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
Consider a general Cobb-Douglas production function q = ALaKb where A, a and b are positive constants. Using this production function, derive the short-run cost function for a fixed capital stock, K0, wage rate w, and capital rental rate r. ANSWER The production function is q = ALaKb Rearrange to get La = (q/AKb) […]
Date: September 9th, 2020
Market price is $50. The firm’s marginal cost curve is given by MC = 10 + 2Q. a. Find the profit-maximizing output for the firm. b. At this output, is the firm making a profit? Explain your answer. ANSWER a. 50 = 10 + 2Q Q* = 20 b. It is impossible to say […]
Date: September 9th, 2020
Assuming mustard and burgers are complements, a decline in the price of burgers will A) decrease the demand for burgers. B) decrease in the quantity demanded of burgers. C) increase the demand for mustard. D) decrease the demand for mustard. ANSWER C
Date: September 9th, 2020
A tax that is imposed as a specific amount per unit of a good is a(n) A) excise or specific tax. B) sales or ad valorem tax. C) compound duty. D) income tax. ANSWER A
Date: September 9th, 2020
A monopolist faces a demand curve Q = 120 – 2p and has costs given by C(Q) = 20Q + 100. a. Write the monopolist’s profits in terms of the price it charges. b. Use the derivative (w.r.t. price) to determine the monopolist’s profit-maximizing price. c. Now, derive the monopolist’s inverse demand based on the […]
Date: September 9th, 2020
Consider a monopolist facing a linear (inverse) demand curve given by: p = a – bQ Show with calculus that the marginal revenue in fact has the same price-axis intercept but twice the slope as the inverse demand curve above. ANSWER Total Revenue = (a – bQ)Q. MR = dTR/dQ = a – 2bQ. […]
Date: September 9th, 2020
If a policy helps some but harms others A) the result is a Pareto improvement for the people who are helped. B) then the cost-benefit analysis will show a net increase in surplus and is therefore desirable. C) we cannot use the Pareto principle to evaluate whether or not the policy is desirable. D) it […]
Date: September 9th, 2020
