Given the cost function C(Y) = 6Y2, what is the marginal cost?
A. 6Y
B. Y2
C. 3Y
D. 12Y
Graphically, an increase in the number of vegetarians will cause the demand curve for
Tofu (a meat substitute) to
A. shift rightward.
B. shift leftward.
C. become flatter.
D. become steeper.
Suppose a manager is interested in implementing third-degree price discrimination. The
manager knows that the price elasticity of demand for Group 1 is -2 and the price
elasticity of demand for Group 2 is -1.2. Based on this information alone we can
conclude that the price charged to Group 2 will be:
A. the same as the price charged to Group 1
B. lower than the price charged to Group 1
C. higher than the price charged to Group 1
D. There is insufficient information to determine whether Group 2 will have a higher,
lower, or the same price as Group 1
Which of the following statements is NOT a condition for a Stackelberg oligopoly?
A. The market is contestable.
B. Barriers to entry exist.
C. A single firm (the leader) selects an output before all other firms choose their
outputs.
D. The firms produce either differentiated or homogeneous products.
In a perfectly competitive market that is operating at maximum efficiency, the
Dansby-Willig index would be:
A. zero
B. 0.25
C. 0.50
D. 1.00
What is the value marginal product of labor if: P = $10, MPL = $25, and APL = 40?
A. $10,000
B. $1,000
C. $400
D. $250
Suppose that there are two types of cars, good and bad. The qualities of cars are not
observable but are known to the sellers. Risk-neutral buyers and sellers have their own
valuation of these two types of cars as follows:
Suppose that both buyers and sellers observe the quality. What happens?
A. Both good and bad cars are traded.
B. Only good cars are traded.
C. Only bad cars are traded.
D. Neither good nor bad cars are traded.
Which of the following are characteristics of public goods?
A. Nonrivalry
B. Nonchivalrous
C. Nonexclusionary
D. Nonrivalry and nonexclusionary
Which of the following is NOT a source of rivalry in economic transactions?
A. Consumer-producer rivalry
B. Producer-producer rivalry
C. Government-producer rivalry
D. All of the statements associated with this question are correct.
Suppose that you are a manager. You are considering whether or not to monitor
employees with the payoffs in the normal-form game shown below.
Management and a labor union are bargaining over how much of a $50 surplus to give
to the union. The $50 is divisible up to one cent. The players have one shot to reach an
agreement. Management has the ability to announce what it wants first, and then the
labor union can accept or reject the offer. Both players get zero if the total amounts
asked for exceed $50. Which of the following is NOT a Nash equilibrium?
A. Management requests $50 and the labor union accepts $0.
B. Management requests $30 and the labor union accepts $10.
C. Management requests $25 and the labor union accepts $25.
D. Neither management requesting $50 and the labor union accepting $0 nor
management requesting $30 and the labor union accepting $10 are Nash equilibria.
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.
The expected value of project C is:
A. $5.
B. $10.
C. $20.
D. None of the answers are correct.
General Motors purchased Fischer Auto Body to produce bodies to place on a chassis.
This transaction is best described as:
A. spot exchange.
B. vertical integration.
C. contract.
D. contract or vertical integration.
According to the table below, what is the marginal cost of producing 90 units of output?
A. 5.32
B. 8.75
C. 11.67
D. 21.00
A monopoly produces widgets at a marginal cost of $8 per unit and zero fixed costs. It
faces an inverse demand function given by P = 38 – Q. What are the profits of the
monopoly in equilibrium?
A. $225
B. $120
C. $345
D. None of the statements is correct.
The following depicts a normal-form game of price competition.
What is the maximum interest rate that can sustain collusion?
A. 66.7 percent
B. 33 percent
C. 25 percent
D. 15 percent
If A and B are complements, an increase in the price of good A would:
A. have no effect on the quantity demanded of B.
B. lead to an increase in demand for B.
C. lead to a decrease in demand for B.
D. none of the statements associated with this question are correct.
Normally, owners of firms should try to induce their managers to care:
A. solely about output.
B. about profits and output.
C. solely about profits.
D. None of the statements associated with this question is correct.
Suppose total benefits and total costs are given by B(Y) = 100Y – 8Y2 and C(Y) =
10Y2. What is the maximum level of net benefits (rounded to the nearest whole
number)?
A. 92
B. 139
C. 78
D. None of the statements associated with this question are correct.
Good X is an inferior good if a decrease in income leads to
A. an increase in the supply of good X.
B. a decrease in the supply of good X.
C. an increase in the demand for good X.
D. a decrease in the demand for good X.