The above figure shows the market for steel ingots. The socially optimal quantity of steel is A) 0 units. B) 50 units. C) 100 units. D) produced if the market were competitive. ANSWER B
Date: September 9th, 2020
What happens in a duopoly if both firms try to act as the Stackelberg leader? What will be an ideal response? ANSWER If both firms think they are the leader, they will maximize profits subject to the other firm’s response function. Each firm will produce twice what the other firm thinks it is producing. […]
Date: September 9th, 2020
In the presence of no externalities, A) social marginal cost exceeds private marginal cost. B) social marginal cost is less than private marginal cost. C) social marginal cost equals private marginal cost. D) social marginal cost and private marginal cost cannot be compared. ANSWER C
Date: September 9th, 2020
Charting observations on a semi-logarithmic graph will help the analyst to ascertain whether A) absolute changes from period to period are constant. B) whether percentage changes from period to period are constant. C) whether percentage changes from period to period are declining. D) Both B and C ANSWER D
Date: September 9th, 2020
By far, the most frequently encountered price discrimination is the A) first-degree price discrimination. B) second-degree price discrimination. C) third-degree price discrimination. D) fourth-degree price discrimination. ANSWER C
Date: September 9th, 2020
If a product which costs $8 is sold at $10, the profit margin is A) $2. B) 25%. C) 20%. D) None of the above ANSWER C
Date: September 9th, 2020
Why do patents stimulate research? A) Patents give firms time to do research. B) Patents give firms the opportunity to recover research costs and thus a profit motive. C) Firms would research as much even without patents. D) Patents don’t stimulate research. ANSWER B
Date: September 9th, 2020
A major problem in projecting with a trend line is that A) only straight-line projections can be accommodated. B) it is valid only if the trend is upward. C) it will not forecast turning points in activity. D) it is a very complex method of forecasting. ANSWER C
Date: September 9th, 2020
If a product which costs $8 is sold at $10, the mark-up is A) $2. B) 25%. C) 20%. D) None of the above ANSWER B
Date: September 9th, 2020
Consider a consumer with preferences for consumption of a composite good (C) and leisure (L) given by the following utility function: U(C,L) = 2C1/2 + L Denote the consumer’s wage rate by w and total time available for labor and leisure is normalized to one. The price of consumption is one. Denote the amount of […]
Date: September 9th, 2020
