Which of the following would be considered open-access common property? A) a library B) the world wide web C) a company gym D) broadcast television ANSWER A
Date: September 9th, 2020
The above figure shows the demand and supply curves in the market for milk. Currently the market is in equilibrium. If the government establishes a $2 per gallon price ceiling to ensure that children are nourished, estimate the change in p, Q, and social welfare. ANSWER At a price of $2, only 500 gallons […]
Date: September 9th, 2020
In a Bertrand model, if one firm has a dominant strategy, its best-response function A) does not exist. B) is identical to its rival. C) is a constant. D) is to respond to its rival’s price increase with a price decrease. ANSWER C
Date: September 9th, 2020
Calculate the elasticity for each variable and briefly comment on what information this gives you in each case. What will be an ideal response? ANSWER Based on the above figures, Q = 2,000 (Own) Price elasticity = -10(1,000/2,000 ) = -5. Demand is elastic at this price. Advertising elasticity = 5(40/2,000 ) = 0.1. […]
Date: September 9th, 2020
Gasoline and heating oil are examples of products which are A) joint products in fixed proportions. B) joint products in variable proportions. C) joint products that are complements. D) unrelated to each other. ANSWER B
Date: September 9th, 2020
When a firm sets a price relatively low in order to increase the market share, it is referred as A) price skimming. B) limit pricing. C) penetration pricing. D) predatory pricing. ANSWER C
Date: September 9th, 2020
A rival good A) is one that is used up as it is consumed. B) is one that rival firms are trying to obtain. C) is exclusive. D) cannot be shared. ANSWER A
Date: September 9th, 2020
Calculate t-statistics for each variable and explain what this tells you. What will be an ideal response? ANSWER Price: -10/2.29 = -4.37 Advertising: 5/1.36 = 3.86 Competitor’s price: 4/1.75 = 2.29 Income: 0.05/1.5 = 0.33 All variables are statistically significant with the exception of income. Thus we can conclude that the other variables do […]
Date: September 9th, 2020
The above figure shows the market for steel ingots. What is the change in consumer surplus if the market switches from competitive equilibrium to social optimum? A) $625 B) $1250 C) $1875 D) $2500 ANSWER C
Date: September 9th, 2020
When a firm prices its goods below the marginal cost to drive away competitors, it is referred as A) price skimming. B) limit pricing. C) penetration pricing. D) predatory pricing. ANSWER D
Date: September 9th, 2020
