HW1_Econ425

HW1_Econ425 - Econ 425-100 Spring 2011 Instructor Fan Ji...

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Econ 425-100 Spring 2011 Instructor Fan Ji Homework 1 (50 Points Total) Name_______________ Due on Feb 11 th, 2011 Part One (20 points) : Multiple Choice (3 points each) Choose the one alternative that best completes the statement or answers the question. 1. When consider the competitive model, which of the following is true? 1) A small number of firms in a market indicate that firms will not behave as price takers. 2) A long-run barrier to entry may result in a deadweight loss or cost to society. a. Both I and II are true. b. I is false, and II is true. c. Both I and II are false. d. I is true, and II is false. 2. Constantine purchased 100 shares of IBM stocks several months ago for $150 per share. The price of these shares has fallen to $55 per share. Constantine's investment strategy is “buy low, sell high.” Therefore, he will not sell his IBM stocks until the price rises above $150 per share. If he sells at a price lower than $150 per share he will have “bought high and sold low.” Constantine's decision:
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HW1_Econ425 - Econ 425-100 Spring 2011 Instructor Fan Ji...

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