Refer to Scenario 17.4. If there is no flood insurance and no flood control system is in place, the expected loss from a flood is A) $5,000. B) $10,000. C) $100,000. D) $200,000. E) $1,000,000. ANSWER B
Date: September 9th, 2020
Why does cooperative behavior break down in games with finite endpoints? A) Each player has an incentive to deviate from a cooperative strategy during the last period. B) A Nash equilibrium in pure strategies is not possible in finite repeated games. C) Finite games have the same outcomes as one-period games, and cooperation is not […]
Date: September 9th, 2020
At the profit-maximizing level of output, demand is A) completely inelastic. B) inelastic, but not completely inelastic. C) unit elastic. D) elastic, but not infinitely elastic. E) infinitely elastic. ANSWER D
Date: September 9th, 2020
Many of the world’s poorest nations have Gini coefficients lower than in the U.S. Indicate whether the statement is true or false ANSWER F
Date: September 9th, 2020
Which of the following statements about the optimal solution to the consumer problem based on the Cobb-Douglas utility function is NOT true? A) The cross-price elasticities of demand are zero. B) Both goods have downward sloping demand curves. C) Both goods are normal goods. D) The marginal utility of income may be negative. ANSWER […]
Date: September 9th, 2020
In a supply-and-demand graph, producer surplus can be pictured as the A) vertical intercept of the supply curve. B) area between the demand curve and the supply curve to the left of equilibrium output. C) area under the supply curve to the left of equilibrium output. D) area under the demand curve to the left […]
Date: September 9th, 2020
With increasing returns to scale, isoquants for unit increases in output become A) farther and farther apart. B) closer and closer together. C) the same distance apart. D) none of these. ANSWER B
Date: September 9th, 2020
The shutdown decision can be restated in terms of producer surplus by saying that a firm should produce in the short run as long as A) revenue exceeds producer surplus. B) producer surplus is positive. C) producer surplus exceeds fixed cost. D) producer surplus exceeds variable cost. E) profit and producer surplus are equal. […]
Date: September 9th, 2020
Ronny’s Pizza House operates in the perfectly competitive local pizza market. If the price of pizza cheese increases (ceteris paribus), what is the expected impact on Ronny’s profit-maximizing output decision? A) Output increases to cover the higher input cost B) Output increases because the marginal cost curve shifts upward C) Output decreases because the marginal […]
Date: September 9th, 2020
If the inflation rate falls and nominal interest rates are unchanged, A) inflation will fall. B) inflation will continue at the same rate. C) real interest rates rise. D) real interest rates are unaffected. E) real interest rates fall. ANSWER C
Date: September 9th, 2020
