A variable cost function of the form: VC = 23 + Q + 7Q2 implies a marginal cost curve that is
A) linear.
B) downward sloping.
C) U-shaped.
D) quadratic.
A
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Suppose the demand for peaches sold from one roadside stand in Georgia is perfectly elastic. As a result, a 7 percent increase in the price charged by the owner of this stand leads to
A) zero peaches sold by this stand. B) no change in the quantity demanded at this stand. C) a 7 percent decrease in the quantity demanded at this stand. D) a 7 percent decrease in demand at this stand. E) a virtually infinite increase in the quantity demanded at this stand.
In June 1960, the price of gasoline in the Midwest was $0.169 per gallon and the CPI was 29.6 with a base period of 1982 to 1984. What was the real price of gasoline per gallon in base period dollars?
A) $0.05 per gallon B) $0.057 per gallon C) $0.169 per gallon D) $0.571 per gallon E) $0.296 per gallon
Suppose that two clothing manufacturers, Frederick's Fashions and Stephan's Styles, announce that they plan to merge. The Herfindahl-Hirschman index is currently 1,500. After the merger, the HHI will rise to 1,560. This market is
A) highly concentrated and so the government will definitely challenge the merger. B) moderately concentrated and because the merger increases the HHI by more than 50 points, the government will definitely challenge the merger. C) moderately concentrated, but because the merger increases the HHI by less than 100 points, the government will probably not challenge the merger. D) competitive and so the government will not challenge the merger.
Which of the following statements about excise taxes is TRUE?
A) The producer will increase the price of the good by the amount of the excise tax. B) The equilibrium price will increase and the equilibrium quantity will remain unchanged. C) Both the consumer and producer pay part of the excise tax. D) Consumers will refuse to pay excise taxes forcing the producers to pay it.