Refer to Scenario 15.2. With no other information available, it is A) clear Furry should retool the offices. B) clear Furry should rewire the network. C) clear Furry should move to Southern California. D) clear Furry should either retool the offices or rewire the network. E) not possible to tell which payment stream is most […]
The snob effect corresponds best to a A) negative network externality. B) Giffen good. C) positive network externality. D) bandwagon effect. ANSWER A
As an economy recovers from a recession, the observed level of labor productivity tends to decline. Why? A) The total product remains the same during the recovery, but the number of workers declines. B) The total product increases during the recovery, but the number of workers declines. C) The marginal product of labor declines as […]
If price is between AVC and ATC, the best and most practical thing for a perfectly competitive firm to do is A) raise prices. B) lower prices to gain revenue from extra volume. C) shut down immediately, but not liquidate the business. D) shut down immediately and liquidate the business. E) continue operating, but plan […]
Refer to the game in Scenario 13.7. If each player chose a maximin strategy, the outcome would be A) $69,000, $69,000. B) $0, -$1000. C) -$1000, $0. D) $0, $0. E) a mixed strategy equilibrium. ANSWER D
If a monopolist sets her output such that marginal revenue, marginal cost and average total cost are equal, economic profit must be: A) negative. B) positive. C) zero. D) indeterminate from the given information. ANSWER B
Refer to Scenario 15.2. If the interest rate were 2%, Furry Software should A) retool the offices. B) rewire the network. C) move to Southern California. D) be indifferent between retooling and rewiring. E) be indifferent between rewiring and moving. ANSWER C
There is very little intergenerational mobility; the children of the rich stay rich and the children of the poor stay poor. Indicate whether the statement is true or false ANSWER F
One problem with the absolute approach to poverty is that there is no agreement as to which goods and services to include in the definition. Indicate whether the statement is true or false ANSWER T
How does government provision of public goods solve the free rider problem? A) Governments can impose compulsory taxes to pay for public goods. B) Governments can convert nonrival goods to rival goods by assigning property rights. C) Governments can tax public goods to prevent over-use of the resources. D) Governments cannot solve the free rider […]
