The below figure shows the cost curves for a typical firm in a market and three possible
market supply curves. If there are 100 identical firms, the market supply curve is best
represented by
curve A.
curve B.
curve C.
either curve A or B, but definitely not C.
A monopoly incurs a marginal cost of $l for each unit produced. If the price elasticity of
demand equals -2.0, the monopoly maximizes profit by charging a price of
$l
$l.50
$3
$2
If the price of one good increases while the price of the other good and the consumer’s
income remain unchanged, what will happen to the budget line?
The budget line rotates outward from the intercept on the axis of the good that did
not change in price.
The budget line rotates inward form the intercept on the axis of the good that did
not change in price.
The budget line shifts inward without a change in slope.
The budget line shifts outward without a change in slope.
The Compensating Variation for an increase in the price of a good is
the minimum amount of money a consumer would accept to voluntarily accept the
price increase
the maximum amount of money a consumer would pay to avoid the price increase
the change in consumer surplus resulting from a price increase
the change in utility resulting from the increase in price
At an output level of 100 a monopolist faces MC=15 and MR=17. At output level
q=101 the monopolists MC=16 and MR=15. To maximize profits the firm
should produce 100 units.
should produce 101 units.
cannot maximize profits.
is not a monopoly
A perfect price discriminating equilibrium maximizes
consumer surplus.
the associated deadweight loss.
the market inefficiency.
total welfare.
If the inverse demand curve a monopoly faces is p=100 −2Q, and MC is constant at 16,
then the deadweight loss from monopoly equals
$21
$441
$882
$1,764
If consumers are identical, then
price discrimination is impossible.
price discrimination can occur if consumer has a downward-sloping demand curve
for the product.
perfect price discrimination is the only form of price discrimination that can
increase a monopoly’s profit.
tie-in sales cannot increase a monopoly’s profit.
Perfect competition and monopolistic competition are similar in that firms in both types
of market structure will
act as price takers.
produce a level of output where price equals marginal cost.
earn zero profit in the long run
act as price setters.
The concept of Nash equilibrium for firms’ competition states that
no firm can improve their outcome holding the other firm’s actions constant
all firms are earning the highest possible profit
firms make alternating output decisions
none of the above
In the short urn, a competitive firm has a marginal product of labor, MPL= 5L−0.5 ⋅ The
output price is $10 per unit and the wage is $7 per hour. The short-run labor demand
curve for the firm is
5L−0.5
5L0.5
50L−0.5
35L−0.5
Quantity discrimination makes sense if
buyers of smaller quantities are more price sensitive than buyers of larger quantities.
demand for the good is perfectly elastic.
buyers of smaller quantities are less price sensitive than buyers of larger quantities.
the lower price for larger quantities encourages all consumers to purchase the larger
quantity.
The below figure shows the marginal benefit from pollution for two firms. If each firm
receives a marketable permit to produce 25 units of pollution, which one of the
following is most likely to happen?
Firm A will produce all 50 units of pollution.
Firm A will sell some pollution rights to firm B.
Firm B will sell some pollution rights to firm A .
Both firms will produce 25 units of pollution.
Which of the following people is NOT considered unemployed in the Current
Population Survey?
The person has just finished school and has entered the labor force to look for work.
The person has been laid off and is looking for a new job.
The person is looking for work after not doing so for a time.
The person is discouraged about finding a job and so does not search for work.
Which of the following is a stock variable?
Income
Depreciation
Investment
Capital
If national saving (S) is $100,000, net taxes (T) equal $100,000 and government
purchases of goods and services (G) are $25,000, how much are households and
businesses saving?
$25,000
$225,000
−$25,000
None of the above.
Read the two statements below and indicate if they are true or false.
I. Autonomous expenditures change when GDP changes,
II. Aggregate planned expenditure is the sum of planned consumption expenditure,
investment, government purchases, and net exports.
I and II are both true.
I and II are both false.
I is true and II is false.
I is false and II is true.
Which of the following does NOT shift the aggregate demand curve?
An increase in the price level.
An increase in investment.
A decrease in the money supply.
A decrease in taxes.
There is a permanent decrease in aggregate demand, A monetarist would
increase the quantity of money in order to decrease the interest rate and offset the
decrease in aggregate demand.
maintain constant growth of the quantity of money and wait for the money wage
rate to fall, and the short-run aggregate supply curve to shift rightward.
maintain constant growth of the quantity of money but at a higher level than
previously in order to offset the decrease in aggregate demand.
maintain constant growth of the quantity of money and call on Congress to cut the
tax rate and increase government spending on goods and services.
Which of the following most likely would decrease frictional unemployment?
An increase in the number of high school and college graduates.
Effective Internet-based employment services and job registries.
An expansion of unemployment compensation benefits.
All of the above would decrease frictional unemployment.
The below table shows answers given by people interviewed in a government survey of
households. Which individuals are considered to be a part of the labor force?
3 and 4
2, 3, and 4
1, 3, and 4
1, 2, and 3
Which of the following changes would reduce the value of the deposit multiplier?
The public decides to hold less currency and more deposits.
Banks decide to hold lower excess reserves.
The public decides to hold more currency and fewer deposits.
The required reserve ratio falls.
All of the following contribute to raising real wages over time EXCEPT
technological progress.
rising labor force participation.
physical capital accumulation.
human capital accumulation.
All of the following are included in gross private domestic investment expenditure
EXCEPT a
business's purchase of a fleet of cars.
business's purchase of another company’s stock.
household's purchase of a new house.
a retail store's purchase of shoes to add to its inventory.
Suppose the money market has an equilibrium interest rate of 10 percent. If the actual
interest were 8 percent, the quantity of money demanded would be greater than the
quantity of money supplied. Which of the following would bring the money market
back to equilibrium?
People buy bonds, the price of bonds rises and the interest rate rises.
People sell bonds, the price of bonds falls and the interest rate rises.
People sell bonds, the price of bonds rises and the interest rate rises.
People buy bonds, the price of bonds falls and the interest rate rises.
A lemon-growing cartel consists of 4 orchards. Their total cost functions are
TC1 = 20 + 5Q12
TC2 = 25+3Q22
TC3 =15+ 4Q32
TC4 = 20+ 6Q42
TC is in hundreds of dollars, and Q is in cartons per month picked and shipped.
(1) If the cartel decided to ship 10 cartons per month and set a price of $25 per carton,
how should output be allocated among the firms?
(2) At this shipping level, which firm has the most incentive to cheat? Why?
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