Refer to Figure 9.7. Before the policy was implemented, consumer surplus was A) $30. B) $60. C) $45,000. D) $90,000. E) $180,000. ANSWER C
Date: September 9th, 2020
We may be tempted to determine the optimal level of advertising expenditures at the point where the last dollar spent on advertising generates an additional dollar of sales revenue (i.e, the marginal revenue of advertising equals one). In general, this rule will not allow the firm to maximize profits because it ignores the: A) price […]
Date: September 9th, 2020
Consider the following payoff matrix for a game in which two firms attempt to collude under the Bertrand model: Firm B cuts Firm B colludes Firm A cuts 6,6 24,8 Firm A colludes 8,24 12,12 Here, the possible options are to retain the collusive price (collude) or to lower the price in attempt to increase […]
Date: September 9th, 2020
Suppose the labor market and all output markets are perfectly competitive. When the labor market is in equilibrium, the wage rate will: A) be less than the marginal revenue product of labor. B) equal the marginal revenue product of labor. C) be greater than the marginal revenue product of labor. D) None of the above […]
Date: September 9th, 2020
Which is NOT an advantage of emissions fees over standards? A) Fees can give a firm the incentive to reduce emissions below the standard when new technology allows. B) Fees can reduce the cost of attaining some goal level of emissions when firms all have the same abatement costs. C) Fees can reduce the cost […]
Date: September 9th, 2020
A firm will avoid producing additional emissions whenever the fee is A) less than the MSB. B) greater than the MSB. C) less than the MCA. D) greater than the MCA. E) equal to the distance between MSB and MCA. ANSWER D
Date: September 9th, 2020
The introduction of refrigerators into American homes: A) decreased the magnitude of the short run own price elasticity of demand for raw meat. B) did not affect the short run own price elasticity of demand for raw meat. C) increased the magnitude of the short run own price elasticity of demand for raw meat. D) […]
Date: September 9th, 2020
Suppose the market price for wheat changes, and we move from point A to point B on the wheat demand curve. If the price elasticity of wheat demand was -0.3 at point A and -0.4 at point B, what is a plausible value for the arc elasticity of demand for wheat between points A and […]
Date: September 9th, 2020
Refer to Figure 4.2. The substitution effect on the quantity of clothing purchased is: A) the change from C3 to C1. B) the change from C3 to C2. C) the change from C2 to C1. D) the change from C1 to C2. E) none of the above ANSWER D
Date: September 9th, 2020
Refer to Figure 4.1. The income effect of the price change in food on the quantity of food purchased is: A) the change from F3 to F1. B) the change from F3 to F2. C) the change from F2 to F1. D) the change from F1 to F2. E) none of the above ANSWER […]
Date: September 9th, 2020
