You have just won a cash award of $500 for academic excellence. A) The substitution effect of this award will be larger than its income effect. B) The income effect of this award will be larger than its substitution effect. C) The substitution and income effects will be of identical size. D) It is impossible […]
Date: September 9th, 2020
Which major asset experienced a price bubble just before the housing price bubble of 2006-2009? A) Internet or tech-stocks B) Tulip bulbs C) Japanese real estate D) Railroad stocks ANSWER A
Date: September 9th, 2020
The scale economies index (SCI) is equal to: A) the cost-output elasticity. B) one minus the cost-output elasticity. C) 100 times the degree of economies of scope (SC). D) marginal cost divided by average cost. ANSWER B
Date: September 9th, 2020
See Scenario 4.1. What is Daniel’s budget constraint? A) 240 = 3Pc + 3Pd B) 240 = 3Qc + 3Qd C) 240 = (Pc)(Qc) D) 240 = (Qc)(Qd) E) none of the above ANSWER B
Date: September 9th, 2020
The authors note that advertising can make the consumer demand for a product more elastic (price responsive) by expanding the potential range of consumers. As this change in demand occurs (ceteris paribus), what happens to the optimal advertising-sales ratio? A) Increases B) Decreases C) Remains the same D) We do not have enough information to […]
Date: September 9th, 2020
What is an informational cascade? A) An excess flow of market information that makes it difficult for an investor to form a rational decision. B) A continual decline in the quality of market information from public sources due to sequential budget cuts. C) A continual increase in the quality of market information from public sources […]
Date: September 9th, 2020
Refer to Figure 9.7. After the policy was implemented, the quantity traded became A) 1000. B) 2000. C) 3000. D) 4000. E) between 2000 and 4000, but the amount depends upon producers’ reactions, which are uncertain. ANSWER B
Date: September 9th, 2020
Why can’t two firms in a Prisoners’ Dilemma enforce a better outcome that has higher payoffs? A) Under an outcome with higher payoffs, the outcome is not a Nash equilibrium and each firm has an incentive to change their actions. B) Barriers to entry C) Barriers to exit D) The Nash equilibrium in a Prisoners’ […]
Date: September 9th, 2020
From a point within the utilities possibilities frontier, A) movement to another point within the frontier can only increase one person’s utility, but not both people’s utility. B) it is possible to find another point within the frontier that generates higher utility for both people. C) it is possible to find another point within the […]
Date: September 9th, 2020
In the long run, new firms can enter an industry and so the supply elasticity tends to be A) more elastic than in the short run. B) less elastic than in the short run. C) perfectly elastic. D) perfectly inelastic. ANSWER A
Date: September 9th, 2020
