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
The Medicare tax is applied only to the first $87,000 of income. a. True b. False ANSWER b
Date: September 9th, 2020
All of the following are conditions which are favorable to the formation of cartels except A) the existence of a small number of firms. B) geographic proximity of firms. C) homogeneity of the product. D) easy entry into the industry. ANSWER D
Date: September 9th, 2020
Joey notices that by employing an additional hairdresser, he will be able to increase the number of haircuts in his salon by 15 haircuts per day. The daily salary he will need to pay the hairdresser is $200. How much is the cost for an additional haircut? Describe the general relationship between the marginal product […]
Date: September 9th, 2020
According to economists, competitive firms A) compete for the same customers. B) are price takers. C) differentiate their products. D) are able to change output and affect the market price. ANSWER B
Date: September 9th, 2020
Job is a smoker. He has a utility function for cigarettes smoked in bars (q1 ) and a composite good (q2 ) given by U(q1,q2 ) = 10q1.5 + q2 Job’s income is $100 and faces prices p1 = 5 and p2 = 1. The government is planning to ban smoking in bars. Compute the […]
Date: September 9th, 2020
