A firm in an oligopolistic industry has the following demand and total cost equations: P = 600 – 20Q and TC = 700 + 160Q + 15Q2 Calculate: a. quantity at which profit is maximized b. maximum profit c. quantity at which revenue is maximized d. maximum revenue e. maximum quantity at which profit will […]
Date: September 9th, 2020
The domestic demand curve, domestic supply curve, and world supply curves for a good are given in the above figure. All the curves are linear. Initially, the country allows imports. Then imports are banned. Calculate how consumer and producer surplus change because of the ban. Is the country better off with the ban on imports? […]
Date: September 9th, 2020
If $1,000 is placed in an account earning 8% annually on January 1, 1999, how much would be in this account on January 1, 2013? What will be an ideal response? ANSWER $2,937
Date: September 9th, 2020
A monopoly might produce less than the socially optimal amount of pollution because A) it likes to be a good citizen. B) it sets price above marginal cost. C) it earns economic profit. D) it internalizes the external costs. ANSWER B
Date: September 9th, 2020
Because the labor supply curve for a monopsonist is upward sloping, the monopsonist A) hires zero units of labor. B) chooses the perfectly competitive quantity of labor. C) must increase the wage to attract more units of labor. D) must take the wage as given by the market. ANSWER C
Date: September 9th, 2020
A monopolistic firm operates in two separate markets. No trade is possible between market A and market B. The firm has calculated the demand functions for each market as follows: Market A p = 15 – Q; Market B p = 11 – Q The company estimates its total cost function to be TC = […]
Date: September 9th, 2020
In the long run, a monopolistic competitor A) sets MR = MC. B) produces where P = AC. C) sets P > MC. D) All of the above. ANSWER D
Date: September 9th, 2020
The efficient quantity of a pure public good occurs when the marginal cost of producing that good equals the A) marginal benefit to the median voter. B) marginal benefit to each individual. C) sum of all individual marginal benefits. D) sum of all individual marginal benefits divided by the number of voters. ANSWER C […]
Date: September 9th, 2020
The welfare loss of a tariff equals that of a import quota that leads to the same level of imports. Indicate whether the statement is true or false ANSWER False. In the case of a tariff the government receives revenue which does not reduce welfare. With a quota this amount is often lost to […]
Date: September 9th, 2020
If the social marginal cost of a good is very high relative to the private marginal cost, then a monopoly will most likely A) produce more than the social optimum. B) produce less than the social optimum. C) produce the social optimum. D) produce zero pollution. ANSWER A
Date: September 9th, 2020
