Exam 3 - Mock

Exam 3 - Mock - light bulbs. Figure 1 2. The domestic...

Info iconThis preview shows page 1. Sign up to view the full content.

View Full Document Right Arrow Icon
ECON 425 - 100 P RACTICE Q UESTIONS FOR E XAM #3 Review Chapter 13, 14, 15. 16 & 18 1. The R&D devision of a monopoly producer of light bulbs develops a new kind of bulb that lasts forever but is otherwise indistinguishable from conventional light bulbs in terms of performance and cost of production. Could it ever be optimal for the monopoly to hide this discovery from the world and continue to produce light bulbs that have a finite lifetime? Briefly explain your answer and think about how your answer might differ depending on whether the monopolists sells or rents its
Background image of page 1
This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: light bulbs. Figure 1 2. The domestic demand curve, domestic supply curve, and world supply curves for a good are given in Figure 1. All the curves are linear. Initially, the country allows imports. Then imports are banned. Calculate how consumer and producer surplus change because of the ban. Is the country better off with the ban on imports? (Also, think of what a tariff, subsidy or a quota system would do to this) 25 25...
View Full Document

This test prep was uploaded on 03/25/2008 for the course ECON 425 taught by Professor Watugala during the Summer '06 term at Texas A&M.

Ask a homework question - tutors are online