[dentzi the Choice that best completes the statement or answers the question.
1. A young chef is considering opening his own sushi bar. To do so, he would have to quit his current job, which
pays $20,000 a year, and take over a store build
Identifi; the choice that best completes the statement or answers the question.
1. If the government wants a natural monopoly to earn a "fair return" or zero economic prot, it will set
price equal to marginal cost
price equal to average to
1. Demand is given by q = 7 2 p . What is the price elasticity of demand at p : 3?
None of the above
2. Consider a downward-sloping linear demand curve. Then
the elastic portion of the demand curve is at low prices
the elastic portion of
Form A Form B
Answer Keys for Midterm#2
22222 MultiEle choice: choose ONE alternative. Mark answer on answer sheet provided.
When a natural monopoly exists, it is
A. always cost effective to have perfect competition among
firms to produce the product.
B. never cost effective for one firm to produce the product.
C. always cost effective for two or more firms to produce the
Suppose that there are four countries (South Korea, India, Indonesia, and China). The autarky
prices (measured in each countrys currency) for each of two goods are given in the following
table. Which country has the lowest price of bicycles in terms of
0 Please read each question below carefully, and respond to the questions on a separate sheet
of scratch paper. You must show your work.
0 Please write clearly and indicate your answers
a When finished with the test, staple your scratch pape
Section A: Fill-in-the-blanks
each uestion is worth 0.5 oints
One of the economic statistics used to measure ination is GDP deator/CPI
Assume that a rancher sells McDonald's a quarter-pound of meat for $1 and that
McDonald's sells you a hamburger
1. How a metropolitan area is defined? How many metros in the U.S.?
A metropolitan area is defined as an aggregate of a principle city and its
economicallytied adjacent counties. The building blocks are counties (political
boundaries). A Principal city is