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
In a tit-for-tat strategy, a player A) randomly punishes its rival. B) ensures that the joint profit is maximized in each round. C) copies the action of its rival’s prior move in the subsequent rounds. D) maximizes the joint profit in the game. ANSWER C
Date: September 9th, 2020
The Earned Income Tax Credit replaced many government transfer programs. a. True b. False ANSWER b
Date: September 9th, 2020
In response to a negative income tax, the substitution of leisure for income could be great enough to reduce total income. a. True b. False ANSWER a
Date: September 9th, 2020
A firm that generates zero economic profit usually faces A) negative business profit. B) zero business profit. C) positive business profit. D) business profit equal to half the total revenue. ANSWER C
Date: September 9th, 2020
If the price of a good is increased and total revenue received from the sale of this good increases, then the price elasticity of demand for the good is A) elastic. B) inelastic. C) unitary. D) None of the above ANSWER B
Date: September 9th, 2020
