If the marginal product per dollar spent on capital is less than the marginal product per
dollar spent on labor, then in order to minimize costs the firm should use:
A. less capital and more labor.
B. less labor and more capital.
C. less labor and less capital.
D. more labor and more capital.
Explain why people in the following occupations are compensated as they are.
a. Insurance agents
b. Football players
c. Authors
d. CEOs of major corporationse. Food servers
Which of the following is true about a Sweezy oligopoly?
A. The marginal cost function has a downward “jump” or “discontinuity.”
B. The marginal revenue function has a downward “jump” or “discontinuity.”
C. The marginal cost function has an upward “jump” or “discontinuity.”
D. The marginal revenue function has an upward “jump” or “discontinuity.”
If the interest rate is 5 percent, the present value of $200 received at the end of five
years is:
A. $121.34.
B. $156.71.
C. $176.41.
D. $132.62.
Firms 1 and 2 compete in a Cournot duopoly. If firm 2 adopts a strategy that raises firm
1s marginal cost:
A. firm 1s reaction function will shift up.
B. firm 2s reaction function will shift up.
C. firm 2s reaction function will shift down.
D. firm 1s reaction function will shift down.
Suppose you compete in a Cournot oligopoly market consisting of four firms. The
equilibrium market price and quantity are $8 and 20 units, respectively. The marginal
cost for each firm is $4. Based on this information, we know the price elasticity of the
market demand is:
A. -0.5.
B. 0.5.
C. -.25.
D. There is insufficient information to answer this question.
Economies of scale exist whenever long-run average costs:
A. increase as output is increased.
B. decrease as output is increased.
C. remain constant as output is increased.
D. None of the statements is correct.
According to the table below, what is the average total cost of producing 160 units of
output?
A. 12.98
B. 16.31
C. 22.04
D. 19.38
Which of the following explains why big business typically spends more on
rent-seeking activities than consumers?
A. Lobbying is a public good to consumers.
B. Lobbying is a public good to businesses.
C. Labor unions in the involved firms.
D. Lobbying is a public good to businesses and labor unions in the involved firms.
Suppose that production for good X is characterized by the following production
function, Q = K0.5L0.5, where K is the fixed input in the short run. If the per-unit rental
rate of capital, r, is $25 and the per-unit wage, w, is $15, then the fixed cost of using 81
units of capital and 9 units of labor is:
A. $2,160
B. $2,025
C. $135
D. There is insufficient information to determine the fixed costs.
Refer to the following payoff matrix:
Suppose the simultaneous-move game depicted in this payoff matrix could be turned
into a sequential-move game with player 1 moving first. In this case, the equilibrium
payoffs will be:
A. ($20, $1).
B. ($50, $5).
C. ($40, $2).
D. ($25, $30).
A coordination problem arises whenever there:
A. is no Nash equilibrium in a game.
B. is a unique Nash equilibrium but it is not very desirable.
C. are multiple Nash equilibria.
D. are no dominant strategies for both players.