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Question;37.The local pizza;restaurant makes such great bread sticks that consumers do not respond much to;a change in the price. If the owner is only interested in increasing revenue;he would;a.lower the;price of the bread sticks.;b.leave the;price of the bread sticks alone.;c.raise the;price of the bread sticks;d.none of the;above are correct.;38.Which of;the following statements is false?;a.When the;marginal product of labor is upward?sloping, the marginal cost curve is;upward?sloping.;b.The average;fixed cost curve is downward?sloping and approaches the horizontal;axis.;c.The;marginal cost curve intersects the average variable cost curve at the;minimum of average variable cost.;d.When the;marginal cost curve is above the average cost curve, the average cost;curve is upward?sloping.;39.Suppose;that Carolyn receives a pay increase. We would expect;a.Carolyn?s?demand for normal goods to remain unchanged.;b.Carolyn?s?demand for inferior goods to decrease.;c.Carolyn?s?demand for luxury goods to decrease.;d.Carolyn?s?demand for normal goods to decrease.;40.Scenario;1.Imagine that two;oil companies, Lexxon and PB, own adjacent oil fields. Under the fields is a;common pool of oil worth $48 million. Drilling a well to recover oil costs $4;million per well. If each company drills one well, each will get half of the;oil and earn a $20 million profit ($24 million in revenue? $4 million in;costs). Assume that each firm can drill either one or two wells and having X;percent of the total wells means that a company will collect X percent of the total;revenue.;Refer to Scenario 1. PB would adopt what sort of well?drilling strategy in a Nash;equilibrium?;a.PB will;never drill a second well.;b.PB will;always drill a second well.;c.PB will;drill a second well only if Lexxon drills a well.;d.PB will;drill a second well only if Lexxon does not drill a well.;41.Suppose a;monopolist faces the following conditions. The firm is currently producing;20,000 units and generating $40,000 revenues. At the current level of;production, the firm has the minimum average total cost that is equal to $2. In;addition, at this level of production, the firm?s average variable cost is $1. What should the monopolist firm do to;maximize its profit in the short run?;a.Increase;output level and decrease price;b.Decrease;output level and increase price;c.Do nothing;d.Shut down;immediately;42.The textile;industry is composed of a large number of small firms. In recent years, these;firms have suffered economic losses and many sellers have left the industry.;Economic theory suggests that these conditions willa.shift the demand curve outward so that price will rise to the level of;production cost.;b.cause the;remaining firms to collude so that they can produce more efficiently.;c.cause the;market supply to decline and the price of textiles to rise.;d.cause firms;in the textile industry to suffer long?run economic losses.;43.Which of the following would not shift;the demand curve for a good or service?;a.a change in;income.;b.a change in;the price of the good or service;c.a change in;expectations about the price of the good or service.;d.a change in;the price of a related good.;44.For the same amount of pollution emitted;an emissions tax is said to be more efficient than an environmental standard;because all polluters;a.emit;pollution up to the point at which the marginal benefit of polluting is equal;to the emissions tax.;b.emit the;same amount of pollution, regardless of the marginal benefit of;polluting.; the;same total tax bill for their pollution.;d.reduce;pollution emissions to zero.;45.An important difference between the;situation faced by a profit?maximizing monopolistically competitive firm in the;short run and the situation faced by that same firm in the long run is that in;the short run;a.price may;exceed marginal revenue, in the long run, price equals marginal;revenue.;b.price may;exceed marginal cost, in the long run, price equals marginal cost.;c.price may exceed;average total cost, in the long run, price equals average total;cost.;d.there are;many firms in the market, in the long run, there are only a few firms in;the market.;46.You lose your job and as a result you buy;fewer mystery books. This shows that you consider mystery books as a/ana.normal good;b.inferior;good; good;d.comple;47.Generally a;firm is more willing and able to increase quantity supplied in response to a;price change when;a.the;relevant time period is short rather than long;b.the;relevant time period is long rather than short; is;inelastic;d.the firm is;experiencing capacity problems.;48.Public;goods should be produced up to the point at which the marginal cost of;production equals;a.the maximum;price any individual is willing to pay for that unit.;b.the sum of;the individual marginal benefits from all consumers of that unit.;, which;is the marginal cost of allowing another individual to consume the;good.;d.the highest;marginal benefit from any individual consumer of the good.;49.The profit?maximization problem for a;monopolist differs from that of a competitive firm in which of the following;ways?;a.A;competitive firm maximizes profit at the point where marginal revenue equals;marginal cost, a monopolist maximizes profit at the point where;marginal;revenue exceeds marginal cost.;b.A;competitive firm maximizes profit at the point where average revenue equals;marginal cost, a monopolist maximizes profit at the point where;average;revenue exceeds marginal cost.;c.For a;competitive firm, marginal revenue at the profit?maximizing level of output;is equal to marginal revenue at all other levels of output, for a;monopolist;marginal revenue at the profit?maximizing level of output is smaller;than it is for;larger levels of output.;d.For a;profit?maximizing competitive firm, thinking at the margin is much more;important than it is for a profit?maximizing monopolist.;50.Which one;of the following descriptions is not suitable for monopolistic competition?;a.There is no;profit in the long run.;b.It is easy;for a new firm to enter the industry.;c.It has a;supply curve with a positive slope.;d.It has;market power.


Paper#57948 | Written in 18-Jul-2015

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