Donna owns the only dog grooming salon on Lonely Island. If Donna can price discriminate between dog owners who are seniors and those who are not, her economic profit will be ________ than if she does not price discriminate and the number of dog
groomings will be ________ than if she does not price discriminate. A) greater; more
B) greater; less
C) less; more
D) less; less
Ques. 2What is the water and diamonds paradox of value and what is its resolution?
What will be an ideal response?
Ques. 3In a perfectly competitive market, an increase in market demand
A) raises the price in the short run and attracts new firms in the long run.
B) raises the price in the short run and the long run.
C) lowers the price in the short run and in the long run.
D) has no effect on the price in either the short run or the long run because the firms are price takers.
Ques. 4Young drivers often buy used cars. An increase in the legal driving age to twenty-one shifts the demand curve for used cars leftward, whereas lowering the age to fifteen shifts the demand curve rightward.
Indicate whether the statement is true or false
Ques. 5Suppose the quantity supplied of computers increases from 2 million to 4 million units as the price of a computer increases from 600 to 700. What does the price elasticity of supply equal?
What will be an ideal response?
Ques. 6Specialization of productive activity between men and women might explain why
A) a married woman earns less than a married man.
B) a never-married man earns more than a never-married woman.
C) a never-married man earns the same as a married man.
D) None of the above answers is correct.
Ques. 7To achieve the efficient amount of use of a common resource, the use should be such that ________ equals ________.
A) marginal social cost; marginal private cost
B) marginal social cost; marginal social benefit
C) marginal social benefit; marginal private cost
D) marginal private cost; marginal private benefit
Ques. 8In the used car market, adverse selection can be limited by
A) offering warranties.
B) establishing loan limits.
C) requiring high deductibles.
D) requiring low deductibles.
Ques. 9Suppose the quantity of sodas and the quantity of popcorn are on an indifference curve/budget line diagram. An increase in income shifts the budget line ________ and, if popcorn is a normal good, shifts the demand curve for popcorn ________.
A) rightward; rightward
B) rightward; leftward
C) leftward; rightward
D) leftward; leftward
Ques. 10Professor Rush decides to quit teaching economics and opens a shoe store out at the mall. He gave up an annual income of 50,000 to open the store. A year after opening the shoe store, the total revenue for the year was 200,000.
Rush's expenses were 30,000 for labor, rent was 18,000, and utilities were 1,200. He also had to purchase new shoes from manufacturers, at a cost of 60,000, which was financed by cashing in his savings of 60,000 that had been in a bank earning 8 percent per year. The normal profit from operating a shoe store in the mall is 20,000. Determine Professor Rush's total cost and economic profit.
Ques. 11If an industry's Herfindahl-Hirschman Index is below 1,000, a merger between any two firms in that industry will be disallowed. Comment on the accuracy of the previous statement.
What will be an ideal response?
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