Dana's utility of wealth is 65 units at 3,000, 80 units at 5,000, and 95 units at 9,000. Starting from zero wealth, he must choose between options A and B. Option A gives him 5,000 for sure.
Option B gives him 3,000 with probability 0.5 or 9,000 with probability 0.5. Dana will
A) choose option A.
B) choose option B.
C) be indifferent between option A and option B because they have the same risk.
D) be indifferent between option A and option B because they have the same expected utility.
Ques. 2The above figure shows the demand and cost curves for a firm in ________ in the ________.
A) perfect competition; short run
B) monopolistic competition; long run
C) perfect competition; long run
D) monopolistic competition; short run
Ques. 3When a cartel maximizes its profit,
A) each firm necessarily produces the same amount.
B) the industry level of output is efficient.
C) industry marginal revenue equals industry marginal cost at the level of total output.
D) total output is greater than it would be without collusion.
Ques. 4Suppose the four-firm concentration ratio for an industry is 10 percent. This value indicates ________. If the four-firm concentration ratio for another industry is 95 percent, this value indicates ________.
A) the industry is competitive; the industry has very little competition
B) the industry has very little competition; the industry is very competitive
C) the industry has firms worldwide; the industry is concentrated in one country
D) the HHI will be high; the HHI will be low
Ques. 5A deadweight loss is created
A) only if the last unit produced has a marginal social benefit greater than its marginal social cost.
B) only if the last unit produced has a marginal social cost greater than its marginal social benefit.
C) only if the last unit produced has a marginal social benefit equal to its marginal social cost.
D) if for the last unit produced, marginal social cost is greater than its marginal social benefit or if its marginal social benefit is greater than its marginal social cost.
Ques. 6The Coase Theorem is the proposition that private transactions are efficient if property rights exist, if only a ________ number of parties are involved, and if transactions costs are ________.
A) large; low
B) large; high
C) small; low
D) small; high
Ques. 7The short-run aggregate supply curve shows a positive relationship between the price level and real GDP.
Indicate whether the statement is true or false
Ques. 8The figure above shows the market for cotton in Georgestan. The government regulates the market with a production quota set at 8 million pounds per year.
With the quota in place, the amount of cotton produced in Georgestan is ________ because the marginal social cost of a pound of cotton is ________ the marginal social benefit of a pound of cotton. A) inefficient; less than
B) inefficient; greater than
C) efficient; less than
D) efficient; equal to
Ques. 9The figure above shows the demand and cost curves for a single-price monopoly. What price will the firm charge?
A) 50 per unit
B) 30 per unit
C) 20 per unit
D) 10 per unit
Ques. 10The figure above shows the market for umbrellas in Sunville. Suppose one firm owns all umbrella stores in Sunville and charges 40 per umbrella. In this situation, the market for umbrellas is
A) efficient, with no deadweight loss but also no surplus.
B) inefficient, with a deadweight loss of 2,666.67.
C) inefficient, with a deadweight loss of 1,333.33.
D) efficient, generating a total surplus of more than 10,000.
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