A 10 percent increase in income increases the quantity of apple juice demanded from 18,800 to 21,200 gallons. The income elasticity of demand for apple juice is
A) 0.5.
B) 0.8.
C) 1.0.
D) 1.2.
Ques. 2In a duopoly game we observe the following payouts: if the two firms collude they will each earn 50,000. If one firm cheats then he earns 60,000 and the other firm earns -10,000. If both firms cheat then they each earn zero economic profit.
In this game what is the Nash equilibrium? A) Both firms cheat.
B) Only one firm will cheat.
C) Neither firm will cheat.
D) It is impossible to say.
Ques. 3A decrease in the price of a fixed factor of production decreases total cost and
A) increases marginal cost.
B) leaves marginal cost unchanged.
C) decreases marginal cost.
D) increases variable cost.
Ques. 4Which market type has characteristics as follows: large number of firms, differentiated product?
A) perfect competition
B) monopolistic competition
C) oligopoly
D) monopoly
Ques. 5Which of the following best describes the short-run supply curve for an individual perfectly competitive firm?
A) It is the firm's marginal cost curve.
B) It is the upward-sloping part of the firm's marginal cost curve.
C) It is the vertical axis at prices less than minimum average variable cost and is the firm's marginal cost curve at prices above minimum average variable cost.
D) It is the vertical axis at prices less than minimum average total cost and is the firm's marginal cost curve at prices above minimum average total cost.
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