Test3_practicequestions(1)

A and b b a and c c b and d d c and d 32 the above

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Unformatted text preview: 23!&*2%.!2.&/+7,!2$&7!(2$%.!0(+723!(7!2$%! & 1(72.&12!1-.)%<! ?"!! .%!/%*+7+2%8=!7(2!2$%!*+7&8!%7/(5C%723!&*2%.!2.&/+7,<! & :735%.@!!! ! ; !"#$%&!!! '()$*+!,-./--*!!/"!0-"#1-! ! A) are most likely to reflect the final endowments after trading. B) are least likely to reflect the final endowments after trading. C) are equally likely to reflect the final endowments after trading than other points on the contract curve. D) are definitely not the final endowments after trading. 31) The above figure depicts the Edgeworth box for two individuals, Al and Bruce. If the endowment is at point a and trade is possible, which of the following points are possible equilibria? A) a and b B) a and c C) b and d D) c and d 32) The above figure depicts the Edgeworth box for two individuals, Al and Bruce. Considering only the labeled points, point c is a possible equilibrium A) only if it is the endowment. B) only if point a is the endowment. C) if either point a or b is the endowment. D) only if point d is the endowment. 33) The above figure depicts the Edgeworth box for two individuals, Al and Bruce. If the endowment is at point a, and Al has no ability to bargain, the final allocation will be at point A ) a. B ) b. C ) c. D ) d. 34) The above figure depicts the Edgeworth box for two individuals, Al and Bruce. Point a is not Pareto efficient because A) Al’s MRS exceeds Bruce’s MRS. B) the point is not near the center of the box. C) Al’s indifference curve is not far enough away from the origin. D) All of the above. 35) The above figure depicts the Edgeworth box for two individuals, Al and Bruce. Point c is Pareto efficient because A) the MRS’s are equal. B) the indifference curves are tangent. C) no mutual gains from trade exist. D) All of the above. 36. Marginal Revenue is A) the increase in total revenue from selling one more unit of output. B) equal to P(1+1/e) C) equal to P when the price elasticity of demand is infinite. D) All of the above 37. One difference between a monopoly and a competitive firm is that A) a monopoly is a price taker. B) a monopoly maximizes profit by setting marginal revenue equal to marginal cost. C) a monopoly faces a downward sloping demand curve. D) None of the above. 38. If the inverse demand function for a monopolyʹs product is p = 100 - 2Q, then the firmʹs marginal revenue function is A) B) C) D) -2. 100 - 4Q. 200 - 4Q. 200 - 2Q. 39. If the inverse demand curve a monopoly faces is p = 100 - 2Q, and MC is constant at 16, then profit maximization is achieved when the monopoly sets price equal to A) 16. B) 21. C) 25. D) 58. 40). A profit-maximizing monopolist will never operate in the portion of the demand curve with price elasticity equal to A) -3. B) -1. C) -1/3. D) None of the above--the price elasticity does not matter. 41) The ability of a monopoly to charge a price that exceeds marginal cost depends on A) the price elasticity of supply. B) price elasticity of demand....
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