Which of the following is a property of an S-shaped curve that corresponds to the prospect theory value function? A) The curve passes through the reference point at the origin. B) Both sections of the curve are convex to the horizontal, outcome axis. C) The curve is symmetric with respect to gains and losses. D) […]
Date: September 9th, 2020
Suppose that all firms in a constant-cost industry have the following long-run cost curve: c(q) = 4q2 + 100q + 100 The demand in this market is given by QD = 1280 – 2p. Suppose the number of firms in the market is restricted to 80 a. Derive the supply curve with this restriction. Find […]
Date: September 9th, 2020
As the manager of good A, which of the following would be of greatest concern (based on the regression results above)? A) None of the factors below would be of concern. B) an impending recession C) pressure on you by your salespersons to lower the price so that they can boost their sales D) a […]
Date: September 9th, 2020
Suppose an individual has $100 to invest. Two assets are available. One asset will yield a return of 10%, while the other risky asset will yield 0% with probability .5 and 21% with probability .5. Suppose the investor’s utility function is given by U(x) = ln(x) where x is the wealth after investing (assume she […]
Date: September 9th, 2020
A disadvantage of moving too quickly is that A) costs of entry are higher. B) the likelihood of misunderstanding the demand is greater. C) followers gain an advantage by learning from the first-mover. D) All of the above. ANSWER D
Date: September 9th, 2020
Students who talk loudly with each other in class A) create an externality because other students cannot follow the lecture as well. B) disturb nobody. C) benefit the other students in class because they engage in conversation. D) only create an externality if they talk about something unrelated to class. ANSWER A
Date: September 9th, 2020
What is the last dollar rule for cost-minimization? Provide a brief explanation (in words) as well as the corresponding mathematical equality. If the firm is producing at a point where the isocost line is steeper than the isoquant, what does the last dollar rule imply (i.e., where is the last dollar most productive, L or […]
Date: September 9th, 2020
Which of the following cannot be determined on the basis of the above regression results? A) the degree of price elasticity of good B B) whether or not good A is “normal” C) the degree of competition between A and B D) All of the above can be determined. ANSWER A
Date: September 9th, 2020
Prices under an ideal cartel situation will be equal to A) monopoly prices. B) competitive prices. C) prices under monopolistic competition. D) marginal cost. ANSWER A
Date: September 9th, 2020
By vertically integrating, two firms can A) increase market share. B) avoid holdup problems. C) limit the problems inherent in moving too quickly. D) avoid antitrust issues. ANSWER B
Date: September 9th, 2020
