Jessica must choose option A or option B. Option A gives her 10,000 for sure. Option B gives her 5,000 if a fair coin toss shows heads and 15,000 if it shows tails. If Jessica is risk averse her utility of wealth curve becomes
A) flatter as her wealth increases and she will choose option A.
B) flatter as her wealth increases and she will choose option B.
C) steeper as her wealth increases and she will choose option A.
D) steeper as her wealth increases and she will choose option B.
Ques. 2In the figure above, the Lorenz curve that shows the richest 20 percent of households receiving 40 percent of all income is
A) curve A.
B) curve B.
C) curve C.
D) curve D.
Ques. 3The figure above shows the demand and cost curves for a single-price monopoly. What economic profit does this firm make?
A) zero
B) 600
C) 400
D) 200
Ques. 4If an industry has a four-firm concentration ratio equal to one hundred percent, then it is definitely the case that the industry is
A) a monopoly.
B) perfectly competitive.
C) monopolistically competitive.
D) either a monopoly or an oligopoly.
Ques. 5The above table shows Priscilla's marginal utility from the two goods she consumes, pizza and Pepsi. The price of a slice of pizza is 2 and of a can of Pepsi is 1. Suppose Priscilla has 6 to spend.
Which combination of pizza and Pepsi will maximize Priscilla's utility? A) 3 slices of pizza
B) 2 slices of pizza and 2 cans of Pepsi
C) 3 cans of Pepsi and 1 slice of pizza
D) 1 slice of pizza and 3 cans of Pepsi
Ques. 6If the price of hair styling increases, then
A) hair styling salons hire fewer workers but makes more profit.
B) hair stylists demand an increase in wages and the salons hire fewer workers.
C) the value of marginal product of each hair stylist increases and the demand curve for hair stylists shifts leftward.
D) the value of marginal product of each hair stylist increases and the demand curve for hair stylists shifts rightward.
Ques. 7If Tom and Di specialize in producing the goods in which he and she have a comparative advantage and they exchange goods, then ________.
A) each will produce a combination of goods that is within her/his production possibility frontier
B) they will lose because they are no longer able to produce and consume both goods
C) each will gain because each can consume a combination of goods that is outside her/his production possibility frontier
D) one of them will gain and the other will lose
Ques. 8The figure above shows the market for milk in Cowland. If a subsidy paid to producers of 1 per gallon of milk is introduced, what is the price that consumers pay?
A) 3.00 a gallon
B) between 3.00 and 4.00 per gallon
C) 4.00 a gallon
D) between 4.00 and 5.00 per gallon
Ques. 9The table below shows data for Japan.
2008 2009
M1 growth rate 0.7 0.9
Inflation rate 0.4 -0.3
Assuming the rate of velocity change is constant, real GDP
A) grew by 0.3 percent in 2008.
B) grew by -1.2 percent in 2009.
C) grew by 1.1 percent in 2008.
D) grew by 0.9 percent in 2009.
Ques. 10In a repeated game, punishments that result in heavy damages are an incentive for players to adopt the strategies that result in a ________ equilibrium.
A) contestable
B) strategic
C) cooperative
D) winner-share-all
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