With two-part pricing, a firm A) charges a lump-sum fee that gives the consumer the right to buy a good or service. B) must have market power. C) must be able to prevent resale. D) All of the above. ANSWER D
Date: September 9th, 2020
What does it mean to say that a perfectly competitive firm is a price taker? Can’t a firm set any price it chooses? What will be an ideal response? ANSWER A firm can set any price it chooses, but in a perfectly competitive industry, it will do no good to choose anything but the […]
Date: September 9th, 2020
Market failures ________ and generate ________. A) compel the government to act; regulations B) create monopolies or oligopolies; deadweight loss C) reduce economic efficiency; deadweight loss D) create deadweight loss; externalities ANSWER C
Date: September 9th, 2020
An advantage of a negative income tax is that there are no disincentives to earning additional income. a. True b. False ANSWER b
Date: September 9th, 2020
A consumer’s utility function is given by: U(x,y) = 10xy Currently, the prices of goods x and y are $3 and $5, respectively, and the consumer’s income is $150. a. Find the MRS for this consumer for any given bundle (x,y). b. Find the optimal consumption bundle for this consumer. c. Suppose the price of […]
Date: September 9th, 2020
Catherine is risk averse. When faced with a choice between a gamble and a certain level of wealth, she will A) always prefer the gamble. B) always prefer the certain level of wealth. C) prefer the gamble if the expected utility from it is higher than the utility from the certain level of wealth. D) […]
Date: September 9th, 2020
In the short run a firm should shut down if it cannot A) make normal profits. B) make economic profits. C) cover its variable costs. D) cover its fixed costs. ANSWER C
Date: September 9th, 2020
If the demand shifts, then for a profit maximizing monopolist, A) price will change while quantity will remain constant. B) price will change and quantity will change. C) Both A and B. D) Neither A nor B. ANSWER C
Date: September 9th, 2020
In two-part pricing A) consumers pay a lump-sum for all the goods purchased. B) the consumer must pay a lump sum if he buys more than a certain number of units of a good. C) a firm charges more for units purchased on the weekend than for those purchased during the week. D) the average […]
Date: September 9th, 2020
A main rationale for government intervention in markets ________ and ________. A) is to reduce producer surplus; redistribute wealth B) concerns the creation of public goods; reduces free-riding C) is to correct market failures; increase surplus D) There is never an economic rationale for government intervention. ANSWER C
Date: September 9th, 2020
