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
The above figure shows the market for steel ingots. At the social optimum, the private producer surplus is A) $1250. B) $1875. C) $2500. D) $3100. ANSWER D
Date: September 9th, 2020
Which of the following is a Leading Economic Indicator? A) commercial and industrial loans outstanding B) industrial production C) average weekly duration of unemployment D) None of the above ANSWER D
Date: September 9th, 2020
There are 10 identical internet service providers (ISPs) in a city serving a market demand with an elasticity of -1.5. The elasticity of supply for each firm is 3.0. The elasticity of demand faced by an individual ISP is A) -42. B) -15. C) -1.5. D) -27. ANSWER A
Date: September 9th, 2020
Assume that a multinational company produces components in country A and ships them to a subsidiary in country B. In order to increase its profits A) the company should charge a high transfer price for the components if income taxes in country B are higher than in country A. B) the company should charge a […]
Date: September 9th, 2020
The residual demand curve is A) the market demand minus the supply of other firms. B) the remaining demand after the market clears. C) the market demand minus the supply of one firm. D) the long-run demand for a market. ANSWER A
Date: September 9th, 2020
