Suppose that in Horsehead, Massachusetts, the cost of operating a lobster boat is $4,000 per month.

Suppose that ifxlobster boats operate in the bay, the total monthly revenue from lobster boats in the bay is $1,000(12x-x²).

If there are no restrictions on entry, then the number of boats operating will be _____ and the total profit of the lobster fishery will be _____.

Question 1 options:

1)More than 12 boats operate, profit > 0

2)More than 6, but no more than 9 boats operate, profit > 0

3)More than 6, but no more than 9 boats operate, profit = 0

4)More than 9, but no more than 12 boats operate, profit = 0

5)No more than 6 boats operate, profit > 0

Suppose that in Horsehead, Massachusetts, the cost of operating a lobster boat is $4,000 per month.

Suppose that ifxlobster boats operate in the bay, the total monthly revenue from lobster boats in the bay is $1,000(12x-x²).

If the lobster fishery is not centrally managed, it is possible to maximize the profit of the entire fishery if lobster boats are required to purchase a fishing license each year as a condition of operation.

What will be the license fee that ensures the optimal number of lobster boats are being operated?

Question 3 options:

1)License Fee less than $6,000 but not less than $2,000

2)License Fee = $16,000

3)License Fee less than $16,000 but not less than $12,000

4)License Fee positive but less than $2,000

5)License Fee less than $12,000 but not less than $6,000

In Wheeling, West Virginia, there are 200 used cars for sale, half of them are good ("peaches") and half of them are bad ("lemons").

Owners of lemons are willing to sell them for $100.

Owners of peaches are willing to sell them for prices above $1,100 but will keep them if the price is lower than $1,100.

There is a large number of potential buyers who are willing to pay $200 for a lemon and $2,100 for a peach.

Buyers can't tell good cars from bad, but original owners know.

Question 4 options:

1)There will be an equilibrium in which all used cars sell for $1,150.

2)There will be an equilibrium in which lemons sell for $100 and peaches sell for $1,100.

3)There will be an equilibrium in which all used cars sell for $600.

4)The only equilibrium is one in which all used cars on the market are lemons and they sell for $200.

5)There will be an equilibrium in which lemons sell for $200 and peaches sell for $2,100.

In West Benz, Indiana, there are 500 used cars for sale, half of them are good ("peaches") and half of them are bad ("lemons").

Owners of lemons are willing to sell them for $100.

Owners of peaches are willing to sell them for prices above $1,100 but will keep them if the price is lower than $1,100.

There is a large number of potential buyers who are willing to pay $500 for a lemon and $1,500 for a peach.

Buyers can't tell good cars from bad, but original owners know.

Question 5 options:

1) There will be an equilibrium in which lemons sell for $500 and peaches sell for $1,500.

2)The only equilibrium is one in which all used cars on the market are lemons and they sell for $500.

3)There will be an equilibrium in which all used cars sell for $1,000.

4)There will be an equilibrium in which all used cars sell for $650.

5)There will be an equilibrium in which lemons sell for $200 and peaches sell for $1,100.

Suppose that in Dache-Borde, P.Q., the quality distribution of the 2,000 used cars on the market is such that the number of used cars of value less thanVisV/2.

Original owners must sell their used cars.

Original owners know what their cars are worth, but buyers can't determine a car's value until they buy it.

An owner can either take his car to an appraiser and pay $500 to have the car appraised (accurately and credibly) or sell the car unappraised.

In equilibrium, car owners will have their cars appraised if their value is at least _______. Those cars that are not appraised will be sold for ______ .

Question 6 options:

1)$1,000; $1,000

2)$1,000; $500

3)$500; $500

4)$1,500; $1,000

In Cortland, NY, there are two kinds of workers, Uselets, whose labour is worth $1,000 per month, and Candus, whose labour is worth $2,500 per month.

Cortland has exactly twice as many Uselets as Candus.

Uselets look just like Candus, and are accomplished liars. They will always claim to be Candus (who are scrupulously honest and always tell the truth).

Monitoring individual work accomplishments is too expensive to be worthwhile.

A professor who is in love with the sound of his own voice offered to give free monthly lectures on economics to the employees of Bingham Industrial (one of 100 identical firms in Cortland). His lectures had zero effect on productivity, but both Candus and Uselets found them excruciatingly dull. To a Uselet, sitting through each one-hour lecture was as bad (reduced utility by as much) as losing $100. To a Candu, sitting through each one-hour lecture was as bad as losing $50.

Suppose the owners of Bingham Industrial gave each employee a pay raise of $60 per month but requires, as a condition of employment, that employees attend one of the professor's lectures. What will be the the average value of productivity of Bingham's employees?

Question 7 options:

1)$1000 < average value of product < $1,500

2)$1,500 <= average value of product < $2000

3)$2,000 <= average value of product < $2,500

4)average value of product = $1,000

5)average value of product = $2,500

In Cortland, NY, there are two kinds of workers, Uselets, whose labour is worth $1,000 per month, and Candus, whose labour is worth $2,500 per month.

Cortland has exactly twice as many Uselets as Candus.

Uselets look just like Candus, and are accomplished liars. They will always claim to be Candus (who are scrupulously honest and always tell the truth).

Monitoring individual work accomplishments is too expensive to be worthwhile.

Owners of the other 99 firms in Cortland noted that those who had attended the economics lectures were more productive than those who had not, and offered higher wages in an attempt to induce these productive workers to come and work for them.

If these 99 firms bid competitively for highly productive workers, what will be the wage offered to workers who attended the professor's lectures?

Question 8 options:

1) $1,500 <= wage < $2,000

2)wage = $2,500

3)wage = $1,000

4)$2,000 <= wage < $2,500

5)$1,000 < wage < $1,500

In Cortland, NY, there are two kinds of workers, Uselets, whose labour is worth $1,000 per month, and Candus, whose labour is worth $2,500 per month.

Cortland has exactly twice as many Uselets as Candus.

Uselets look just like Candus, and are accomplished liars. They will always claim to be Candus (who are scrupulously honest and always tell the truth).

Monitoring individual work accomplishments is too expensive to be worthwhile.

A professor who is in love with the sound of his own voice offered to give free monthly lectures on economics toany or all of the workersin Cortland. His lectures had zero effect on productivity, but both Candus and Uselets found them excruciatingly dull. To a Uselet, sitting through each one-hour lecture was as bad (reduced utility by as much) as losing $100. To a Candu, sitting through each one-hour lecture was as bad as losing $50.

Suppose that, rather than only Bingham Industrial providing a pay raise, ALL 100 employers offered a one-time bonus of $200 to any employee who attended one of the professor's lectures.

What will be the wage paid in the entire industry three months after these bonus offers have been made?

Question 9 options:

1)wage = $2,500

2)wage = $1,000

3)$1,500 <= wage < $2,000

4)$1,000 < wage < $1,500

5)$2,000 <= wage < $2,500

In Cortland, NY, there are two kinds of workers, Uselets, whose labour is worth $1,000 per month, and Candus, whose labour is worth $2,500 per month.

Cortland has exactly twice as many Uselets as Candus.

Uselets look just like Candus, and are accomplished liars. They will always claim to be Candus (who are scrupulously honest and always tell the truth).

Monitoring individual work accomplishments is too expensive to be worthwhile.

A professor who is in love with the sound of his own voice offered to give free monthly lectures on economics toany or all of the workersin Cortland. His lectures had zero effect on productivity, but both Candus and Uselets found them excruciatingly dull. To a Uselet, sitting through each one-hour lecture was as bad (reduced utility by as much) as losing $100. To a Candu, sitting through each one-hour lecture was as bad as losing $50.

The various employers in Cortland together offer to pay the professor to give entire courses of lectures to workers. The professor is paid according to the number of hours of lectures he gives per month.

The employers want the course to be long enough to ensure that only Candus will attend, so that course attendance provides a clear signal that an employee is a Candu. The employers will then pay each worker according to the value of his or her labour.

If employers want the courses to be long enough that attendance provides a signal, how long should the courses be?

Question 10 options:

1) course > 12hrs/month

2)course > 16hrs/month

3)course > 14hrs/month

4)course > 15hrs/month

5)course > 13hrs/month