A public good:
A. can be profitably produced by private firms.
B. is characterized by rivalry and excludability.
C. produces no positive or negative externalities.
D. is available to all and cannot be denied to anyone.
Answer: D
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A consumer spends all of her income on goods x and y. At her optimum,
a. marginal rate of substitution between good x and good y exceeds the ratio of the price of good x to the price of good y. b. her expenditure on good x is equal to her expenditure on good y. c. the slope of her budget constraint is equal to the slope of the highest indifference curve that she can reach while remaining within her budget. d. her valuation of the two goods exceeds the market’s valuation of the two goods.
Farou invests $2,000 at 8% interest. About how long will it take for Farou to double his investment (e.g., to have $4,000)?
A. 5 years B. 4 years C. 9 years D. 8 years
John is a seller in an affiliated-values auction environment where bidders are risk neutral. Which auction yields John the greatest expected revenue?
A. English B. Second price C. First price D. All of the choices are revenue equivalent.
Answer the following statements true (T) or false (F)
1. The cornerstone of antitrust policy in the United States is generally considered to be the Sherman Antitrust Act of 1890. 2. All price discrimination is deemed illegal in antitrust legislation. 3. Unfair advertising practices are investigated by the Federal Trade Commission. 4. The rule of reason in antitrust applications means that if a firm has a dominant share of the market, it stands to reason that it will exploit its monopoly power to gain an unfair advantage over its rivals. 5. "Behaviorists" in antitrust applications believe that a firm that dominates a market is not necessarily behaving unfairly.