What is the shape of the marginal revenue curve derived from a linear downward sloping demand curve? A) Horizontal B) Vertical C) U-shaped D) Downward sloping, with a constant slope ANSWER D
Date: September 9th, 2020
Suppose the U.S. government imposes a maximum price of $5 per gallon of gasoline, and the current equilibrium price is $3.50 per gallon. This policy represents a: A) binding price floor. B) non-binding price floor. C) binding price ceiling. D) non-binding price ceiling. ANSWER D
Date: September 9th, 2020
A production function assumes a given A) technology. B) set of input prices. C) ratio of input prices. D) amount of capital and labor. E) amount of output. ANSWER A
Date: September 9th, 2020
Refer to Figure 9.8. In order to gain the equivalent imports as a $50 tariff, the government would have to impose a quota of A) 100 tons of sugar. B) 200 tons of sugar. C) 300 tons of sugar. D) 350 tons of sugar. E) 500 tons of sugar. ANSWER A
Date: September 9th, 2020
The slope of the production possibilities frontier is defined to be the marginal rate of A) transformation. B) technical substitution. C) substitution. D) profit. ANSWER A
Date: September 9th, 2020
Which of the following examples is NOT a negative stock externality? A) Goodwill generated by a company B) Noise pollution from an airport C) Odors emitted from a paper mill D) None of these cases are examples of negative stock externalities ANSWER D
Date: September 9th, 2020
Refer to Scenario 14.4. Suppose that a tax is imposed on each unit of the product that John produces. Which curve will shift? A) Marginal product of labor B) Marginal revenue product of labor C) The supply of labor D) All of the above will shift due to the tax on output. ANSWER B […]
Date: September 9th, 2020
From the profit maximizing conditions for the Cobb-Douglas production function, we find that the optimal input demands for labor and capital may be related as L = brK/(aw). Under what conditions are the expenditures on capital and labor equal? A) Constant returns to scale B) Increasing returns to scale C) Decreasing returns to scale D) […]
Date: September 9th, 2020
What happens if price falls below the market clearing price? A) Demand shifts out. B) Supply shifts in. C) Quantity demanded decreases, quantity supplied increases, and price falls. D) Quantity demanded increases, quantity supplied decreases, and price rises. ANSWER D
Date: September 9th, 2020
Why is the production possibilities frontier concave to (bowed away from) the origin? A) Consumers have declining marginal utility, so their relative satisfaction from consuming a good changes as they move from high levels to low levels of consumption. B) The shape of the curve is due to the marginal costs of producing the two […]
Date: September 9th, 2020
