Question 1(Multiple Choice Worth 1 points)

(04.03 MC)

A monopoly firm produces men's collared dress shirts. Its brand is strong and differentiated. The company uses price discrimination to increase its economic profits. Which of the following is correct?

The firm is giving greater benefits to its buyers.

The firm produces the same quantity at a higher variable cost.

Buyers are forced to buy at a higher price because the shirts are scarce.

Those with less elastic demand pay a higher price for the shirts.

A greater quantity than the allocatively efficient quantity is sold, at a price higher than the market price.

Question 2(Multiple Choice Worth 1 points)

(06.01 MC)

Use the graph to answer the question that follows.

Assume the steel market is experiencing the inefficiency shown in the graph, and the demand curve remains constant. Which of the following economic policies could move the market to an allocatively efficient result?

The introduction of a per-unit tax on steel production

A government subsidy to steel producers

Reducing the tariff on foreign steel imports

A reduced quota of foreign steel imports

A decrease in the excise tax on steel

Question 3(Multiple Choice Worth 1 points)

(02.07 MC)

Use the graph to answer the question that follows.

If the price for the good above is set at P3,which of the following is true?

A surplus of Q3-Q1 units

A quantity supplied of Q3 units

A producer surplus equal to area D

A consumer surplus equal to areas B + C

An economic surplus equal to areas A +

Question 4(Multiple Choice Worth 1 points)

(04.05 HC)

Company A and Company B are competing oligopolists. Both companies are considering opening retail outlets to increase their profits. The payoff matrix shows the profits of the companies in millions based on their possible actions.

Company BCompany AOpen Retail OutletNo Retail OutletOpen Retail Outlet$50, $40$35, $30No Retail Outlet$55, $45$60, $35

The government offers a $10 million subsidy to open a new retail outlet. What is the expected outcome of the new payoff matrix, given the subsidy?The Nash equilibrium changes so that both companies will open retail outlets.

The Nash equilibrium does not change as a result of the subsidy.

Company A's dominant strategy remains the same, and it will not open retail outlets.

Company B's dominant strategy changes, and it will not open retail outlets.

Company B no longer has a dominant strategy, and both companies will not open retail outlets.

Question 5(Multiple Choice Worth 1 points)

(02.06 MC)

Consider the market equilibrium supply and demand schedules for James and for all other consumers.

Market SupplyJames's DemandTotal Demand excluding JamesPriceQuantityQuantityQuantity$1025050400$2035040350$3045030420$4055020600$5065010750

What is the equilibrium market quantity for the good shown above?250

350

450

550

650

Question 6(Multiple Choice Worth 1 points)

(02.05 MC)

The percentage change of any determinant of supply or demand along with the percentage change in quantity can be used to measure a good's

total utility

price elasticity

optimal price point

marginal utility

net benefit

Question 7(Multiple Choice Worth 1 points)

(05.03 MC)

Use the table to answer the question that follows.

Quantity of LaborMP of LaborQuantity of CapitalMP of Capital13015022524032033541541551055

Which of the following combinations of labor and capital would satisfy the input hiring rule that minimizes the cost of production, if the price of labor is $10 and the price of capital is $20?1 unit of labor; 3 units of capital

3 units of labor; 4 units of capital

3 units of labor; 2 units of capital

4 units of labor; 1 unit of capital

5 units of labor; 5 units of capital

Question 8(Multiple Choice Worth 1 points)

(01.04 MC)

Use the production possibilities table below to answer the following question. Assume constant opportunity costs for Steven and Matthew.

Units of Cheese in a DayFish in a DaySteven1025Matthew3010

Based on the table above, to which of the following trade agreements should Steven and Matthew agree?1 fish forunit of cheese

1 fish for 3 units of cheese

1 fish for 5 units of cheese

1 unit of cheese for 1 fish

1 unit of cheese for 3 fish

Question 9(Multiple Choice Worth 1 points)

(02.03 MC)

A product is experiencing unit elastic price demand. If it increases its price by 5 percent, what must happen to its quantity demanded?

It must decrease by 5 percent.

It must increase by 5 percent.

It must increase by 5 units.

It must increase by one unit.

It must decrease by one unit.

Question 10(Multiple Choice Worth 1 points)

(02.01 MC)

Which of the following is a necessary element of the market system that distinguishes it from a command economy?

Diminishing returns

Coordinated answers to the basic economic questions

A system of property rights

Robust regulations to address production hazards

Supply and demand