Robinson spends all his income on mangos and bananas. Mangos cost 3 per pound and bananas cost 1 per pound. The marginal utility is 24 for the last pound of mangos purchased and 10 for the last pound of bananas.
To maximize his utility, Robinson should buy A) more mangos and fewer bananas.
B) more bananas and fewer mangos.
C) the present combination of goods.
D) only mangos.
Ques. 2President Obama has proposed a goal that everyone complete at least one year of formal education or training beyond high school.
This policy would ________ the production of current consumption goods and services and ________ the future production of consumption goods and services. A) decrease; increase
B) increase; decrease
C) not change; increase
D) increase; increase
Ques. 3The income elasticity of demand is the percentage change in ________ divided by the percentage change in ________.
A) the price; income
B) the quantity demanded; income
C) income; the quantity demanded
D) income; the price
Ques. 4Intel hired a consultant who found that the value of marginal product of Intel's workers decreased as more workers were hired. Suppose Intel is a monopolistically competitive firm. Then the value of marginal product decreases because the
I. workers' marginal product of labor decreased as more workers were hired.
II. marginal revenue of Intel's chips decreased as more chips were sold.
A) I only
B) II only
C) Both I and II
D) Neither I nor II
Ques. 5The figure above shows a monopoly firm's demand curve. The monopoly's total revenue is at its maximum when the firm produces at point
A) x.
B) r.
C) t.
D) u.
Ques. 6The figure above shows Ronald's budget line. He has a weekly income of 20, which he spends on hotdogs and hamburgers. Ronald's real income in terms of hamburgers ________.
A) depends on the quantity of hamburgers consumed
B) depends on the quantity of hotdogs consumed
C) is 20
D) is 10 hamburgers
Ques. 7Two software firms have developed an identical new software application. They are debating whether to give the new app away free and then sell add-ons or sell the application at 30 a copy.
The payoff matrix is above and the payoffs are profits in millions of dollars. What is the Nash equilibrium of the game? A) Both Firm 1 and 2 will sell the software application at 30 a copy.
B) Both Firm 1 and 2 will give the software application away free.
C) Firm 1 will give the application away free and Firm 2 will sell it at 30.
D) There is no Nash equilibrium to this game.
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