If a firm manager has a base salary of $100,000 and also receives 5 percent of all
profits, what percentage of his/her final income will be from a profit-sharing plan when
profit equals $1,500,000?
A. 51 percent
B. 27 percent
C. 43 percent
D. 48 percent
A cash gift causes the budget line to:
A. shift to the right in a parallel fashion.
B. shift to the left in a parallel fashion.
C. rotate clockwise.
D. None of the statements is correct.
Good Y is a complement to good X if an increase in the price of good Y leads to
A. an increase in the demand for good X.
B. an increase in the supply for good X.
C. a decrease in the demand for good X.
D. a decrease in the supply for good X.
Suppose a consumer has determined that her reservation price, R, is $75. The expected
benefit of an additional search at this reservation price is $25. Based on this information
we can conclude that:
A. search costs are $25 per search.
B. this consumer will reject any price above $25.
C. this consumer will accept any price below $75.
D. search costs are $25 per search, and this consumer will accept any price below $75.
The external marginal cost of producing coal is MCexternal = 6Q while the internal
marginal cost is MCinternal = 4Q. The inverse demand for coal is given by P = 120 – 2Q.
How much output would a monopoly produce?
A. 10
B. 20
C. 15
D. It cannot be determined because of incomplete information.
Isoquants are normally drawn with a convex shape because:
A. inputs are perfectly substitutable.
B. inputs are perfectly complementary.
C. inputs are not perfectly substitutable.
D. inputs are not perfectly complementary.
In a Cournot oligopoly with N firms and identical marginal costs, the relationship
between the price elasticity of market demand and that of the firm is:
A. EM = EF.
B. EM = NEF.
C. EM = EF/N.
D. No deterministic relationship.
What contributes to the existence of multiproduct firms?
A. Economies of scale
B. Economies of scope
C. Cost complementarity
D. Economies of scope and cost complementarity
Consider the monopoly in the figure below with price regulated at $20 per unit.
Consumer surplus at the regulated price is:
A. $500.
B. $3,920.
C. $2,300.
D. There is insufficient information to determine consumer surplus.
Suppose supply decreases and demand increases. What effect will this have on the
quantity?
A. It will fall.
B. It will rise.
C. It may rise or fall.
D. It will remain the same.