When do new firms enter a perfectly competitive market? When does entry stop?
What will be an ideal response?
Ques. 2The table above shows the marginal costs and marginal benefits of college education. If the market for college education is perfectly competitive and unregulated, how many students are enrolled in college?
A) 12 million
B) 20 million
C) 16 million
D) 24 million
Ques. 3Farmer Seth has a perfectly flat long-run average total cost curve over the range of output from 10,000 bushels of wheat to 100,000 bushels of wheat. Hence, over this range of output, Farmer Seth definitely experiences
A) constant marginal returns.
B) constant returns to scale.
C) constant economies of scale.
D) none of the above.
Ques. 4If the price of a barrel of oil is 100 this year and the interest rate is 10 percent, then according to the Hotelling Principle the price next year is expected to be ________ per barrel.
A) 90
B) 110
C) 100
D) None of the above is correct.
Ques. 5Adverse selection occurs when a sales offer attracts the kinds of customers that the seller does not want.
Indicate whether the statement is true or false
Ques. 6In the above figure, income is 8, the price of a soft drink is 1, and the initial price of a milkshake is 2. If the price of a milkshake decreases to 1, the substitution effect is the movement from point ________ to point ________.
A) a; b
B) b; d
C) b; c
D) a; c
Ques. 7According to the table above, ________ percent of total income is redistributed from the highest income group.
A) 4.7
B) 2.3
C) 1.5
D) 3.8
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