The Leontief production function:
A. implies inputs are used in variable proportions.
B. implies inputs are used in fixed proportions.
C. is Q = max{bK, cL}.
D. is Q = aK + bL.
Suppose two types of consumers buy suits. Consumers of type A will pay $100 for a
coat and $50 for pants. Consumers of type B will pay $75 for a coat and $75 for pants.
The firm selling suits faces no competition and has a marginal cost of zero. The optimal
commodity bundling strategy is:
A. Charge $150 for a suit.
B. Charge $75 for a suit.
C. Charge $100 for a suit.
D. Charge $125 for a suit.
Firm A has a strictly higher marginal cost than firm B. They compete in a homogeneous
product Bertrand duopoly. Which of the following results will NOT occur?
A. QA < QB
B. ProfitA = 0 < ProfitB
C. Revenue of firm A < Revenue of firm B
D. PriceA < PriceB
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.
What should the manager do to solve the shirking problem?
A. Always monitor.
B. Never monitor.
C. Sincerely tell workers not to shirk.
D. Engage in “random” spot checks of the workplace.
Refer to the normal-form game of advertising shown below.
Suppose there is a 50 percent chance that the advertising game depicted in Figure 10-17
will end next period. The collusive agreement {(not advertise, not advertise)} is:
A. sustainable since $175 < $250.
B. unsustainable since $175 < $25.
C. sustainable since $20 > $50.
D. unsustainable since $350 > $50.
If the price of an input rises, producers are willing to produce
A. more output at each given price.
B. less output at each given price.
C. the same output at each given price.
D. none of the statements associated with this question are correct.
If the production function is Q = KL and capital is fixed at 1 unit, then the marginal
product of labor when L = 25 is:
A.
B. 1/10
C. 15
D. None of the answers are correct.
A firm that engages in predatory pricing benefits from:
A. building a reputation of accommodating future entrants.
B. building a reputation for taking tough actions to drive a competitor out of the market.
C. having its prey stockpile its product.
D. full protection from the courts.
Two firms producing identical products may merge due to the existence of:
A. economies of scope.
B. economies of scale.
C. cost complementarities.
D. All of the statements are correct.
If the slope of the indifference curve is steeper than the slope of the budget line, and X
is on the horizontal axis:
A. the consumer is willing to give up more of good Y to get an additional unit of good
X than is necessary under the current market prices.
B. MRS < PX/PY.
C. MRS < -PX/PY.
D. the consumer is willing to give up more of good X to get an additional unit of good
Y than is necessary under the current market prices.