At the point at which P=MC, suppose that a perfectly competitive firm’s MC = $100, its AVC = $80 and its AC = $110. This firm should A) shut down immediately. B) continue operating in the short run. C) try to take advantage of economies of scale. D) try to increase its advertising and promotion. […]
Date: September 9th, 2020
In auctions, the winner always pays a price equal to the highest (his) bid. Indicate whether the statement is true or false ANSWER False. There are also second-price auctions in which the winner pays a price equal to the second highest bid.
Date: September 9th, 2020
The California cigarette market consists of the following supply and demand curves: QD = 150 – 20p QS = 40p where Q is the number of packs of cigarettes per year (in millions!), and p is the price per pack. a. Compute the market equilibrium price and quantity. b. Calculate the price elasticities of each […]
Date: September 9th, 2020
One drawback of deferred payments is that A) employees may shirk anyway. B) employers might fire high achievers to avoid paying higher wages or bonuses. C) it is difficult to determine who are the good and who are the bad workers. D) employees have to work for the firm for a long time. ANSWER […]
Date: September 9th, 2020
The marginal tax rate from the food stamp program is _____. a. zero b. 10 percent c. 20 percent d. 30 percent ANSWER d
Date: September 9th, 2020
Shin likes to spend a (relatively small) portion of his income on vacations to Cabo San Lucas (a popular resort area in Mexico). On these trips, he either stays at a four star resort with panoramic ocean views or a more modest, and slightly deteriorating hotel in the noisy part of town. Understandably, the four […]
Date: September 9th, 2020
The owner of a produce store found that when the price of a head of lettuce was raised from 50 cents to $1, the quantity sold per hour fell from 18 to 8. The arc elasticity of demand for lettuce is A) -0.56. B) -1.15. C) -0.8. D) -1.57. ANSWER B
Date: September 9th, 2020
Borem is a big fan of wine from Trader Moe’s. Moe’s sells a high-quality expensive wine and a cheap low-quality wine. Borem buys both types but tends to buy more bottles of the cheaper wine. Borem later moves to a new city where he must drive a long distance to get his wine at Trader […]
Date: September 9th, 2020
When a firm produces at the point where MR = MC, the profit that it is earning is considered to be A) maximum. B) normal. C) above normal. D) Not enough information is provided. ANSWER D
Date: September 9th, 2020
The benefit to employers of deferred payments is that A) adverse selection is eliminated. B) employers cannot engage in any opportunistic behavior. C) these payments raise the cost of being fired, so more monitoring is needed. D) these payments raise the cost of being fired, so less monitoring is needed. ANSWER D
Date: September 9th, 2020
