The table above shows the marginal benefit from providing police protection in a community of two people, Jake and Elwood. Police protection is a public good.
a) What is the marginal social benefit to community from the 4th police car on duty?
b) If the marginal social cost of a police car on duty is 37, what is the efficient number of cars on duty?
c) If the marginal social cost of a police car on duty is 70, what is the efficient number of cars on duty?
Ques. 2The MRS of the indifference curves in the above figure
A) equals 1/2.
B) equals 2.
C) changes when moving along any one of the curves.
D) is constant along a particular indifference curve, but changes from one indifference curve to the next.
Ques. 3Suppose that Richard has just told you that he would not pay more than 100 dollars for one of his favorite baseball cards. You offer to give him 110 dollars for his card and he refuses. What consumer choice theory or effect explains this result?
A) the endowment effect
B) bounded rationality
C) bounded self-interest
D) bounded will power
Ques. 4In the long run, the firms in a perfectly competitive market
A) maximize their profit.
B) make an economic profit.
C) display price setting behavior.
D) are protected by barriers to entry.
Ques. 5A market structure in which there is only one buyer is
A) a monopoly.
B) a monopsony.
C) an oligopoly.
D) a competitive market.
Ques. 6Can the incidence of a sales tax ever be so that buyers pay all of the tax or so that sellers pay all of the tax?
What will be an ideal response?
Ques. 7The above figure shows a firm in monopolistic competition. At the profit maximizing level of output, excess capacity for the firm is equal to
A) 0 units per day.
B) 4 units per day.
C) 8 units per day.
D) 16 units per day.
Ques. 8The above figure shows the costs at Barney's Bagel Bakery. For which of the following levels of output does the average product of labor exceed the marginal product of labor?
A) at 1000 bagels daily
B) at 2000 bagels daily
C) at 3000 bagels daily
D) all of the above
Ques. 9In the figure above, S is the supply curve and D is the demand curve in the unregulated, competitive market for gasoline in Motorland. The external cost of gasoline is constant at 1.50 per gallon.
The unregulated, competitive market for gasoline in Motorland A) produces the efficient quantity of gasoline.
B) overproduces by 0.2 million gallons of gasoline a month.
C) underproduces by 0.1 million gallons of gasoline a month.
D) overproduces by 0.1 million gallons of gasoline a month.
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