2008ps4 - BUAD 351 - Economic Analysis for Business...

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Unformatted text preview: BUAD 351 - Economic Analysis for Business Decisions Homework 4 due: Wed 04/09/2008 PART (i): multiple choice please provide the answers in the following box: question answer 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 1. In long-run equilibrium with free entry: a. the equilibrium price must equal the minimum average total cost. b. pro&t is equal to zero. c. each active &rm must produce at its e cient scale of production . d. All of the above 2. If an individual &rm supply function is Q = 2+3P, and there are 5 &rms, then the market supply function is: a. Q = 2+3P b. 5Q = 2+3P c. Q = 10 + 15P 3. Aggregate surplus is equal to a. consumer surplus + producer surplus. b. consumerstotal willingness to pay for a good minus the total avoidable cost of producing the good. c. the net bene&t created by the production and consumption of the good. d. all of the above 4. When aggregate surplus is maximized, deadweight loss is a. equal to sunk costs. b. zero. c. the area under the demand curve. d. none of the above 5. The Second Welfare Theorem states that a. government welfare and programs are essential to achieve a reasonable balance between e ciency and equity. b. every Pareto e cient allocation can be achieved as a competitive equilibrium, given some initial allocation of resources. c. competitive market forces cannot achieve a Pareto e cient allocation. d. All of the above 1 6. Consumers pay a larger share of a speci&c tax when demand for the good is: a. less elastic. b. more elastic. c. perfectly inelastic. d. none of the above 7. True or False: A milk price oor would de&nitely help all dairy farmers. a. True b. False 8. Some government policies create net losses. They are enacted because: a. the policies create bene&ts for a small group that lobbies for the policies. b. the policies generate costs that are spread over such a large group, that individual members of that large group are not motivated to lobby against the policies....
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This note was uploaded on 07/23/2008 for the course BUAD 351 taught by Professor Eastin during the Spring '07 term at USC.

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2008ps4 - BUAD 351 - Economic Analysis for Business...

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