Question 16

When successfully implemented, which of the following pricing strategies does not lead to zero consumer surplus?

Group of answer choices

two-part pricing.

block pricing.

1st degree price discrimination.

3rd degree price discrimination.

Question 17

A firm has a total cost function of C(Q) = 50 + 5Q2. The firm's average total cost (ATC) of producing 2 units of output is:

Group of answer choices

70.

35.

20.

10.

Question 18

Suppose the production function is Q = min {3L, 5K}. How much output is produced when 2 units of labor and 4 units of capital are employed?

Group of answer choices

3.

6.

8.

20.

Question 19

The demand for cinnamon toast crunch cereal is:

Group of answer choices

more elastic than the demand for breakfast food in general.

more inelastic than the demand for breakfast food in general.

equally elastic to the demand for breakfast food in general.

none of the above.

Question 20

To maximize profits, a firm should continue to increase production of a good until:

Group of answer choices

total revenue equals to total cost.

marginal revenue equals zero.

marginal revenue equals to marginal cost.

average cost equals average revenue.

Question 21

Which of the following is a price setting oligopoly model?

Group of answer choices

Cournot.

Sweezy.

Stackelberg.

None of the above.

Question 22

Increases in the price of production inputs will cause the:

Group of answer choices

demand curve to shift left.

supply curve to shift left.

demand curve to shift right.

supply curve to shift right.

Question 23

Suppose the demand for good X is given by Qdx= 10 - 3Px + 2Py - 4Pz - 1M. Where Px is the price of good X, Py is the price of good Y, Pz is the price of good Z, and M is income. Which of the following is true?

Group of answer choices

good X is a normal good.

good X and good Y are substitutes.

good X and good Z are substitutes.

None of the above.

Question 24

A firm with market power has an individual consumer demand of Q = 20 - 4P and marginal costs of MC = 4. If the firm employs a block pricing strategy, what is the optimal quantity of this product to package into a single block?

Group of answer choices

2.

3.

4.

5.

Question 25

When firm one acts as a Stackelberg leader:

Group of answer choices

Firm two produces the monopoly output.

Firm one will earn less than if they compete in a Cournot fashion.

Firm two will earn more than if they compete in a Cournot fashion.

Firm two produces output according to its Cournot reaction function.

Question 26

A competitive market is currently charging $10, if government enacts a $13 price celing in the market, what is the likely impact?

Group of answer choices

quantity supplied will be less than quantity demanded.

quantity supplied will be greater than quantity demanded.

quantity supplied will be equal to quantity demanded at the new higher price.

the market will remain in its original equilibrium.

Question 27

In the long-run, perfectly competitive firms produce a level of output such that:

Group of answer choices

P = MC.

P = minimum of ATC.

both a and b.

None of the above.

Question 28

Consider a production function that only uses labor as its variable input, and all other inputs are fixed. Within this production, it is optimal to hire labor units in the short run as long as:

Group of answer choices

value marginal product of labor is greater than wage.

marginal product of labor is less than product price.

average product of labor is greater than wage.

value margnal product of labor is less than product price.

Question 29

Each week Pablo buys exactly 14 bottles of Bai Infusion drink regardless of its price. Pablo's own price elasticity of demand for the drink is:

Group of answer choices

0.

-1.

less than -1.

more than -1.

Question 30

Suppose both supply and demand decrease. What effect will this have on price?

Group of answer choices

price will fall.

price will rise.

price may rise or fall.

price will remain the same.