The equation below gives the degree of economies of scope (SC): SC = (C(Q1 ) + C(Q2 ) – C(Q1,Q2 )) / C(Q1,Q2 ) where C(Q1 ) is the cost of producing output Q1, C(Q2 ) is the cost of producing output Q2, and C(Q1,Q2 ) is the joint cost of producing both outputs. If […]
Date: September 9th, 2020
Which of the following product pairs would NOT be good candidates for price discrimination through tying? A) Razors and razor blades B) Ink-jet printers and ink cartridges C) Pencils and paper D) Cellular telephones and cell phone service ANSWER C
Date: September 9th, 2020
Let P be the output price for a particular good. Why is the value P*MPL greater than MRPL for a monopolist? A) The monopolist is not as technically efficient as firms operating under perfect competition. B) The monopolist hires less labor, so MPL is higher under a monopoly than under perfect competition. C) The monopolist […]
Date: September 9th, 2020
Refer to Figure 2.1. At point A, demand is: A) completely inelastic. B) inelastic, but not completely inelastic. C) unit elastic. D) elastic, but not infinitely elastic. E) infinitely elastic. ANSWER E
Date: September 9th, 2020
Why does perfect competition guarantee a Pareto optimal distribution of goods between two people? Under perfect competition, A) everyone has the same preferences. B) everyone faces the same prices. C) everyone consumes the same quantity of both goods. D) goods are homogeneous. ANSWER B
Date: September 9th, 2020
Because of the relationship between an asset’s real rate of return and its risk, one would expect to find all of the following, except one. Which one? A) Corporate stocks have higher rates of return than U.S. Treasury bonds. B) Corporate stocks have higher rates of return than U.S. Treasury bills. C) Corporate stocks have […]
Date: September 9th, 2020
The change in the quantity demanded of a good resulting from a change in relative price with the level of satisfaction held constant is called the ________ effect. A) Giffen B) real price C) income D) substitution ANSWER D
Date: September 9th, 2020
Which one of the following statements is a common criticism of the original Bertrand duopoly model? A) Firms never choose optimal prices as strategic variables. B) Firms would more naturally choose quantities if goods are homogenous. C) The assumption that market share is split evenly between the firms is unrealistic. D) A and B are […]
Date: September 9th, 2020
All possible efficient allocations of 2 goods between 2 people are located on A) the indifference curve. B) the contract curve. C) the production possibilities frontier. D) the budget line. ANSWER B
Date: September 9th, 2020
Due to externalities generated by home landscaping, its price A) is above the optimal level, and quantity that is below the optimal level. B) is below the optimal level, and quantity that is above the optimal level. C) and quantity traded are both above the optimal level. D) and quantity traded are both below the […]
Date: September 9th, 2020
