microeconomics

Suppose the market Demand Curve for Rice is Qd = 500 - 10P, what is the price above which no rice will be demanded?

50

Suppose frost destroys part of the wine harvest in France while at the same time there is a shift in world demand towards French wine.  What would we expect to happen to equilibrium P and Q in the French wine market?

P rises but effect on Q is ambiguous

All of the following are determinants of the demand for a good except:

cost of a good

Suppose you play a round of golf costing $75. The golf takes four hours to play. If you were not playing golf you could be working and earning $40 per hour. The opportunity cost of your golf game is:

235

The following question refers to the table below, which shows the maximum number of goods X and Y that producers A and B can produce in one day.

No producer has the comparative advantage in producing either X or Y.

The demand for books is: Qd = 60 –P and supply of books is: Qs = 20. What is the equilibrium price and quantity of books?

P=40, Q=20

The table above gives Argentina and Spain’s annual production of beef and ham.   Argentina’s opportunity cost of an extra ton of ham (in terms of beef) is __________ and Spain's opportunity cost of an extra ton of ham in terms of beef is __________.

3 fewer tons; 1/3 fewer tons

Suppose the supply curve for rice is given by Qs=20+5P and the Demand Curve is Qd=50-10P   If the government insist that price is fixed at 4 this will lead to:

excess supply of 30

We observe that the equilibrium price of T-shirts increases and the equilibrium quantity decreases. Which of the following best fits the observed data?

A decrease in supply with demand constant.

The table above shows England and Portugal’s production of cloth and wine per annum.   Which of the following statements is true?  

Portugal has a comparative advantage in cloth and England in wine

If Y denotes income and Q denotes quantity demanded, then the correct mathematical expression for income elasticity of demand is (assume it is defined with respect to initial Y and Q).

(Q/Y) x (𝚫Y/𝚫Q)

Suppose that a demand curve is given by Q_d=500-0.5P.  If price is 200, then point price elasticity of demand is:

-0.25

At the local store, when the price of a bottle of Pepsi was €1, then 100 bottles were sold per day. When the price increased to €1.40, only 80 bottles were sold per day. Using the midpoint method, what is the price elasticity of demand for a bottle of Pepsi?  

-2/3

If there is a lot of excess capacity in a firm’s production then it is likely that supply is

highly price elastic

Assuming that golf clubs are a normal good, which of these is likely to shift the demand for golf clubs to the left:

a rise in fees required to play on a golf course

John’s income falls from 1000 euro to 900 euro.  If his demand for pizza then falls from 10 per week to 8 per week, pizza is a

luxury good

If quantity demanded, Qd=60-P and quantity supplied Qs=20, then, the point own price elasticity of demand at equilibrium is

-2

A long-run demand curve, as compared to a short-run demand curve for the same

commodity, is generally:

more elastic

Which of the following is likely to lead to a demand curve for a good to be price inelastic?

the good is a necessity

You have one hour to catch a flight to Madrid for spring break. It takes 45 minutes to drive to the airport. Your car is almost out of petrol; the price of petrol at the closest petrol station is higher than the one other side of the town. To you, the price elasticity of demand for petrol is likely to be ______ than it would be if you had several hours before the flight.

Less elastic

Suppose average cost for a firm is given by AC=2Q+6+13/Q.  Then, when Q=5, marginal cost is

26

Assume the following market, where firms have the following market shares:

 

Firm A	60%
Firm B	15%
Firm C	7%
Firm D	7%
Firm E	7%
Firm F	4%

 

The 3-firm concentration Ratio for this industry is _______, while the Herfindhal-Hirschman index (HHI) is ______

0.82;  0.3988

If a firm moves from one point on a production isoquant to another point on the same isoquant, which of the following will not happen:

a change in the level of output

Suppose the cola industry in Ireland consists of five sellers: two global brands, Coca-Cola and Pepsi, and three local competitors, Dunnes’ St. Bernard Cola, Tesco Finest Cola and Lidl’s Freeway. Consumers view these products as similar but not identical. The market shares of the five sellers are as follows

Firm                  Market Share

Coca-Cola          25%

Lidl Freeway     24%

Pepsi                  23%

Tesco Finest      20%

Dunne’s Cola    8%

 

The 4-firm Concentration Ratio (4CR) for this industry is _______, while the Herfindhal-Hirschman Index (HHI) is ___________.

0.92, 0.2194

I estimate that elasticity of demand for my product is (minus) 0.5.  If I lower my price by 5% I can expect

Total sales revenue should fall

Suppose the own price elasticity of demand for tennis balls is -0.4 and the cross price elasticity of demand between tennis balls and tennis racquets is -0.2.  In that case a 10% rise in the price of tennis balls will lead to:

Increased sales revenue for tennis balls and a 2% fall in quantity sold of tennis racquets

The average variable cost curve:

Converges with the average total cost curve as output increases

The firm’s total cost of producing 10 units of output is 120. At this output level, average fixed costs are equal to 2. It follows that the firms average variable costs are equal to

10

Suppose that your grade on this examination is described by G = 2A^0.5E^0.5, where G is your numerical score, A is ability, and E is effort measured in terms of hours studied. This grade production function reflects

constant returns to scale and diminishing returns to A and E

Monopoly is a market structure that is typically characterised by all the following features except

firm is a price taker

Which of the following statements about price and marginal cost in competitive and monopolized markets is true? In competitive markets…

price equals marginal cost; in monopolized markets, price exceeds marginal cost

Suppose the demand curve facing a firm is Q=40-P and that MC=ATC=4.  What are the profit maximizing Q and P for the firm?

P = 22, Q = 18

Suppose the demand curve facing a firm is Q=40-P and that MC=ATC=4.  What are profits for the firm?

324

The firm’s total cost of producing 10 units of output is 120. At this output level, average fixed costs are equal to 2. It follows that the firms average variable costs are equal to 

10

If the demand curve for a perfectly inelastic good is Q=10, then a decrease in price of that good will

lead to no change in quantity demanded

A natural monopoly is most likely to exist when

there are very large economies of scale

The diagram shows a profit maximising monopolist.  What does the shaded area represent?

the monopolists total costs

A profit maximising monopolist will choose the price-quantity combination represented by point

A

Identify the truthfulness of the following statements.

I. A monopolist faces a downward-sloping demand curve, whereas a perfectly competitive firm faces a horizontal demand curve.

II. Price will be higher and quantity lower in a monopolised market than in the equivalent competitive market.

III.  Because the monopolist is the only seller of her product, she may sell any quantity that she chooses for any given price.

I and II are true, III is false

At the profit maximising P and Q, the total revenue and profit for the monopolist is (revenue figure given first)

21; 3

Given the total cost function, TC=120+12Q, the average cost function is 

120/Q + 12

Suppose 30 employee-hours can produce 50 units of output. Assuming the law of diminishing marginal returns is present, to produce 100 units of output will require

more than 30 additional employee hours

Which one of the following statements is true?

If the marginal cost is greater than the average cost the average cost increases

The average variable cost curve:

Converges with the average total cost curve as output increases

Increasing returns to scale in production means

less than twice as much of all inputs is required to double output

Suppose that your grade on this examination is described by G = 2.5A^0.5E^0.5, where G is your numerical score, A is ability, and E is effort measured in terms of hours studied. This grade production function exhibits

constant returns to scale and diminishing marginal product for A and E

Suppose a production function is given by the equation Q = 4L^1.5 + 2K, where Q is output, L is labour and K is capital. This production function exhibits

increasing returns to scale

The marginal rate of technical substitution measures

the rate at which one factor input can be substituted for another at a given level of output

Suppose a firm has the production function Q = 10L^3K and is currently using L = 4 and K = 2. The Marginal Rate of Technical Substitution is

1.5

Consider the following production​ function Q = 100L^0.8K^0.4. Currently the wage rate​ (w) is €1.00 and the price of capital​ (r) is €1.00. If the firm is using 50 units of K in​ production, how much L should be employed to minimize costs

100