10. The consumer's utility function is U=4 square root of X1 + X2. This means that the MRS at the bundle (x1, x2) is 2/square root of X1. Show that the individual's indifference curves have the diminishing MRS property.
For each of the following equations, graph the line and calculate its slope. A) P = 10-2Qd ( Put Qd on the X-axis) B) P = 100-4Qd ( Put Qd on the X axis) C) P = 50+6Qs ( Put Qs on the x axis) D) I = 10,000-500r ( Put I on the x axis)
Calculate the real GDP in each year, assuming that the nominal GDP was $559 billion in the base year, $577 billion in year one, and $605 billion in year two; and that the price index rose from 100 to 104.5 in the first year, and up to 108.3 in the second year. If the price index 20 years before the base year was 41.2, and the no
The equation for the required rate of return on an individual stock given by the Capital Asset Pricing Model is
The equation for the required rate of return on an individual stock given by the Capital Asset Pricing Model is kj = Rf + á(Rf - km) kj = Rf - á(km - Rf) kj = Rf + á(km - Rf) kj = km + á(km - kf)
The practice by a monopolist of charging each buyer the highest price he/she is willing to pay is called
The practice by a monopolist of charging each buyer the highest price he/she is willing to pay is called first-degree discrimination. second-degree discrimination. third-degree discrimination. fourth-degree discrimination
Among the advantages of the _____________ technique of forecasting are ease of calculation, relatively little requirement for analytical skills, and the ability to provide the analyst with information regarding the statistical significance of results and the size of statistical errors. least-squares trend analysis
When the consumption of chicken increases following an increase in the price of beef, the two products can be considered to be
When the consumption of chicken (whose price has not changed) increases following an increase in the price of beef, the two products can be considered to be complements substitutes unrelated correlated
When two mutually exclusive projects are considered, the NPV calculations and the IRR calculations may, under certain circumstances, give conflicting recommendations as to which project to accept. The reason for this result is that in the NPV calculation, cash inflows are assumed to be reinvested at the cost of capital, while i
If a firm finds itself operating in Stage I, it implies that variable inputs are extremely expensive it over-invested in fixed capacity it under-invested in fixed capacity fixed inputs are extremely expensive
The internal rate of return of a project can be found a. by discounting all cash flows at the cost of capital. b. by averaging all cash inflows, and calculating the interest rate, which will make them equal to the average investment. c. by calculating the interest rate, which will equate the present value of
Please explain what the concept of mutual interdependence among oligopolists is.
A. What is the grim trigger strategy, and how does it solve the Prisoner's Dilemma in repeated games? b. Under what circumstances is it likely to fail?
In the long run, the most helpful action that a monopolistically competitive firm can take to maintain its economic profit is to a. continue its efforts to differentiate its product. b. raise its price. c. lower its price. d. do nothing, because it will inevitably experience a decline in profits.
WHich of the following is an example of an adverse selection problem and which is a moral hazard incentive problem? In each case, give one method that the restaurant might use to reduce the problem 1) A restaurant decided to offer an all-you-can-eat buffet that is sold for a fixed price. The restaurant discovers that the cust
Assume a perfectly competitive firm's short run cost is TC = 100 + 160Q + 3Q2. If the market price is $196, what should it do? a. produce 5 units and continue operating b. produce 6 units and continue operating c. produce zero units (i.e., shut down) d. cannot be determined from the above information
A firm that seeks to maximize its revenue is most likely to adhere to which of the following? a. MR = MC b. MR = 0 c. MR = P d. MR < MC
In economic analysis, any amount of profit earned above zero is considered "above normal" because a. normally firms are supposed to earn zero profit. b. this would indicate that the firm's revenue exceeded both its accounting and opportunity cost. c.this would indicate that the firm was at least earning a profit equal t
If a stock is expected to pay an annual dividend of $20 forever, what is the approximate present value of the stock, given that the discount rate is 5%?
If a stock is expected to pay an annual dividend of $20 forever, what is the approximate present value of the stock, given that the discount rate is 5%? 300 40 400 30
When the slope of the total revenue curve is equal to the slope of the total cost curve monopoly profit is maximized marginal revenue equals marginal cost marginal cost curve intersects the total average cost curve. the total cost curve is at its minimum both a and b are correct
Which of the following is an example of how the question of "what goods and services to produce?" is answered by the command process? government subsidies for affordable housing laws regarding equal opportunity in employment government allowance for the deduction of interest payments on private mortgag
Instructions for Homework #5: A Perfect Competitive Firm: Costs, Outputs, and Profits The following graph represents a perfect competitive firm operating in the short-run. Please answer the following questions based on the information from the graph. Please show all your work to get full credits. a. Please determine the firm
1. Average fixed cost is: a.AC minus AVC b.TC divided by Q c.AVC minus MC d.TC minus TVC 2. Economists consider which of the following costs to be irrelevant to a short-run business decision? a.Opportunity cost b.Out of pocket cost c.Historical Cost d.Replacement Cost 3. When MR=MC a.Marginal profit is maximized
Which of the following is a relevant cost? a. replacement cost b. sunk cost c. historical cost d. fixed cost e. all of the above are relevant.
Which of the following cost relationships is not true? a. AFC = AC - MC b. TVC = TC - TFC c. the change in TVC/the change in Q = MC d. the change in TC/ the change in Q = MC
In the long run, a firm is said to be experiencing decreasing returns to scale if a 10 percent increase in inputs results in: an increase in output from 100 to 110. a decrease in output from 100 to 90. an increase in output from 100 to 105. a decrease in output from 100 to 85.
If a firm finds itself operating in Stage I, it implies that variable inputs are extremely expensive. it overinvested in fixed capacity. it underinvested in fixed capacity. fixed inputs are extremely expensive.
The perfect substitution of two inputs implies that two inputs can be substituted at a ratio of 1 to 1. one input can be substituted for another up to some point. two inputs can be substituted at some constant ratio. one input can be substituted for another.
When total revenue increases from $18,000 to $26,000 when quantity increases from eight to ten, marginal revenue is equal to
When total revenue increases from $18,000 to $26,000 when quantity increases from eight to ten, marginal revenue is equal to $3,000 $4,000 $8,000 $2,600
____________ risk involves variation in returns due to the ups and downs of the economy, the industry and the firm. structural fluctuational business financial
3. SAR Publisher is a monopolist in publishing a textbook on Hong Kong economy. Besides the Hong Kong market, SAR Publisher also sells this textbook in the US. Suppose SAR Publisher can produce this textbook at a constant marginal cost of $20 per copy and the demand curves for the two markets are given by: QUS = 48, 000 - 600PU