Final Exam Practice Questions
Dr. John Horowitz
1) The transactions costs of writing and enforcing contracts are higher:
a) in countries with poorly-enforced property rights.
(cost of making the deal)
b) in countries with strongly-enforced proper
A. Set MR = MC and solve for Q to find the profit-maximizing activity level:
$1,500 - $0.01Q
= PQ - TC
= $1,500(75,000) - $0.005(75,0002) - $18,000,000 - $750(75,000)
Market Supply and Demand
1. If the demand curve for good X is downward-sloping, an increase in the price will
a. an increase in the demand for good X.
b. a decrease in the demand for good X.
c. no change in the quantity d
A clinic uses doctors and nurses to serve the maximum number of patients given a limited annual
payroll.The clinic currently has 10 doctors and 30 nurses.The last doctor hired can serve 300
additional patients, while the last nurs
Using Supply and Demand
A f t e r r e a d i n g t h i s c h a p t e r, y o u s h o u l d b e a b l e t o :
Show the effect of a shift in demand and supply on equilibrium price
Explain real-world events using supply and demand.
Chapter 11: Pricing with Market Power
PRICING WITH MARKET POWER
The chapter begins with a discussion of the basic objective of every pricing strategy,
which is to capture as much consumer surplus as possible and convert it into a