Which of the following is not an argument against government intervention in a market?

a) If the government reduces output below the free market level, consumer surplus will fall.

b) If the government reduces output below the free market level, producer surplus will fall.

c) If the government raises output above the free market level, consumers will get no benefit from the extra units of output.

d) If the government raises output above the free market level, some units of output will cost more to produce than the value placed on them by consumers.

Question 2

Which of the following statements about a price ceiling is false?

a) The number of buyers who gain from the ceiling is smaller than the original number of buyers.

b) The ceiling creates an excess demand.

c) The ceiling generates losers as well as gainers.

d) To have any effect, the price ceiling must be set at a higher level than the original market price.

Question 3

Assuming that everyone is law-abiding, which of the following would not reduce the quantity traded in a market?

a) The imposition of an effective price ceiling.

b) The removal of an effective price floor.

c) The imposition of a supply-side quantity control.

d) The imposition of a demand-side quantity control.

Question 4

Suppose the government introduces a specific tax of 5 a unit on a product which has sloping supply and demand curves. Which of the following statements about the resulting curve S+tax is true?

a) The gap between S+tax and S will be higher at high quantities than at low quantities.

b) The gap between S+tax and S will be higher at low quantities than at high quantities.

c) The gap between S+tax and S will be 5 at each quantity.

d) The gap between S+tax and S will be whatever is needed to show that the equilibrium price for consumers increases by 5.

Question 5

On a graph showing the effects of an ad valorem tax, where do we find the price received by producers?

a) At the point on S below the point where S+tax intersects D.

b) At the point where S intersects D.

c) At the point where S+tax intersects D.

d) At the initial price minus the amount of the tax.

Question 6

Which of the following statements about the incidence of a specific tax is false?

a) The incidence which falls on consumers plus the incidence which falls on producers equals the amount of the tax.

b) The incidence falls more heavily on producers than consumers if the demand curve is flatter than the supply curve.

c) The incidence falls more heavily on consumers than producers if the supply curve is flatter than the demand curve.

d) The incidence always falls wholly on consumers.

Question 7

Under which of the following circumstances would the incidence of a specific tax fall wholly on consumers?

a) Demand is perfectly elastic.

b) Supply is perfectly elastic

c) Both demand and supply have unit elasticity.

d) Under all circumstances.

Question 8

Suppose the CAP has imposed a tariff on the import of a certain foodstuff from outside the EU, and suppose that EU consumers always pay a price equal to the rest of the world price plus the tariff. Which of the following events would not lead to a higher price for EU consumers?

a) A rise in the supply of the foodstuff by EU producers.

b) An increase in the tariff.

c) A rise in the demand for the foodstuff by non-EU consumers.

d) A fall in the supply of the foodstuff by non-EU producers.

Question 9

Suppose the CAP reduces the tariff on imports of a certain foodstuff from outside the EU. Which of the following statements is false?

a) The quantity consumed in the EU would increase.

b) The quantity of imports into the EU would increase.

c) The incomes of EU farmers would increase.

d) The incomes of non-EU farmers would increase.

Question 10

Suppose the government introduces a prohibition on the supply or purchase of some substance. Assuming that some suppliers and some users ignore the law, which of the following could not occur?

a) The price might rise.

b) The price might stay the same.

c) The price might fall.

d) There would be no price because the market would disappear underground..

Question 2.

1. Given the following information for a particular production system, a) set up an aggregate planning matrix, and b) solve for the minimum cost plan including determining the minimum cost amount. Hint: assure total demand equals capacity, and may need to use additional column to accommodate unused capacity (zero cost per unit): Period 1 Period 2 Period 3 Demand: 550 700 750 Capacity: Regular 500 500 500 Overtime 50 50 50 Subcontract 120 120 100 Beginning Inventory -100 Costs: Regular time - $60 per unit Overtime - $80 per unit She Get Subcontract - $90 per unit Inventory carrying cost - $1 per unit per month Backorder cost - $3 per unit per month 2. The purchasing manager for a job shop must decide whether to stock a particular material or just order it as needed for custom jobs. To stock the item, the inventory status would have to be checked once a week at a cost of $500 annually. The cost to place an order is estimated at $125. Irregular orders placed for specific jobs would require an additional $85 delivery charge. The company would have to place approximately 20 orders per year. Demand for the $8 item is 2,300 units per years. The annual holding cost rate is 40%. Should the manager decide to stock the item (show your process, solution, and decision)? 3. A warehouse sells 10,000 boxes of copy paper per year. It costs $150 to reorder from the factory. Each box costs $5, and the holding cost rate is 0.35 per year. Find the optimal order quantity, the average inventory cost, the number of orders place per year, and the inventory cost per year. Assume a lead time of 2 weeks. 4. Material handlers use push carts to move parts around a plant. A cart load is used as the minimum production quantity. Each cart holds 12 parts. Replenishment lead time for a part is a half-day and its demand rate is 100 units per day. Determine the following; a) the minimum number of Kanban's needed for this part, and b) the number of Kanban's assuming that a 10% safety factor is desired. 5. A plant purchases components that are then combined into subassemblies. The subassemblies are produced in batches and stored until customers place orders. The subassemblies are then quickly combined into finished, customized products. For on particular subassembly, parts cost $50, and $12 is added during subassembly. Holding cost for the facility is 40% per year, and annual demand for subassemblies is 14,500. Each set-up costs $125. Processing time is 1 hour per subassembly, and batches spend approximately two-thirds of total time waiting at machines or forQUESTION 7 2 poi Table: Monopolist Output Total Revenue Marginal Cost $20 $10 50 10 70 10 80 WOUAWN 10 85 10 88 10 90 10 Refer to the table. What is the monopolist's profit-maximizing level of output? OA. 6 OB. 4 OC. 3 O D. 5 QUESTION 8 2 poi Suppose a monopolist faces the demand curve P = 118 - 2Q. The monopolist's marginal costs are a constant $17 and they have fixed costs equal to $99. Given this information, what will the profit- maximizing price be for this monopolist? Round your answer to two decimal places. Do not use a $ sign.There were many causes that contributed to the financial crisis of 2007-2008. Which of the following most accurately describes the role of securitization in contributing to the crisis? Globalization has increased the connectedness of the major economies of the world. O Correspondingly, there has been a decrease in the economic security of the U.S., where the U.S. has been adversely affected by the many European nations that have suffered recessions. Banks bundled mortgages together and then sold them on the market as a financial asset. O However, the risk level of these securitized assets was often much higher than the purchaser thought. In providing aid to firms that were at risk of becoming insolvent, the U.S. government O securitized these firms. In the future, firms are more now likely to engage in risky investments since the government securitizes these behaviors. Banks failed to securitize their loans by requiring sufficient down payments from home O buyers. This resulted in even small declines in housing prices causing many homes to go into foreclosure.Suppose you are given the following information about a monopolist: Market Demand Curve: P = EEK} 2Q MC for the monopolist: MC = 20 + 2Q Total Cost for the monopolist: TC = EUQ + Q2 + 100 Use this information to answer this set of questions. 1) 2) 3) 4) What is the prot maximizing price and quantity for this monopolist given the above information? Show how you found your answer and what your reasoning was. Calculate the monopolist's prot. Calculate the monopolist's consumer surplus {CS}, producer surplus (PS), and deadweight loss (DWL). In a well-labeled graph illustrate this monopolist: he sure to include the areas that rcpresent CS, PS. and DWL in your graph. Suppose demand increases by 90 units at every price. Find the equation for the monopolist's new demand curve. Then, calculate the new pmt maximizing price and quantity for this monopolist given the new demand curve. Calculate the new level of monopoly prots. Calculate the value of consumer surplus {1135'}, producer 3111le {PS'}, and deadweight loss {DWL'} for this monopolist given the information in (3}. In a well- labeled graph illustrate this monopolist: he sure to include the areas that represent (33*, PS', and D'WL' in your graph