In a production process, all inputs are increased by 10%; but output increases less than 10%. This means that the firm experiences A) decreasing returns to scale. B) constant returns to scale. C) increasing returns to scale. D) negative returns to scale. ANSWER A
Date: September 9th, 2020
Refer to Scenario 17.4. If there is no flood insurance and the 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 A
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
Refer to Scenario 10.6. If red rubber balls can be produced at any of the three plants, and John decides to produce 1 red rubber ball, at which plant will he produce it? A) California B) Florida C) Montana D) He is indifferent between California and Florida. E) He is indifferent between Florida and Montana. […]
Date: September 9th, 2020
The demand curve and marginal revenue curve for red rubber balls are given as follows: Q = 16 – P MR = 16 – 2Q What level of output maximizes profit? A) 0 B) 4 C) 5.5 D) 6 E) B, C and D all maximize profit. ANSWER D
Date: September 9th, 2020
When cost and demand are stable over time in an industry, repetition of Prisoners’ Dilemma situations A) can yield cooperative outcomes because firms can explicitly collude to set prices. B) can yield cooperative outcomes even when firms do not explicitly collude to set prices. C) cooperative or noncooperative outcomes may occur, but cooperation is harder […]
Date: September 9th, 2020
Suppose you solve a utility maximization problem, and the solution value of the Lagrange multiplier equals zero. What does this outcome imply about the problem solution? A) You must have made an error while solving the problem. B) The budget constraint is not binding, and the constrained solution is equal to the solution to the […]
Date: September 9th, 2020
It can be rational to play tit-for-tat in a repeated Prisoners’ Dilemma game A) only if the game is played an infinite number of times. B) if the game is played an infinite number of times, or if it is uncertain how many times it will be played. C) only if the game is played […]
Date: September 9th, 2020
Defining global poverty in the context of American standards would classify most people in the developing world as poor. Indicate whether the statement is true or false ANSWER T
Date: September 9th, 2020
