A two-way network linking 15 users creates how many potential network connections?
A. 225
B. 100
C. 210
D. 300
Nonexclusionary, as it relates to public goods, means that:
A. no producer can be excluded from providing the good.
B. no one can be excluded from consuming the good, once it is provided.
C. the government can only exclude consumers from consuming the good.
D. producer-consumer rivalry exists.
If good A is an inferior good, an increase in income leads to:
A. a decrease in the demand for good B.
B. a decrease in the demand for good A.
C. an increase in the demand for good A.
D. no change in the quantity demanded of good A.
Refer to the figure below. During high-peak times, what price-quantity combination
should the firm charge to maximize profit?
A. P1 and Q3
B. P2 and Q3
C. P4 and Q3
D. P1 and Q2
The budget set defines the combinations of good X and Y that:
A. are desirable to the consumer.
B. are affordable to the consumer.
C. maximize the consumer’s utility.
D. maximize the supplier’s profit.
Suppose total benefits and total costs are given by B(Y) = 600Y – 12Y2 and C(Y) =
20Y2. What is the maximum level of total benefits?
A. 2,812.5
B. 7,500
C. 1,600
D. None of the statements associated with this question are correct.
Risk-averse persons sometimes prefer to play some gambles even if they know that
those gambles are not fair, i.e., on average people lose by playing them. One plausible
explanation for this seemingly paradoxical phenomenon is that:
A. The economic theory of uncertainty is not correct.
B. Gambling has entertaining effects which are not treated explicitly as part of the
payoffs.
C. People’s actions are not reasonable.
D. None of the statements is correct.
If you sell an inferior good, offering to sell gift certificates to those looking for a gift
may result in:
A. a greater quantity sold than before the customer is given a gift certificate.
B. a greater quantity sold than if the customer resorts to giving a cash gift.
C. a smaller quantity sold than before the customer is given a gift certificate.
D. a smaller quantity sold than if the customer resorts to giving a cash gift.
With linear demand and constant marginal cost, a Stackelberg leader’s profits are
___________ the follower.
A. less than
B. equal to
C. greater than
D. either less than or greater than
The presence of substantial specialized investment relative to contracting costs suggests
that the optimal input procurement method is:
A. spot exchange.
B. vertical integration.
C. contract.
D. vertical integration or contract.
The domestic demand and supply for sugar are Qd = 40,000 – 200P and QSD = 10,000 +
300P. The foreign supply is QSF = 20,000 + 100P. Suppose an import quota of 5,000 is
imposed in the domestic market. What will be the new market price of sugar?
A. 20
B. 30
C. 40
D. 50
Which of the following cost functions exhibits economies of scope over the specified
output range?
A. C(Q1, Q2) = 2 – 0.5Q1Q2 – (Q1)2 + (Q2)2, for all Q1 > 0 and Q2 > 0
B. C(Q1, Q2) = 2 – 3Q1Q2 – (Q1)2 + (Q2)2, for all Q1 > 0 and Q2 > 0
C. C(Q1, Q2) = 2 – 0.5Q1Q2 – (Q1)2 + (Q2)2, for all Q1 < 2 and Q2 < 2
D. C(Q1, Q2) = 2 – 3Q1Q2 – (Q1)2 + (Q2)2, for all Q1 > 4 and Q2 > 4
Using the following sequential-move production game, determine whether player B has
a first-mover advantage and identify the strategy that leads to that advantage:
A. Player B has a first-mover advantage. The equilibrium strategies leading to an
advantage are {(low output); (if low output, high output), (if high output, high output)}.
B. Player B has a first-mover advantage. The equilibrium strategies leading to an
advantage are {(low output); (if low output, high output), (if high output, low output)}.
C. Player B has a first-mover advantage. The equilibrium strategies leading to an
advantage are {(high output); (if low output, high output), (if high output, low output)}.
D. Player B does not have a first-mover advantage in the game.