By shutting down, a firm A) stops receiving revenue but continues to pay variable costs. B) stops receiving revenue and is stuck with its fixed costs. C) avoids its sunk costs as well as its variable costs. D) can avoid paying taxes on its previously earned profits. ANSWER B
Date: September 9th, 2020
The benefits from cartelizing are greater if A) the market demand elasticity is higher. B) the market demand elasticity is lower. C) the market price is higher. D) each firm cuts its output more. ANSWER B
Date: September 9th, 2020
In two-part pricing with identical consumers, a firm A) charges a lump-sum fee equal to the consumer surplus. B) sets unit price below marginal cost. C) should go with single-price monopoly pricing to maximize profits. D) Both A and B. ANSWER A
Date: September 9th, 2020
If a short-run fixed cost is sunk, then A) losses can be minimized by shutting down. B) the firm should keep producing to cover the sunk cost. C) the cost cannot be avoided by shutting down. D) Both B and C. ANSWER C
Date: September 9th, 2020
Other things remaining the same, an increase in the price of butter can be expected to A) increase margarine sales. B) decrease margarine sales. C) increase butter sales. D) None of the above ANSWER A
Date: September 9th, 2020
Suppose a monopolist faces the constant price elasticity demand curve: p = Qε where ε < 0. The monopolist has a constant marginal cost of c. a. If ε < -1, can you determine what price and quantity will the monopolist set? Explain. b. If 0 > ε > -1, what is the price and […]
Date: September 9th, 2020
If government imposes an excise tax on a good and the tax burden is borne equally by buyers and sellers, then A) price elasticity of demand is unitary. B) price elasticity of supply is unitary. C) the absolute values of price elasticities of demand and supply are equal. D) None of the above ANSWER […]
Date: September 9th, 2020
In a Stackelberg oligopoly A) the leader moves first, and the follower chooses its price in the second stage of the game. B) the leader moves first, and the follower chooses its output in the second stage of the game. C) both firms act simultaneously, but one chooses price and the other output level. D) […]
Date: September 9th, 2020
A recipient of a Section 8 rent subsidy can be used to rent any government approved housing project. a. True b. False ANSWER a
Date: September 9th, 2020
The Cournot and Stackelberg models are similar, EXCEPT Cournot ________ and Stackelberg ________. A) sets price; sets output B) sets output; sets price C) is dynamic; is static D) is static; is dynamic ANSWER D
Date: September 9th, 2020
