Interlace, Inc produces and a unique soda. The company cannot price discriminate. The figure above shows Interlace's demand curve, marginal revenue curve, and marginal cost curve. Interlace's profit maximizing level of output is
A) 30,000 bottles.
B) 50,000 bottles
C) 100,000 bottles
D) 0; that is, the firm shuts down.
Ques. 2Gunther rents Nintendo games and videos. The marginal utility from his last Nintendo game is 10 and that from his last video is 5. Nintendo games rent for 2 each. Gunther's demand curve for games is shown in the figure above.
How many videos a week does Gunther rent? A) 1
B) 2
C) 3
D) 4
Ques. 3Of the following, which is the most accurate indicator of the degree of inequality?
A) distribution of annual income
B) distribution of lifetime income
C) distribution of wealth
D) distribution of the sum of wealth and annual income
Ques. 4The above table shows the market shares for all the landscaping services in a suburban area. A merger between the three largest firms would
A) make the industry more competitive.
B) increase the four-firm concentration ratio and increase the Herfindahl-Hirschman Index (HHI).
C) increase the four-firm concentration ratio and decrease the Herfindahl-Hirschman Index (HHI).
D) decrease the four-firm concentration ratio and decrease the Herfindahl-Hirschman Index (HHI).
Ques. 5In the above figure, if the price is P1 and the firm produces Q2, it is
A) making an economic profit.
B) incurring an economic loss.
C) breaking even.
D) More information is needed to determine if the firm is earning a positive economic profit, zero economic profit, or is incurring an economic loss.
Ques. 6Insurance can be profitable when it
A) eliminates risks.
B) decreases risks.
C) pools risks.
D) changes the individual's marginal utility of wealth.
Ques. 7Any such pollution is
A) an external benefit.
B) an external cost.
C) a private cost.
D) a private benefit.
Ques. 8An important determinant of the price elasticity of supply is
A) whether the good is a durable or a nondurable.
B) the time period firms have to adjust to a new price.
C) how well consumers like the commodity.
D) the proportion of the consumer's total budget spent on the good.
Ques. 9Explain how the money market determines the equilibrium interest rate.
What will be an ideal response?
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