Suppose the price of movies seen at a theater rises from $12 per couple to $20 per couple. The theater manager observes that the rise in price causes attendance at a given movie to fall from 300 persons to 200 persons. What is the arc price elasticity of demand for movies? A) 0.5 B) 0.8 […]
Date: September 10th, 2020
X-inefficiency refers to the situation in which: A) highly competitive firms have less incentive to minimize their costs of production than other firms because the highly competitive firms have almost no chance to earn above-average profits. B) firms are unable to minimize their costs of production because there is no potential for input substitution. C) […]
Date: September 10th, 2020
If the local pizzeria raises the price of a medium pizza from $6 to $10 and quantity demanded falls from 700 pizzas a night to 100 pizzas a night, the arc price elasticity of demand for pizzas is: A) 0.67. B) 1.5. C) 2.0. D) 3.0. ANSWER D
Date: September 10th, 2020
In game theory, a Nash equilibrium is defined as: A) the dominant strategy of each player. B) a set of strategies for which all players are choosing their best strategy, given the actions of the other players. C) the set of strategies that result in the maximum payoff to each player. D) the set of […]
Date: September 10th, 2020
The term “relative price” is used to refer to how the current price of a good or service compares to the price of the same item in the previous time period. Indicate whether the statement is true or false ANSWER FALSE
Date: September 10th, 2020
A car dealer wants to get rid of the stock of last year’s model. Assume that the dealer knows from past experience that the price elasticity of demand for cars is unitary (= 1). If the price of the cars is currently $20,000 and the dealer wants to increase the quantity demanded from 30 units […]
Date: September 10th, 2020
In which of the following market structures would X-inefficiency be most likely to exist? A) Perfect competition. B) Monopolistic competition. C) Oligopoly. D) Monopoly. ANSWER D
Date: September 10th, 2020
In deciding which model of a car to buy, microeconomic theory maintains that consumers are concerned about the absolute price of a particular car, rather than its relative price. Indicate whether the statement is true or false ANSWER FALSE
Date: September 10th, 2020
In order for the first player to move in a sequential game to be able to gain an advantage from making the first move, the player must: A) possess a dominant strategy that is better than the other player’s dominant strategy. B) be able to achieve a higher maximum payoff than the other player. C) […]
Date: September 10th, 2020
An increase in the amount of competition with other firms that employ “best practices” would be likely to cause a particular firm’s labor productivity to: A) increase B) stay the same. C) decrease. D) cannot be determined without additional information. ANSWER A
Date: September 10th, 2020
