 2014. More than 1 trillion barrels were extracted and consumed in the same period. Based on this information, which of the following statements is correct? *graph in screenshot*
Julian Simon's forecast, that the discovery of technologies to find new resources and extract them more efficiently would outstrip increases in demand, was correct in the period 1981-2014.
Unit 6 Q's Maria earns $12 per hour in her current job and works 35 hours a week. Her disutility of effort is equivalent to a cost of $2 per hour of work. If she loses her job, she will receive unemployment benefit equivalent to $6 per hour. Additionally, being unemployed has psychological and social costs equivalent to $1 per hour. Then:
Maria's employment rent if she can only get a job at a lower wage rate after 44 weeks of being unemployed is more than $7,700.
Unit 6 Quiz 3-10: Maria earns $12 per hour in her current job and works 35 hours a week. Her disutility of effort is equivalent to a cost of $2 per hour of work. If she loses her job, she will receive unemployment benefit equivalent to $6 per hour. Additionally, being unemployed has psychological and social costs equivalent to $1 per hour. Then:
Maria's employment rent if she can only get a job at a lower wage rate after 44 weeks of being unemployed is more than $7,700.
Unit 20 HW 4-6: In the 2006 Stern Review, Professor Nicholas Stern used the discount rate of 1.4% (1.3% due to technological progress plus 0.1% for the possibility of extinction). Professor William Nordhaus argued that the impatience of citizens, estimated to be around 3.0% per annum, should also be considered, and suggested an overall discount rate of 4.3%. The following table shows the present values of a $100 payment in future, discounted at the two rates. Based on this information, which of the following statements is correct? *table in screenshot*
Nordhaus would only approve a project that saves $100 in environmental damages 50 years from now if it costs less than $12.18 today
Unit 20 quiz 12-13: On the abatement cost curve, which of the following is the most cost-effective abatement policy?
Nuclear Energy --------WRONG! look at figure 20.9 for help
Unit 20 Q's Figure 20.9 shows a global greenhouse gas abatement curve, defined as the abatement in 2030 compared with 'business as usual', produced by McKinsey in 2015. The width of each bar indicates potential abatement measured in gigatonnes of CO2, while the height indicates the cost of abatement per tonne. Based on this information, which of the following statements is correct?
Nuclear energy has a higher potential to abate emissions than reforestation of degraded forests.
Unit 7 Q's This figure shows the marginal cost and marginal revenue curves for Beautiful Cars. Which of the following statements is correct, based on the information shown? *Graph on e-book*
Profit is greater when Q = 20 than when Q = 10.
Unit 20 HW 5-6: This figure shows the temperature increase arising from the CO2 emitted, generated at different levels of use of fossil fuel reserves (which can be technically and economically extracted) and resources (estimated total amounts) in the earth's crust. For example, it states that a further 1 to 1.5 trillion tonnes of CO2 emissions would be likely to lead to a 2°C increase in temperature, compared to the pre-industrial average. You are also given that 36 billion tons of CO2 are generated each year currently. Based on this information, which of the following statements is correct? *graph in screenshot*
Stabilizing the emission rate at the current level will not be enough to prevent the possibility of a climate-induced economic catastrophe.
Unit 20 Q's Figure 20.8 shows the temperature increase arising from the CO2 emitted, generated at different levels of use of fossil fuel reserves (which can be technically and economically extracted) and resources (estimated total amounts) in the earth's crust. For example, it states that a further 1 to 1.5 trillion tonnes of CO2 emissions would be likely to lead to a 2°C increase in temperature, compared to the pre-industrial average. You are also given that 36 billion tonnes of CO2 are generated each year currently. Based on this information, which of the following statements is correct?
Stabilizing the emission rate at the current level will not be enough to prevent the possibility of a climate-induced economic catastrophe.
Unit 7 quiz 2-7: Suppose that the unit cost of producing a pound of poker chips is $2, irrespective of the level of output. Which of the following statements is correct?
The average cost and the marginal cost curves coincide
Unit 20 Q's Figure 20.11 shows the graph of the amount abated against its total cost, under different abatement policies. Based on this information, which of the following statements are correct?
The fact that the slope of the curve is monotonically diminishing implies that the technologies are adopted in increasing order of their cost.
Unit 7 Q's Figure 7.11 depicts the demand curve for Beautiful Cars, together with the marginal cost and isoprofit curves. The quantity-price combination at point E is (Q*, P*) = (32, 5,440). The average cost of producing 50 cars is the same as the average cost of producing 32. Suppose that the firm keeps the price at P = $5,440 but now produces 50 cars instead of 32. Which of the following is correct?
The firm's profit is now reduced.
Unit 7 hw 4-7: Suppose that the marginal cost of producing a pound of cereal is $2, irrespective of the level of output, but there are also some fixed costs of production. Which of the following statements is correct?
The marginal cost curve is a horizontal straight line
Unit 20 Q's Refer to Figure 20.5. Based on this information, which of the following statements is correct?
The market price of pesticides is unlikely to reflect the full social cost of their use.
Unit 20 Q's Figure 20.27 is the diagram of the amount abated for the total cost of abatement using different abatement policies. Based on this information, which of the following statements is correct?
The optimal policy choice will have the quality of the environment higher than E.
Unit 7 Q's The diagram depicts the marginal cost curve (MC), the average cost curve (AC), and the isoprofit curves of a firm. What can we deduce from the information in the diagram? *graph on e-book*
The price at C is 50.
Unit 7 Q's Figure 7.11 depicts the demand curve for Beautiful Cars, together with the marginal cost and isoprofit curves. At point E, the quantity-price combination is (Q*, P*) = (32, 5,440) and the profit is $63,360. Suppose that the firm chooses instead to produce Q = 32 cars and sets the price at P = $5,400. Which of the following statements is correct?
The profit is reduced to $62,080.
Unit 7 Q's The table represents market demand Q for a good at different prices P. Q_____________P 100___________270 200__________240 300__________210 400__________180 500__________150 600__________120 700__________90 800__________60 900__________30 1,000________0 The firm's unit cost of production is £60. Based on this information, which of the following is correct?
The profit-maximizing output is Q = 400.
Unit 7 Q's Figure 7.11 depicts the demand curve for Beautiful Cars, together with the marginal cost and isoprofit curves. Suppose that the firm decides to switch from P* = $5,440 and Q* = 32 to a higher price, and chooses the profit-maximizing level of output at the new price. Which of the following statements is correct?
The quantity of cars produced is reduced.
Unit 7 hw 5-7: The following figure depicts a firm's profit-maximizing choice at point E, given the market demand curve and the firm's marginal cost curve. You are given that the firm's marginal costs are $400, $2,960 and $4,200 at output levels Q = 0, Q* = 32 (point E) and Q0 = 48 (point F), respectively. Based on this information, which of the following statements is correct? *graph in screenshots*
WRONG the producer surplus at E is $126,720-----MAYBE?
Unit 7 Q's Consider a firm with fixed costs of production. Which of the following statements about its average cost (AC) and marginal cost (MC) is correct?
When AC = MC, the AC curve has a zero slope.
Unit 20 HW 1-6: Which of the following are practical and effective policies to deal with carbon emissions caused by driving a car?
a tax on gas
Unit 7 Q's The figure depicts two demand curves, D₁ and D₂. *graph in e-book* Based on this figure, which of the following statements are correct? a. At E, demand curve D₁ is less elastic than D₂. b. The elasticity is the same at A and C. c. At E, both demand curves have the same elasticity. d. The elasticity is higher at E than at B.
a. At E, demand curve D₁ is less elastic than D₂. d. The elasticity is higher at E than at B.
Unit 7 Q's Which of the following statements is correct? a. Consumer surplus is the difference between the consumers' willingness to pay and what they actually pay. b. Producer surplus equals the firm's profit. c. Deadweight loss is the loss incurred by the producer for not selling more cars. d. All possible gains from trade are achieved when the firm chooses its profit-maximizing output and price.
a. Consumer surplus is the difference between the consumers' willingness to pay and what they actually pay.
Unit 7 Quiz 7-7: Which of these statements are true? a. If a firm's technology exhibits constant returns to scale, doubling the inputs leads to doubling of the output level. b. If a firm's technology exhibits economies of scale, costs per unit will fall as the firm expands its production. c. If a firm's technology exhibits diseconomies of scale, doubling the inputs leads to less than doubling of the output level. d. If a firm's technology exhibits decreasing returns to scale, doubling the inputs more than doubles the output level.
a. If a firm's technology exhibits constant returns to scale, doubling the inputs leads to doubling of the output level. b. If a firm's technology exhibits economies of scale, costs per unit will fall as the firm expands its production. c. If a firm's technology exhibits diseconomies of scale, doubling the inputs leads to less than doubling of the output level.
Unit 7 Q's Which of the following statements is correct? a. If a firm's technology exhibits constant returns to scale, doubling the inputs leads to doubling of the output level. b. If a firm's technology exhibits decreasing returns to scale, doubling the inputs more than doubles the output level. c. If a firm's technology exhibits economies of scale, costs per unit will fall as the firm expands its production. d. If a firm's technology exhibits diseconomies of scale, doubling the inputs leads to less than doubling of the output level.
a. If a firm's technology exhibits constant returns to scale, doubling the inputs leads to doubling of the output level. c. If a firm's technology exhibits economies of scale, costs per unit will fall as the firm expands its production. d. If a firm's technology exhibits diseconomies of scale, doubling the inputs leads to less than doubling of the output level.
Unit 20 quiz 11-13: What is an example of a negative externality? (Select all correct answers.) a. second-hand smoke b. pollution c. increasing prices at a grocery store d. traffic congestion e. your neighbor planting a garden
a. second-hand smoke b. pollution c. increasing prices at a grocery store d. traffic congestion
Unit 6 Quiz 6-10: Figure 6.4 depicted Maria's best response curve when the expected duration of unemployment was 44 weeks. Which of the following statements is correct? a. If the expected unemployment duration increased to 50 weeks, Maria's best response to a wage of $12 would be an effort level above 0.5. b. Over the range of wages shown in the figure, Maria would never exert the maximum possible effort per hour. c. If the unemployment benefit was reduced, then Maria's reservation wage would be higher than $6. d. Increasing effort from 0.5 to 0.6 requires a bigger wage increase than increasing effort from 0.8 to 0.9.
a. If the expected unemployment duration increased to 50 weeks, Maria's best response to a wage of $12 would be an effort level above 0.5. b. Over the range of wages shown in the figure, Maria would never exert the maximum possible effort per hour.
Unit 6 Q's Figure 6.4 depicted Maria's best response curve when the expected duration of unemployment was 44 weeks. Which of the following statements is correct? a. If the expected unemployment duration increased to 50 weeks, Maria's best response to a wage of $12 would be an effort level above 0.5. b. If the unemployment benefit was reduced, then Maria's reservation wage would be higher than $6. c. Over the range of wages shown in the figure, Maria would never exert the maximum possible effort per hour. d. Increasing effort from 0.5 to 0.6 requires a bigger wage increase than increasing effort from 0.8 to 0.9.
a. If the expected unemployment duration increased to 50 weeks, Maria's best response to a wage of $12 would be an effort level above 0.5. c. Over the range of wages shown in the figure, Maria would never exert the maximum possible effort per hour.
Unit 6 Q's Which of the following statements are true? a. If unemployment benefits are increased, the minimum cost of a unit of effort for the employer will rise. b. If the wage doesn't change, employees will work harder in periods of high unemployment. c. If workers continue to receive benefits however long they remained unemployed, an increase in the level of unemployment will have no effect on the best response curve. d. If an employee's disutility of effort increases, the reservation wage will rise.
a. If unemployment benefits are increased, the minimum cost of a unit of effort for the employer will rise. b. If the wage doesn't change, employees will work harder in periods of high unemployment.
Unit 6 Quiz 10-10: In which of the following employment situations would the employment rent be high, ceteris paribus? a. In a job that provides many benefits, such as housing and medical insurance. b. When the worker is paid a high salary because the firm's customers know and trust her. c. In an economic boom, when the ratio of job-seekers to vacancies is low. d. When the worker is paid a high salary because she is a qualified accountant and there is a shortage of accountancy skills.
a. In a job that provides many benefits, such as housing and medical insurance. b. When the worker is paid a high salary because the firm's customers know and trust her.
Unit 6 Q's In which of the following employment situations would the employment rent be high, ceteris paribus? a. In a job that provides many benefits, such as housing and medical insurance. b. In an economic boom, when the ratio of job-seekers to vacancies is low. c. When the worker is paid a high salary because she is a qualified accountant and there is a shortage of accountancy skills. d. When the worker is paid a high salary because the firm's customers know and trust her.
a. In a job that provides many benefits, such as housing and medical insurance. d. When the worker is paid a high salary because the firm's customers know and trust her.
Unit 6 Q's Which of the following are reasons why employment contracts are incomplete? a. The firm cannot contract an employee not to leave. b. The firm cannot specify every eventuality in a contract. c. The firm is unable to observe exactly how an employee is fulfilling the contract. d.The contract is unfinished.
a. The firm cannot contract an employee not to leave. b. The firm cannot specify every eventuality in a contract. c. The firm is unable to observe exactly how an employee is fulfilling the contract.
Unit 6 Quiz 1-10: Which of the following are reasons why employment contracts are incomplete? a. The firm cannot contract an employee not to leave. b. The contract is unfinished. c. The firm is unable to observe exactly how an employee is fulfilling the contract. d. The firm cannot specify every eventuality in a contract.
a. The firm cannot contract an employee not to leave. c. The firm is unable to observe exactly how an employee is fulfilling the contract. d. The firm cannot specify every eventuality in a contract.
Unit 20 5-13: Why is climate change a particularly difficult environmental problem to handle? (Select all correct answers.) a. capping emissions is not enough b. may be irreversible c. requires global cooperation d. conflicts of interest (between and within countries as well as generations) e. worst case scenario is catastrophic
a. capping emissions is not enough b. may be irreversible c. requires global cooperation d. conflicts of interest (between and within countries as well as generations) e. worst case scenario is catastrophic
Unit 6 HW 5-5: For each of the following examples, explain who is the principal, who is the agent, and what aspects of their interaction are of interest to each and are not covered by a complete contract: 1. A company hires a security guard to protect its premises at night. 2. A charity wants to commission research to find out as much as possible about a new virus. Select all answers that apply.
a. the guard and researcher are the agents b. the company and the charity are the principles c. the company can state the duration and number of breaks the guard can take, which parts of the premises the guard should patrol, and specific security checks to carry out (such as checking whether doors are locked), it is impossible to verify these duties. Less tangible ones such as diligence in undertaking the tasks is also impossible to erfy and cannot be written in a contract d. the researcher may have a personal agenda (to publish or to pursue long-term research projects) that may not perfectly align with the charity's research agenda (immediate practical solutions for the virus) e. for both these cases, the principle would want to make explicit in the contract the amount of effort or output that they expect from the agent
Unit 7 Q's A shop sells 20 hats per week at $10 each. When it increases the price to $12, the number of hats sold falls to 15 per week. Which of the following statements are correct? a. When the price increases from $10 to $12, demand increases by 25%. b. A 20% increase in the price causes a 25% fall in demand. c. The demand for hats is inelastic. d. The elasticity of demand is approximately 1.25.
b. A 20% increase in the price causes a 25% fall in demand. d. The elasticity of demand is approximately 1.25.
Unit 7 Q's The diagram depicts two alternative demand curves, D and D′, for a product. Based on this graph, which of the following are correct? *graph on e-book* a. On demand curve D, when the price is £5,000, the firm can sell 15 units of the product. b. On demand curve D′, the firm can sell 70 units at a price of £3,000. c. At price £1,000, the firm can sell 40 more units of the product on D′ than on D. d. With an output of 30 units, the firm can charge £2,000 more on D′ than on D.
b. On demand curve D′, the firm can sell 70 units at a price of £3,000. c. At price £1,000, the firm can sell 40 more units of the product on D′ than on D.
Unit 7 Q's Suppose that in a small town a multinational retailer is planning to build a new superstore. Which of the following arguments could be correct? a. The local protestors argue that the close substitutability of some of the goods sold between the new retailer and existing ones means that the new retailer faces inelastic demand for those goods, giving it excessive market power. b. The new retailer argues that the close substitutability of some of the goods implies a high elasticity of demand, leading to healthy competition and lower prices for consumers. c. The local protestors argue that once the local retailers are driven out, there will be no competition, giving the multinational retailer more market power and driving up prices. d. The new retailer argues that most of the goods sold by local retailers are sufficiently differentiated from its own goods that their elasticity of demand will be high enough to protect the local retailers' profits.
b. The new retailer argues that the close substitutability of some of the goods implies a high elasticity of demand, leading to healthy competition and lower prices for consumers. c. The local protestors argue that once the local retailers are driven out, there will be no competition, giving the multinational retailer more market power and driving up prices.
Unit 7 Q's Consider a firm whose unit cost (the cost of producing one unit of output) is the same at all output levels. Which of the following statements are correct? a. Each isoprofit curve depicts the firm's profit for different outputs for a given price of the output good. b. Isoprofit curves can be upward-sloping when at high profit levels. c. Every price-quantity combination lies on an isoprofit curve. d. Isoprofit curves slope downward when the price is above the unit cost.
c. Every price-quantity combination lies on an isoprofit curve. d. Isoprofit curves slope downward when the price is above the unit cost.
Unit 6 Q's Which of the following statements is true? a. A labour contract transfers ownership of the employee from the employee to the employer. b. The office where the employee works is a relation-specific asset, because the employee cannot use it after leaving the firm. c. In a labour contract, one side of the contract has the power to issue orders to the other side, but this power is absent from a sale contract. d.A firm is a structure that involves decentralization of power to the employees.
c. In a labour contract, one side of the contract has the power to issue orders to the other side, but this power is absent from a sale contract.
Unit 6 Q's Which of the following statements about the separation of ownership and control is true? a. When the ownership and control of a firm is separated, the managers become the residual claimants. b. Managers always work to maximize the firm's profit. c. One way to address the problem associated with the separation of ownership and control is to pay the managers a salary that depends on the performance of the firm's share price. d. It is effective for shareholders to monitor the performance of the management, in a firm owned by a large number of shareholders.
c. One way to address the problem associated with the separation of ownership and control is to pay the managers a salary that depends on the performance of the firm's share price.
Unit 7 Q's A firm's cost of production is £12 per unit of output. If P is the price of the output good and Q is the number of units produced, which of the following statements is correct? a. Point (Q, P) = (2,000, 20) is on the isoprofit curve representing the profit level £20,000. b. Point (Q, P) = (2,000, 20) is on a lower isoprofit curve than point (Q, P) = (1,200, 24). c. Points (Q, P) = (2,000, 20) and (4,000, 16) are on the same isoprofit curve. d. Point (Q, P) = (5,000, 12) is not on any isoprofit curve.
c. Points (Q, P) = (2,000, 20) and (4,000, 16) are on the same isoprofit curve.
Unit 7 Q's Suppose that the unit cost of producing a pound of cereal is $2, irrespective of the level of output. (This means there are no fixed costs, that is, costs that are present for any level of output, including zero.) Which of the following statements is correct? a.The total cost curve is a horizontal straight line. b. The average cost curve is downward-sloping. c. The marginal cost curve is upward-sloping. d. The average cost and the marginal cost curves coincide.
d. The average cost and the marginal cost curves coincide.
Unit 7 hw 7-7: Potato chips has a price elasticity of 0.45. This means:
demand is inelastic
Unit 6 Quiz 8-10: If an employee's disutility of effort increases, the reservation wage will rise.
false
Unit 20 quiz 10-13: Contingent valuation uses prices of market goods to infer the economic value of unpriced attributes.
false (uses survey-based technique)
Unit 20 hw 2-6: This figure shows the choice of the abatement level, using the economy's feasible set and the citizens' indifference curves for consumption and quality of environment. The lower diagram shows the MRT and MRS curves. Based on this information, which of the following statements is correct? *Graph in screenshot*
if abatement became cheaper due to technological advancements then the feasible set would expand upwards, leading to a choice of a policy with a higher level of abatement
Unit 20 Quiz 3-13: Are benefits of abatement equally shared across society?
no
Unit 20 Quiz 2-13: The tragedy of the commons is when:
people share environmental resources, overuse them, and eventually deplete them
Unit 20 Quiz 13-13: The government may use this kind of tax to address the problem of market failure due to an externality such as pollution.
pigouvian tax
Unit 20 Quiz 1-13: This is the process whereby some initial change sets in motion a process that magnifies the initial change.
positive feedback process
Unit 6 HW 4-5: Thia figure below depicts the effect of an increase in the unemployment benefit on the workers' best response curve, when the unemployment rate is 12%. Which of the following statements is correct following a rise in the unemployment benefit? *figure in screenshot*
the firm's profit level falls
Unit 7 hw 3-7: The following is a table of the total cost (TC) of producing output Q for a particular firm. Based on this information, which of the following statements is correct? Q____________TC($) 10____________140 20___________210 30___________265 40___________310 50___________360 60____________420 70____________490 80____________570 90____________660 100___________760
the marginal cost curve intersects the average cost curve at Q=60
Unit 7 Quiz 6-7: Figure 7.11 depicts the demand curve for Beautiful Cars, together with the marginal cost and isoprofit curves. At point E, the quantity-price combination is (Q*, P*) = (32, 5,440) and the profit is $63,360.Suppose that the firm chooses instead to produce Q = 32 cars and sets the price at P = $5,400. Which of the following statements is correct?
the profit is reduced to $62,080
Unit 6 Quiz 9-10: One way to address the problem associated with the separation of ownership and control is to pay the managers a salary that depends on the performance of the firm's share price.
true
Unit 7 quiz 3-7: Consider a firm with fixed costs of production. Which of the following statements about its average cost (AC) and marginal cost (MC) is correct?
when AC=MC, the AC curve has a zero slope
Unit 20 4-13: If MRT = marginal productivity of abatement expenditures and MRS = opportunity cost of abatement expenditure would a policymaker's optimal abatement choice be where MRS = MRT?
yes
Unit 7 hw 6-7: If demand is elastic, do people respond to price changes by changing their quantity demanded?
yes