If it costs 6.00 to go to the movies and 25.00 to go to a hockey game, Tom is maximizing his utility between movies and hockey if his marginal utility of movies is 12 units and his marginal utility from hockey is 50.
Indicate whether the statement is true or false
Ques. 2An income tax system in which the average tax rate decreases with the level of income is called a
A) progressive income tax system.
B) proportional income tax system.
C) regressive income tax system.
D) flat-rate income tax system.
Ques. 3Using the demand schedule in the table above, the total revenue a perfectly price discriminating monopolist receives from selling 5 units of output is
A) 5.
B) 15.
C) 18.
D) 25.
Ques. 4Wendy spends 30 a week on movies and magazines. The price of a movie is 8, the price of a magazine is 2, and Wendy sees 3 movies a week and buys 3 magazines.
The price of a magazine now increases to 4 and Wendy's brother gives her 6 a week so that she can still see 3 movies a week and buy 3 magazines. In this situation, Wendy will see ________ movies and buy ________ magazines. A) 3; 3
B) less than 3; less than 3
C) more than 3; fewer than 3
D) less than 3; more than 3
Ques. 5The above figure illustrates the case of a monopsony in the labor market. If the current wage paid is W1 and new wage legislation is passed that increases the minimum wage in this market to W2, the firm will
A) hire less labor at the higher wage and, according to the law of demand, moving from point D to B.
B) hire the same amount of labor as before the law was passed because it cannot adjust to wage changes.
C) hire more labor, moving from point C to B.
D) pay a higher wage, moving from point C to A.
Ques. 6The International Maritime Bureau said the waters off Somalia are the world's most dangerous, accounting for nearly a third reported pirate attacks worldwide. Suppose all boats are insured to 100,000 and pay a premium of 15,000 each.
Suppose 10 out of 100 boats are attacked by pirates and these 10 file claims with their insurance. Has the insurance company earned an economic profit? A) Yes, they earned an economic profit of 500,000.
B) Yes, they earned an economic profit of 50,000.
C) No, they sustained an economic loss of 85,000.
D) No, they broke even.
Ques. 7One year ago, Ms. Case and Mr. Bond opened a jewelry store called T & J. They invested 1,000,000 of their savings into the partnership to buy equipment and initial inventory.
They rented a building for 90,000 a year, and hired two employees for an annual wage of 40,000 each. Case and Bond believed that the best alternative investment of their money would be government bonds, which could yield an annual return of 8 percent. To run the store, Case quit her previous job, at which she earned 100,000, but her former boss told her that she was welcome to return anytime. Bond kept his job with the government, but gave up 6 hours of leisure each week (for 50 weeks), the time he used to spend playing golf. Bond used to say: I'd only give up my golf time if someone paid me 100 an hour. During the first year of operation, T & J paid 20,000 for utilities and the firm's total revenue was 350,000. The market value of T & J's equipment was 200,000 at the beginning of the year and 170,000 at the end of the year. a) What is the economic depreciation of their capital? b) What are T & J's opportunity costs? c) What is the firm's economic profit in the first year of operation?
Ques. 8All along the beach in San Diego, California are shops which rent boogie boards by the hour.
Tourists perceive that all rental boogie boards are identical, all prices are clearly listed on signs in front of the shops, and there are no restrictions on entry and exit in the boogie board market. What type of market is the boogie board market? A) monopoly
B) oligopoly
C) monopolistic competition
D) perfect competition
Ques. 9If it costs 6.00 to go to the movies and 25.00 to go to a hockey game, Tom is maximizing his utility between movies and hockey if his marginal utility of movies is 12 units and his marginal utility from hockey is 25.
Indicate whether the statement is true or false
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