The substitution effect reflects a movement along a given
A) horizontal line.
B) vertical line.
C) indifference curve.
D) budget line.
Ques. 2The sum of the squares of the market share for the fifty largest firms in a market is the basis of the government's current merger guidelines.
Indicate whether the statement is true or false
Ques. 3Which of the following statements regarding perfect price discrimination is FALSE?
A) Only part of consumer surplus is captured by the firm as producer surplus.
B) For the firm, the market demand curve becomes the firm's marginal revenue curve.
C) The monopoly produces the output at which the marginal revenue equals the marginal cost.
D) No deadweight loss is created.
Ques. 4Silvio's Pizza is a small pizzeria. The firm's production function is shown in the table above.
Suppose that Silvio's costs include only the cost of renting ovens, which is 100 per oven per week, the labor cost, 280 per worker per week, and the opportunity cost of Silvio's entrepreneurship, 1,000 per week. Suppose Silvio's uses Plant 2. If Silvio hires the 4th worker, the firm will experience ________ marginal returns. A) diminishing
B) increasing
C) constant
D) zero
Ques. 5Lee, J Brand, Joe's Jeans, Paper Denim & Cloth, Levi's, Wrangler, and many others are all producers of jeans. J Brand jeans sell for 200 a pair.
Suppose at the short-run profit maximizing quantity, J Brand's ATC was 180 and AVC was 100, which statement is TRUE? A) J Brand will produce in the short and long run.
B) J Brand will produce in the short run but go out of business in the long run.
C) J Brand will shut down in the short run and go out of business in the long run.
D) J Brand will produce in the short run and shut down in the long run.
Ques. 6The only two ways of dealing with the principal agent problem are the use of long-term contracts and monitoring.
Indicate whether the statement is true or false
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