2030 practice test 2

2030 practice test 2 - 1. A perfectly competitive firm's...

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1 . A perfectly competitive firm's marginal revenue: A. increases as the firm's output increases. B. decreases as the firm's output increases. C. is constant. D. is below the selling price. E. is above the selling price 2. In the prisoner's dilemma, when does the prisoner have an incentive to confess? A. Never because if both confess both are worse off. B. Only if he thinks the other will confess. C. Only if he thinks the other will remain silent. D. Always. 3. Suppose government imposes a per unit tax paid by producers on a product that has a downward- sloping market demand curve and an upward-sloping market supply curve. Then, the price producers actually receive for the product (after tax price): A. increases by the amount of the per unit tax. B. increases by less than the amount of the per unit tax. C. decreases by the amount of the per unit tax. D. decreases by less than the amount of the per unit tax. 4. The long run market supply curve in a perfectly competitive constant-cost industry is: A. upward sloping. B. horizontal. C. downward sloping. 5. Suppose elasticity of demand is 1, elasticity of supply is 2, and a 5% excise tax is levied on consumers. Which of the following changes will increase the burden of the tax on consumers? A. Elasticity of demand falls to 0. B. Elasticity of demand rises to 2. C. Elasticity of supply decreases to to 0.8. 6. A highly competitive market consisting of many firms selling differentiated products is: A. an oligopoly. B. monopolistically competitive. C. a pure monopoly. D. perfectly competitive. 7. A price-discriminating monopolist will charge a lower price to: A. individuals with a more inelastic demand. B. individuals with a more elastic demand. Version 1 Page 1
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8. Refer to the graph above. An unregulated, profit-maximizing monopolist will charge a price of: A. P1 and produce Q1 units of output. B. P2 and produce Q2 units of output.
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This note was uploaded on 12/09/2009 for the course ECON 2030 taught by Professor Bong during the Spring '07 term at LSU.

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2030 practice test 2 - 1. A perfectly competitive firm's...

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