Tag: Economics – Others

How would each of the following affect the firm’s marginal cost (MC), average variable cost (AVC), and average total cost (ATC) curves?
1. A decrease in material costs.
decrease MC, no change AVC, decrease, ATC
decrease MC, decrease AVC, decrease, ATC
increase MC, increase AVC, increase, ATC
no change MC, no change AVC, decreases ATC
no change MC, no change AVC, increases ATC
increase MC, no change AVC, increase, ATC
2. An increase in wages.
decrease MC, no change AVC, decrease, ATC
decrease MC, decrease AVC, decrease, ATC
increase MC, increase AVC, increase, ATC
no change MC, no change AVC, decreases ATC
no change MC, no change AVC, increases ATC
increase MC, no change AVC, increase, ATC
3. The rent that the firm pays on the building that it leases decreases.
decrease MC, no change AVC, decrease, ATC
decrease MC, decrease AVC, decrease, ATC
increase MC, increase AVC, increase, ATC
no change MC, no change AVC, decreases ATC
no change MC, no change AVC, increases ATC
increase MC, no change AVC, increase, ATC
4. The government imposes a fixed amount of tax.
decrease MC, no change AVC, decrease, ATC
decrease MC, decrease AVC, decrease, ATC
increase MC, increase AVC, increase, ATC
no change MC, no change AVC, decreases ATC
no change MC, no change AVC, increases ATC
increase MC, no change AVC, increase, ATC

QUESTION 25
What is found in Arthur Laffer’s model of the macro economy?
A. The trade-off between the MPC and the MPS.
B. The trade-off between inflation and unemployment.
C. The spending multiplier.
D. The tradeoff between leisure and all other economic goods.
E. None of the above is in his model.
QUESTION 26
Suppose goif ball workers in lapan earn 112 per houl, while goif bal workers in the Thilpgines earn 36 per hour on anerage. Aasume these workers in japan are 3 smes more productive then workers in the Philippines. What happers given free trade and rero Eamsaction coss?
RWorkers in the Phig ppines wages ofecrease to 54 per hour.
8. Workers in japan will have their wages fall to 19 per hour.
C. Workers in Japan will have their wages to $4 per houf.
D. Nouhing will change.
C. Workers in the Prilppines wages decrease to $3 per hour.
QUISTION 27
What is not true?
A. Repressed inflation arises when the government accelerates the growth of the money supply and simuluateully impoles maximum price controls.
B. Cetens Paribus, lower money velocity will lead to deflation.
C. Monetary policy can permanently lower the real interest rate.
0. An increased Consumer Price index (CPD) indicates inflation.
E. The dfference between frictional unemployment and cyclical unemployment is that frictional unemployment exsts even in a general equilibrium whereas cyclical unemployment exists only in a recession.

22Mrs. Renfro’s, Inc., sells 25 different relishes in 45 states. Mrs. Renfro’s chipotle corn salsa is so popular that the company cannot make enough to keep its resellers stocked. Its price of $4.50 for a jar seems just right to consumers who savor its hot and spicy taste. The popularity of hot and spicy food is an example of a that Mrs. Renfro’s has taken advantage of to make its product a success.
Multiple Choice
barter factor
demand factor
supply factor
consumer index
macroeconomic environmental factor
23You can go to your nearest Hallmark card store and buy a birthday greeting card for a friend and pay $4.50. Or you can buy a Hallmark card from its new $0.99 line of greeting cards, made with lesser-quality materials but just as sentimental, sold at Barnes & Noble bookstores. This is an example of
Multiple Choice
eBook
mass customization
organizational synergy
one product and multiple market segments
price discrimination
a Tiffany/Walmart strategy

Suppose that during the past year, the price of a virtual reality headset fell from $5,500 to $5,300. During the same time period, consumer sales increased from 489,000 to 635,000 headsets.
Calculate the elasticity of demand between these two price-quantity combinations by using the following steps. After each step, complete the relevant part of the table with the appropriate answers. (Note: For decreases in price or quantity, enter values in the Change column with a minus sigh.)
Original
New
Average
Change
Percentage Change
Quantity
Price
Step 1: FiW in the appropriate values for original quantity, new quantity, original price, and new price.
Step 2: Calculate the average quantity by adding the original quantily and the new quantity, and then dividing by two. Do the same for the average price.
Step 3: Calculate the change in quantity by subtracting the ariginal quantity from the new quanbity. Do the same for the change in price.
Step 4: Calculate the percentage change in quantily demanded by dividing the change in quantity by the average quantity. Do the same to calculate the percentage change in price.
Step 5: Calculate the price elasticity of demand by dividing the percentage change in quantity demanded by the percentage change in price, ignoving the negative sign,Using the midpoint method, the elesticity of demand for heodsets is about ◻ .

Jen is the only seller of bottled water at the Brisbane Entertainment Centre.
There are no close substitutes available. Patrons are not allowed to bring any form of bottled water to the venue.
Select the item from the list provided to make the following statements true:
The extent of the deadweight loss created by Jen’s monopoly depends on her ability to set price. This is also referred to as __________.
As a monopolist, Jen will be able to set the price of bottled water so that her profit is _____.
If monopolistic competition existed for drinks at this Entertainment Centre, the available products would be _______.
Choices:
Supply
Government regulators
Economic profits
Marginal revenue
Demand
Minimised
Deadweight loss
Maximised
Differentiated
Opportunity costs
Market power
Marginal cost

Consider the information in the file HW7 Negative Production Externality. The allocatively efficient amount of production is units. Therefore, without any government policy, the production of this good would result in a deadweight loss of dollars. To solve the externality problem, the government imposes a Pigouvian tax on the producers in this industry. The total tax collected by the government equals dollars, which it pays to the affected parties to compensate them for the harmful effects of the externality. As a result, total external cost equals dollars.
Production of a commodity in a perfectly competitive market imposes $40 of marginal external cost on the society. The following graph shows the marginal private cost (same as supply) and marginal private benefit (same as demand) functions. The total tax collected by the government equals 60000.00 dollars, which it pays to the affected parties to compensate them for the harmful effects. As a result, total external cost equals 120000.00 dollars.

Part 1
Suppose you run a regression of test scores against parking lot area per pupil. Is the R-squared (R
2
) likely to be high or low?
A. High, Because the relationship between test scores and parking lot area per pupil is a causal relationship.
B. High, because parking lot area is correlated with student–teacher ratio, with whether the school is in a suburb or a city, and possibly with district income.
C. Low, because parking lot area is correlated with student–teacher ratio, with whether the school is in a suburb or a city, and possibly with district income.
D. Low, Because the relationship between test scores and parking lot area per pupil is a causal relationship.
Part 2
Are the OLS estimators likely to be biased and inconsistent?
A. The OLS estimators are likely biased and inconsistent because there are omitted variables correlated with parking lot area per pupil that also explain test scores, such as ability.
B. The OLS estimators are likely to be unbiased and consistent because the R-squared (R
2
) is probably sufficiently high.
C. The OLS estimators are likely unbiased and consistent because there are no omitted variables correlated with parking lot area per pupil that also explain test scores.
D. The OLS estimators are likely to be biased and inconsistent because the R-squared (R
2
) is probably not sufficiently high.

Eleanor works as a private tutor on evenings and weekends. She has no fixed costs, and her opportunity cost of giving a tutoring session is $25.
She has nine potential students each week whose willingness to pay are shown in the following table:
Students (Sessions per week)
Willingness to Pay (Dollars per tutoring session)
Total Revenue (Dollars per week)
Marginal Revenue (Dollars per tutoring session)
1
2
3
4
5
6
7
8
9
If Eleanor has to charge a single price to all of her students, she will maximize her profit by giving tutoring sessions. This is than the efficient number, which is tutoring sessions.
If Eleanor can practice perfect price discrimination, she should give tutoring sessions.
Now suppose Eleanor cannot practice perfect price discrimination, but she is able to find a hurdle that identifies the group of students who are willing to pay at least $34 for a tutoring session (the
)

Question 1
The model of perfectly competitive markets relies on these four core assumptions:
There must be numerous small firms and customers — each player’s actions have no effect on price and thus trade is not possible to influence the market price.
Firms must produce a homogeneous product — buyers must regard all sellers’ products as equivalent.
Firms and resources must be fully mobile, allowing for free entry into and exit from the industry.
Each firm and each customer is well informed about available products and prices.
The first two conditions imply that all consumers and firms are price takers. While the third is not strictly necessary for price-taking, a market cannot maintain competition in the long run without free entry.
Identify whether or not each of the following scenarios describes a perfectly competitive market, along with the corresponding reasons:
Dozens of companies produce plain white socks. Consumers regard plain white socks as homogeneous and don’t care which company makes them.
Several stores in the mall sell hooded sweatshirts. Each store’s sweatshirts reflect the style of that particular store; some use more cotton than others, which is reflected in the apparel’s prices.
The government has granted a patent to a pharmaceutical company for an experimental AIDS drug. That company is the exclusive producer of the drug.
In a small town, there are two providers of broadband internet access: a cable company and the phone company. The service is of the same speed.

Normal Form Game:
The table below provides a normal form, 2 x 2 game. The players are Column and Row. Column can choose either LEFT or RIGHT, and Row can choose either UP or DOWN. Their payoffs for each combination of moves are provided in the four boxes. What is the dominant strategy Nash equilibrium in the game situation described in the table above?
Question 18 options:
Every outcome is a dominant strategy Nash Equilibrium
Either LEFT or RIGHT, so long as Row plays UP
Either UP or DOWN, so long as Column plays LEFT
There is only one dominant strategy, UP