The production function in the table below exhibits negative marginal returns to capital
over what output range?
A. Between 0 and 1,524
B. Between 0 and 2,991
C. Between 2,391 and 3,048
D. Between 3,016 and 2,945
Consider a monopoly where the inverse demand for its product is given by P = 80 – 2Q.
Total costs for this monopolist are estimated to be C(Q) = 100 + 20Q + Q2. At the
profit-maximizing combination of output and price, deadweight loss is:
A. $30.
B. $50.
C. $80.
D. Cannot be determined with the given information.
Beta Industries manufactures floppy disks that consumers perceive as identical to those
produced by numerous other manufacturers. Recently, Beta hired an econometrician to
estimate its cost function for producing boxes of one dozen floppy disks. The estimated
cost function is C = 20 + 2Q2.a. What are the firms fixed costs?b. What is the firms
marginal cost?Now suppose other firms in the market sell the product at a price of
$10.c. How much should this firm charge for the product?d. What is the optimal level
of output to maximize profits?e. How much profit will be earned?f. In the long run,
should this firm continue to operate or shut down? Why?
You are a hotel manager and you are considering four projects that yield different
payoffs, depending upon whether there is an economic boom or a recession. The
potential payoffs and corresponding payoffs are summarized in the following table.
A risk-neutral manager will prefer project:
A. A.
B. B.
C. C.
D. D.
A situation where a consumer says he does not know his preference ordering for
bundles X and Y would violate the property of:
A. more is better.
B. completeness.
C. substitutability.
D. complementarity.
The marginal product of an input is defined as the change in:
A. average output attributable to the last unit of an input.
B. total output attributable to the last unit of an input.
C. total input attributable to the last unit of an output.
D. average output attributable to the last unit of an output.
Differentiated goods are NOT a feature of a:
A. perfectly competitive market.
B. monopolistically competitive market.
C. monopolistic market.
D. perfectly competitive market and monopolistic market.
The value of the firm is the:
A. current value of profits.
B. present discounted value of all future profits.
C. average value of all future profits.
D. total value of all future profits.
Diminishing marginal rate of substitution implies that indifference curves are:
A. convex from the origin.
B. concave from the origin.
C. either convex or concave from the origin.
D. straight line.
The main purpose of antitrust policy is to:
A. reduce market power.
B. control negative externalities.
C. help make information easily obtainable for producers and consumers.
D. All of the statements associated with this question are correct.
What is the maximum amount of good Y that can be purchased if X and Y are the only
two goods available for purchase and Px = $10, Py = $20, X = 20, and M = 400?
A. 10
B. 20
C. 5
D. 0
An important condition for a contestable market is:
A. all producers have different technologies.
B. there are high transaction costs.
C. existing firms cannot respond quickly to entry by lowering their price.
D. there are sunk costs.