If a production function is represented as q = Lα Kβ, the long-run average cost curve will be horizontal as long as A) α + β = 0. B) α + β = 1. C) q > 0. D) L = K. ANSWER B
Date: September 9th, 2020
As a result of the pay-as-you-go nature of Social Security financing, the continuation of benefit payments is dependent upon _____. a. new individuals entering the system b. the current tax level c. current economic growth rates d. the Baby Boomer’s decision on when to retire ANSWER a
Date: September 9th, 2020
In the U.S., charging monopoly-level prices A) is evidence of a conspiracy. B) is illegal. C) is not necessarily illegal. D) constitutes a per se violation. ANSWER C
Date: September 9th, 2020
Distinguish between risk that can be reduced through diversification and risk that cannot be reduced through diversification. What will be an ideal response? ANSWER Risk that cannot be diversified away affects all investments equally. Examples would include war and natural disasters. Risk that can be reduced through diversification includes changes to the value of […]
Date: September 9th, 2020
A firm’s horizontal dimension refers to A) its size in its primary market. B) its size in all markets in which is competes. C) the level of supply chain integration the firm undertakes. D) the number of stages in the production process that are upstream from the stages the firm undertakes. ANSWER A
Date: September 9th, 2020
If firms have different costs and market demand only supports the quantity the incumbent produces, then the incumbent’s threat to use limit pricing A) is credible. B) is not credible. C) would be illegal. D) is unable to be determined with the information given. ANSWER D
Date: September 9th, 2020
In the kinked demand curve model, the demand curve is ________ for price increases and ________ for price decreases. A) unit elastic; relatively elastic B) relatively inelastic; relatively elastic C) relatively elastic; relatively inelastic D) perfectly elastic; perfectly inelastic ANSWER C
Date: September 9th, 2020
In a Duopoly Nash-Cournot equilibrium, A) neither firm has an incentive to change its output level given the other firm’s output decision. B) firms will choose the pair of quantities above the intersection of the two best response functions. C) firms will choose the pair of quantities below the intersection of the two best response […]
Date: September 9th, 2020
According to the survivor principle A) firms will get taken over by their larger rivals over time. B) only firms that maximize profits survive in highly competitive markets. C) managers only work hard if they are threatened with their survival at the firm. D) eventually all firms merge to become one large monopoly. ANSWER […]
Date: September 9th, 2020
The above figure shows an individual’s demand curve for time per month spent telecommunicating while driving (talking on the car phone.) A car phone is useless except for talking with somebody who is not in the car. If calls are priced at ten cents per minute, what is the consumer surplus derived from talking? What […]
Date: September 9th, 2020
