PART A – Questions 1 – 7 Consider a market where demand is D: P = 30 – Q and sup
ID: 1206048 • Letter: P
Question
PART A – Questions 1 – 7
Consider a market where demand is D: P = 30 – Q and supply is S: P = 0.5Q.
Equilibrium quantity Qe is
A. 17
B. 18
C. 19
D. 20
Equilibrium is price Pe
A. $10
B. $11
C. $12
D. $13
Consumer surplus CS is
A. $199
B. $200
C. $201
D. $202
Producer surplus PS is
A. $98
B. $99
C. $100
D. $101
Total surplus TS is
A.$220
B. $300
C. $323
D. $444
When the government imposes a price ceiling = $20, disequilibrium between quantity demanded and quantity supplied results in
A. Deficit = 10
B. Surplus = 10
C. Deficit = 30
D. Surplus = 30
Total surplus TS’ with the price floor is
A. $220
B. $225
C. $230
D. $235
PART B – Questions 8 – 28
Consider a market where demand is D: P = 40 – Q and supply is S: P = Q.
Equilibrium quantity Qe is
A. 16
B. 18
C. 20
D. 22
Equilibrium price Pe is
A. $18
B. $20
C. $22
D. $24
Consumer surplus CS is
A. $198
B. $199
C. $200
D. $201
Producer surplus PS is
A. $198
B. $199
C. $200
D. $201
Total surplus TS is
A. $390
B. $394
C. $396
D. $400
Impose a specific tax T = $4 on each unit sold in the above market.
Post-tax quantity Q’ is
A. 16
B. 18
C. 20
D. 22
Post-tax price P’ is
A. $18
B. $20
C. $22
D. $24
Consumer surplus CS’ is
A. $156
B. $158
C. $160
D. $162
Producer surplus PS’ is
A. $156
B. $158
C. $160
D. $162
Tax revenue TR of the government is
A. $68
B. $70
C. $72
D. $74
Total surplus TS’ is
A. $390
B. $394
C. $396
D. $400
Consider a market where demand is: P = 70 – Q and supply is S: P = Q.
Equilibrium quantity Qe is
A. 35
B. 36
C. 45
D. 56
Equilibrium price Pe is
A. $34
B. $35
C. $36
D. $37
Consumer surplus CS is
A. $610
B. $612.5
C. $615
D. $648
Producer surplus PS is
A. $610
B. $612.5
C. $615
D. $648
Total surplus TS is
A. $1,222
B. $1,223
C. $1,224
D. $1,225
Construct a budget neutral subsidy in the above market.
Post-subsidy quantity Q’ is
A. 35
B. 36
C. 45
D. 56
Post-subsidy price P’ is
A. $34
B. $35
C. $36
D. $37
Consumer surplus CS’ is
A. $610
B. $612.5
C. $615
D. $648
Producer surplus PS’ is
A. $610
B. $612.5
C. $615
D. $648
Total surplus TS is (do not forget to account for the subsidy expenditure SE)
A. $1,222
B. $1,223
C. $1,224
D. $1,225
The basic characteristic of the long run is that:
A. barriers to entry prevent new firms from entering the industry.
B. the firm has sufficient time to change the size of its plant.
C. the firm does not have sufficient time to cut its rate of output to zero.
D. a firm does not have sufficient time to change the amounts of any of the resources it employs.
The law of diminishing returns indicates that:
A. as extra units of a variable resource are added to a fixed resource, marginal product will decline beyond some point.
B. because of economies and diseconomies of scale a competitive firm's long-run average total cost curve will be U-shaped.
C. the demand for goods produced by purely competitive industries is downsloping.
D. beyond some point the extra utility derived from additional units of a product will yield the consumer smaller and smaller extra amounts of satisfaction.
Variable cost is:
A. the cost of producing one more unit of capital, say, machinery.
B. any cost which does not change when the firm changes its output.
C. average total cost multiplied by the firm's output.
D. any cost that rises with output in the short run.
Consider a market with the market demand D: P = 100 – Q, which is served by twoCournot duopolistic producers with the constant marginal cost MC = $10 and no fixed cost.
In Nash equilibrium, the output of each firm, is
A. 20
.B 30
C. 40
D. 50
In Nash equilibrium, the market output is
A. 40
B. 60
C. 80
D.100
In Nash equilibrium, the market price is
A. $30
B. $40
C. $50
D. $60
In Nash equilibrium, profit of each firm is
A. $900
B. $1000
C. $1100
D. $1200
When these two firms collude to form a cartel, the market output is
A. 10
B. 20
C. 35
D. 45
When these two firms collude to form a cartel, the market price is
A. 45
B. 55
C. 60
D. 70
When these two firms collude to form a cartel, the profit of each firm is
A. $1012.50
B. $1450.50
C. $1560.25
D. $1860.25
Under pure competition a large number of identical firms in this market would produce a market output of
A. 80
B. 90
C. 100
D. 110
Under pure competition the market price in this market would be
A. $10
B. $14
C. $15
D. $18
Explanation / Answer
part-A.
1.D
2.A
3.B
4.C
5.B
6.C
7.C
part-B
8.C
9.B
10.C
11.C
12.D
13.B
14.A
15.D
16.D
17.C
18.C
19.A
20.B
21.B
22.B
23.D
24.
25.
26.
27.
28.B
29.D
30.D
31.B
32.B
33.B
34.A
if u need explanation of any answer please comment.
Related Questions
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.