The kinked demand curve model is based on the assumption that each firm A) considers its rival’s output to be fixed. B) considers its rival’s price to be fixed. C) believes rivals will match all price changes. D) believes rivals will never match price changes. E) none of the above ANSWER E
Date: September 9th, 2020
Consider a supply curve of the form: Q = c + dP. If d equals zero, then supply is: A) completely inelastic. B) inelastic, but not completely inelastic. C) elastic, but not infinitely elastic. D) infinitely elastic ANSWER A
Date: September 9th, 2020
Suppose you only consume rice and bananas. Can both of these goods be Giffen goods in your consumption? A) Yes, this is possible B) No, at least one of the goods must be normal C) No, they both can be inferior, but at least one of the goods cannot be a Giffen good D) We […]
Date: September 9th, 2020
Suppose the price of rice increases and you view rice as an inferior good. The substitution effect results in a ________ change in rice consumption, and the income effect leads to a ________ change in rice consumption. A) positive, positive B) positive, negative C) negative, positive D) negative, negative ANSWER C
Date: September 9th, 2020
The Russian government wants to reduce the consumption of vodka. A one hundred rouble tax on each bottle purchased may reduce the consumption of vodka under which circumstance(s)? A) Vodka is an inferior good. B) Vodka is a normal good. C) Vodka is an inferior good and the taxes collected from this tax are rebated […]
Date: September 9th, 2020
Which of the following is NOT an example of consumer behavior consistent with the standard assumptions of microeconomic theory? A) A concern for fairness can influence purchasing patterns. B) When demand increases, all else being equal, consumers expect price to rise. C) After a snowstorm, the demand for snow shovels increases. D) Snow shovels and […]
Date: September 9th, 2020
By 2011, how much had U.S. housing prices declined from their peak in 2006? A) 2 percent B) 33 percent C) 40 percent D) 50 percent ANSWER A
Date: September 9th, 2020
Refer to Figure 9.7. Because of this policy, total producer surplus including funds received from the government will be at least A) $10,000. B) $40,000. C) $80,000. D) $100,000. E) $160,000. ANSWER C
Date: September 9th, 2020
Refer to Figure 9.7. Without counting any government payments received by firms, as a result of this policy the producer surplus earned on the units sold in the market A) rose by $15,000. B) rose by $20,000. C) rose by $40,000. D) fell by $5,000. E) fell by $45,000. ANSWER A
Date: September 9th, 2020
Halifax & Smyth (H&S) is a clothier that specializes in expensive men’s suits, and the firm makes the suits from wool fabrics that are woven by one of the firm’s divisions. This division is not the only source for this material, and H&S could buy or sell wool fabric in the outside competitive market. H&S […]
Date: September 9th, 2020
