Econ-Extra Prelim 2 Practice Questions Only

Econ-Extra Prelim 2 Practice Questions Only - Economics...

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Economics 1110 Extra Prelim 2 Practice Questions with Answers For each of the 20 multiple-choice questions below, circle the best response IN INK. Each question is worth 3 points. Questions 1-4 refer to the diagram below. $ D 300 MC 200 150 100 300 100 150 Quantity 75 225 75 1. Emily is a single-price, profit-maximizing monopolist  in the annual sale of class rings at Cornell University.  If  her demand and marginal cost curves are as shown, how  much will she charge for each class ring, and how many  will she sell each year? a. $200 per ring, 100 rings. b. $225 per ring, 75 rings. c. $150 per ring, 150 rings. d. $100 per ring, 100 rings. e. $75 per ring, 75 rings. 2. What is the socially optimal price and quantity of  rings for this market? a. $100 per ring, 150 rings. b. $0 per ring, 300 rings. c. $200 per ring, 100 rings. d. $150 per ring, 150 rings. e. $75 per ring, 75 rings. 3. For this market, by how much is annual total  economic surplus at the monopolist's profit-maximizing  price and quantity smaller than at the socially optimal  price and quantity? a. $1,250. b. $2,500. c. $5,000. d. $10,000. e. None of the above. Answer: b. 4. How much consumer surplus would ring buyers reap  each year in this market if Cornell refused to allow  Emily to charge a price above $100? a. $5,000. b. $7,500. c. $10,00. d. $15,000. e. None of the above. 5. If a profit-maximizing monopolist had only fixed  costs and no marginal costs, a. it would produce the same as a competitive firm. b. its output choice would be unaffected by the  imposition of a tax of $1 per unit of output. c. it would definitely earn an economic profit. d. it would maximize total revenue. e. only one of the above statements is false. 6. Each buyer in the market for designer potatoes buys  one pound per week if the price is less than or equal to  her reservation price, and none if the price is higher than  her reservation price.  The following table shows the  reservation prices of potential customers of the lone  seller in this market.       
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This note was uploaded on 04/19/2011 for the course ECON 1110 taught by Professor Wissink during the Spring '06 term at Cornell.

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Econ-Extra Prelim 2 Practice Questions Only - Economics...

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