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D. Compare AVC to MR

E. Produce the highest quantity demanded, regardless of price

 

20. Which of the following statements about SR and LR cost curves are true?

A. SMC curves are typically flatter than the LMC curve

B. SAC curves are typically flatter than the LAC curve

C. SAC curves intersect the LAC curve at its minimum

D. SAC curves touch the LAC curve at their minimums

E. If the LAC curve reaches its minimum at some point, one of the SAC curves must also reach its minimum at this point.

 

21. The graph above depicts a perfectly competitive industry with initial equilibrium at (q2, p2). After government intervention, deadweight loss emerged. Which of the following policies could have caused such a loss?

A. A price ceiling set at p4

B. A price floor set at p1

C. A per-unit tax of (p4 – p1) on the good’s production

D. A per-unit subsidy of (p4 – p1) on the good’s production

E. A lump-sum tax of (p4 – p1)q2 on the good’s production

 

22. Which of the following could indicate that there are economies of scale in an industry?

A. Two firms can produce any amount of output with lower cost, than one firm

B. MC is constant for all levels of output

C. Whenever output increases by 1%, TC increases by 2%

D. When a typical firm doubles the quantity of all inputs used, its output rises by 200%

E. No right answer

 

23. A perfectly competitive firm and a monopoly are the same in that:

A. They cease production when MR < min(AVC)

B. Their technologies are equally likely to have economies of scale

C. A binding price ceiling would increase their profits

D. At the profit-maximizing level of output, market demand for their output is elastic

E. More than one answer is correct

 

24. Which of these situations is NOT an example of price discrimination?

A. Policeman Boots works night shifts, so he chooses to buy bread at 7 a.m. rather than 7 p.m.

B. Sean buys 6 bottles of Coke for $6, while Sheila buys them one at a time, paying $1.50 for each.

C. At weekends, John prefers to go to the movies in the morning, when tickets are cheaper. Jane, however, likes to stay in bed till noon, so she goes to the movies in the evening, paying a higher price.

D. Mary and Susan are offered 5% discount at a sports shop, if they fill a marketing questionnaire. Mary wastes 1 hour to fill it – and receives the discount, while Susan chooses not to.

E. Bill has to pay $50 to enter a nightclub, but his girlfriend is let in for free.

 

25. If, at some level of output q, P(q) > MC(q), motive of profit maximization would require that:

A. A firm should increase output, no matter whether it is a monopoly, or a competitive firm


Date: 2015-12-17; view: 853


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D. Price equal to marginal cost | B. A competitive firm should increase output; a monopoly may not.
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