Lizzie's budget line is shown in the figure above. If Lizzie's income is 20, which of the following formulas represents her budget equation?
A) QC = 20 + QM
B) QC = 20 - QM
C) QC = -20 + 2 QM
D) QC = 20 - 2QM
Ques. 2Because the value of marginal product diminishes as the quantity of labor employed increases, the ________ the wage rate, the ________ workers the firm hires.
A) lower; more
B) higher; more
C) lower; fewer
D) None of the above answers is correct because there is no relationship between the wage rate and the number of workers hired.
Ques. 3The above figure is for a firm in monopolistic competition. The diagram represents the short run rather than the long run because the
A) MR curve cuts the ATC curve from below.
B) MR curve and the D curve do not coincide.
C) firm is incurring an economic loss.
D) firm is making an economic profit.
Ques. 4Dell and Gateway must decide whether to lower their prices, based on the potential economic profits shown in the payoff matrix above. (The profits are in millions of dollars).
If the firms collude and don't cheat, Dell's profit is ________ million and Gateway's profit is ________ million. A) 10; 10
B) 15; 15
C) 5; 20
D) 20; 5
Ques. 5In the market for books, initially there are no taxes on books. Books are normal goods. The government introduces a tax of 4 a book and, at the same time, people's income fall by 4,000 a year.
Following these two changes, the equilibrium quantity of books A) decreases.
B) increases.
C) remains unchanged.
D) either increases or decreases. We cannot say which.
Ques. 6Which of the following statements pertains to the four-firm concentration ratio? I. It is the percentage of the value of sales accounted for by the four largest firms in an industry. II.
A high concentration ratio is indicative of a high degree of competition. III. The ratio is used to measure product differentiation. A) I only
B) I, II only
C) I, III only
D) I, II, and III
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