Why would a firm choose to remain in an industry in which it makes an economic profit of zero? What will be an ideal response? ANSWER Making an economic profit of zero does not mean that the firm is not making any money. It means that it is covering all its costs, including opportunity […]
Date: September 9th, 2020
As long as the amount of food stamps an individual receives is less than they would have spent on food without the food stamps, the food stamps act like a straight income transfer. a. True b. False ANSWER a
Date: September 9th, 2020
The minimum wage is an example of a government imposed A) price control. B) price ceiling. C) price floor. D) Both A and B E) Both A and C ANSWER E
Date: September 9th, 2020
Which of the following examples best illustrates the concept of derived demand? A) An increase in the price of beef results in an increase in the demand for fish. B) The higher the demand for automobiles, the greater the demand for steel. C) The demand for Pepsi varies directly with the price of Coke. D) […]
Date: September 9th, 2020
A Californian student consumes Internet services (I) and books (B). Her preferences are represented by a Cobb-Douglas utility function: U(I,B) = I1/4B1/4 The prices of each good is $2 and the student has an income of $200. Over the course of the past year, the price of internet services has risen to $4, but the […]
Date: September 9th, 2020
In a finitely repeated prisoners’ dilemma game A) firms will only cooperate if they each adopt a tit-for-tat strategy. B) firms cooperate and achieve the collusive Nash equilibrium for all rounds. C) firms cooperate for most of the rounds, but switch to the non-cooperative outcome in the final couple of rounds. D) firms do not […]
Date: September 9th, 2020
If a government policy increases benefits to the unemployed without having a detrimental effect on any other constituent, the policy is A) a Pareto improvement. B) redistributive. C) regressive. D) a positive externality effect. ANSWER A
Date: September 9th, 2020
The derived demand curve for a good component will be more inelastic A) the larger is the fraction of total cost going to this component. B) the more inelastic is the demand curve for the final good. C) the more elastic are the supply curves of cooperating factors. D) the less essential is the component […]
Date: September 9th, 2020
A problem with the TANF program’s predecessor AFDC was that it was strictly means-tested. a. True b. False ANSWER a
Date: September 9th, 2020
The Arrow-Pratt measure of risk aversion is A) negative if a person is risk averse. B) greater than one if a person is risk averse. C) negative if a person is risk loving. D) None of the above. ANSWER C
Date: September 9th, 2020
