If the apartment owner can somehow see the effort of the each of the room mates and punishes with a loss of 5 to any room mate who doesn't clean, is that likely to lead to a more efficient outcome?
a. No because they would have to clean against their will
b. Yes because now they would both get a utility of 3
c. No because neither of them like cleaning
d. No because filth is good
QUESTION 2The government decided to reduce taxes on fast-food to increase revenue. The government assumes that fast-food products have
a. An inelastic demand
b. An elastic demand
c. A demand curve that is upward sloping
d. Unitary elastic demand curve
QUESTION 3If the apartment owner decides to fine both the roommates if the apartment is dirty, such that now if neither of them clean they each get a 5 utility loss, what would the new equilibrium be now?
a. John cleans, Joe doesn't
b. Joe cleans, John doesn't
c. Neither of them clean the apartment
d. Both A&B
QUESTION 4Jim saw a decrease in the quantity demanded for his firm's product from 8000 to 6000 units a week when he raised the price of the product from 200 to 250 . What is Jim's own price elasticity of demand?
a. 1.29
b. 1
c. 0.25
d. 0.78
QUESTION 5Is the equilibrium efficient?
a. Yes, since they are both maximizing the utility
b. No, since they could both get more utility
c. One should keep the house clean
d. None of the above
QUESTION 6The price elasticity of demand tells us about
a. The sensitivity of price to quantity
b. The sensitivity of quantity to price
c. The sensitivity of income to price
d. The sensitivity of income to quantity
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