You are a hotel manager and you are considering four projects that yield different payoffs, depending upon whether there is an economic boom or a recession. The potential payoffs and corresponding payoffs are summarized in the following table. ProjectBoom (50%)Recession (50%)A$20-$10B-$10$20C$30-$30D$50$50Which project yields the greatest return, regardless of whether a boom or a recession occurs?
A. A
B. B
C. C
D. D
Answer: D
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Suppose you own a firm that produces widgets and is a monopoly. The market demand is given by the equation P = 100 - 2Q, where P is the price of gadgets and Q is the quantity of gadgets sold per week. The firm's marginal costs are given by the equation MC = 16Q. When the monopolist maximizes profits the price elasticity of demand for widgets is
A. 9. B. 36. C. 0.02. D. 0.5.
Figure 4-25
Refer to . The price that buyers pay after the tax is imposed is
a.
P1.
b.
P2.
c.
P3.
d.
impossible to determine from the figure.
Suppose that utility-maximizing consumers in San Francisco pay three times as much for apples as for peaches. What is the ratio of the marginal utility of apples to the marginal utility of peaches?
A. 1/3 B. 3 C. 2/3 D. none of the above E. cannot determine without further information
At the output level defining allocative efficiency:
A. the areas of consumer and producer surplus necessarily are equal. B. marginal benefit exceeds marginal cost by the greatest amount. C. consumer surplus exceeds producer surplus by the greatest amount. D. the maximum willingness to pay for the last unit of output equals the minimum acceptable price of that unit of output.