Which of the following is a way to deter entry? A) increase costs through legislation that affects only new entrants B) raise switching costs for customers that use your products C) obtain a patent so that others must license your invention D) All of the above. ANSWER D
Date: September 9th, 2020
Concerning an investment project, which of the following is TRUE? A) A risk-neutral individual is more likely to invest than a risk-averse individual. B) A risk-neutral individual is more likely to invest than a risk-loving individual. C) A risk-neutral individual is more less likely to invest than a risk-averse individual. D) Not enough information. […]
Date: September 9th, 2020
For the regression equation Q = 100 – 10X + 0.25X2, which of the following statements is true? A) X2 is the more important variable because it is positive. B) When X decreases by one unit, Q decreases by 10 units. C) When X increases by 10 units, Q decreases by 1 unit. D) The […]
Date: September 9th, 2020
A quota will reduce consumer welfare when A) the quota is less than the amount purchased without the quota. B) the quota is greater than the amount purchased without the quota. C) the quota is on a good with high income elasticity. D) Quotas always reduce consumer welfare. ANSWER A
Date: September 9th, 2020
Using the “rule of 2,” which of the following variables can be deemed statistically significant? A) PA B) PB C) I D) All of the above E) None of the above ANSWER A
Date: September 9th, 2020
Jeremy derives all of his utility from consuming milk shakes; he devotes his entire $20 allowance to milk shakes each week. Suppose the price of milk shakes rise from $2 to $4. Compute Jeremy’s Compensating Variation and Equivalent Variation. What will be an ideal response? ANSWER The CV is the amount of money needed […]
Date: September 9th, 2020
Resale price maintenance A) requires a retailer to sell a good no lower than the specified price. B) is illegal. C) is the price of a maintenance contract on a good, such as an extended service contract on a car. D) has a net negative impact on competition. ANSWER A
Date: September 9th, 2020
Vertical integration A) is always driven by profitability concerns. B) results in lower transaction costs. C) may be undertaken to avoid government regulations. D) hampers timely delivery of inputs into the production process. ANSWER C
Date: September 9th, 2020
Why might a concentration ratio be a poor measure of actual industry competition? What will be an ideal response? ANSWER Concentration ratios measure national competition within a line of products that are substitutes in production. Where there is much international competition, where competition is regional rather than national, where there is competition from products […]
Date: September 9th, 2020
Ian views playing Wartcraft and drinking soda as perfect complements (one soda with one hour of playing Wartcraft). Currently, sodas are $1 each and Wartcraft costs $1 per hour. Ian has $12 of income. a. Compute Ian’s Compensating Variation if the price of Wartcraft rises to $2. b. Compute Ian’s Equivalent Variation if the price […]
Date: September 9th, 2020
