If two firms behave as Cournot duopolists, the level of social welfare is lower than if the same firms act as a cartel. Indicate whether the statement is true or false ANSWER False. The Cournot duopolists produce more at a lower price than a cartel. Thus, social welfare is lower with a cartel.
Date: September 9th, 2020
Under conditions of first-degree price discrimination A) production will equal that which would exist under perfect competition. B) production will exceed that which would prevail under perfect competition. C) prices will be lower than under perfect competition. D) production will always be lower than under perfect competition. ANSWER A
Date: September 9th, 2020
The forecasting technique which involves the use of the least squares statistical method to examine trends, and takes into account seasonal and cyclical fluctuations, is known as A) compound growth rate projection. B) the Delphi method. C) time series projection. D) exponential smoothing projection. ANSWER C
Date: September 9th, 2020
The above figure shows the market for steel ingots. An externality can be seen because A) the social marginal cost exceeds the private marginal cost. B) the private marginal cost exceeds the social marginal cost. C) the optimal quantity of steel is zero. D) not enough steel gets produced by the competitive market. ANSWER […]
Date: September 9th, 2020
When state universities charge higher tuition fees to out-of-state students than to local students, the universities are practicing A) first-degree discrimination. B) second-degree discrimination. C) third-degree discrimination. D) fourth-degree discrimination. ANSWER C
Date: September 9th, 2020
Empirical evidence from electric-power-producing firms suggests that A) all electric-power-producing firms are natural monopolies. B) no electric-power-producing firms are natural monopolies. C) the largest electric-power-producing firms are natural monopolies. D) the smallest electric-power-producing firms are natural monopolies. ANSWER D
Date: September 9th, 2020
Explain the main difference between the pay-as-you-go system employed by Social Security and a private pension plan. What will be an ideal response? ANSWER Superficially, the two systems look the same. Individuals pay money now in order to receive benefits in the future. The pay-as-you-go system, however, merely takes the contributions from current contributors […]
Date: September 9th, 2020
The following are possible examples of price discrimination except A) prices in export markets are lower than for identical products in the domestic market. B) senior citizens pay lower fares on public transportation than younger people at the same time. C) a product sells at a higher price at location A than at location B, […]
Date: September 9th, 2020
The result for the seller of being able to practice price discrimination will be A) higher profits. B) lower demand elasticity. C) lower quantity sold. D) cost minimization. ANSWER A
Date: September 9th, 2020
Half of Social Security taxes are paid by the employer and half are paid by the employee. What would happen if the employer was made to pay the entire amount? Explain your reasoning. What will be an ideal response? ANSWER While the statutory requirement would change, nothing of economic importance would change. Since employers […]
Date: September 9th, 2020
