You have two options for how to spend the afternoon. You can either go see a movie with your roommate or work as a tutor for the Math Department. From experience, you know that going to see a movie gives you $20 worth of enjoyment, and with your student discount, a movie ticket only costs $12. If you spend the afternoon working as a math tutor, you will get paid $45. On a typical day, you wouldn't be willing to spend the afternoon working as a math tutor for less than $35. What is your economic surplus from working as a math tutor instead of going to the movies?
A. $2
B. $8
C. $22
D. $57
Answer: A
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When should a firm shut down in the short run?
a. When its revenues cannot cover its variable costs b. When its revenues cannot cover its fixed costs c. When price equals the minimum average variable d. When it is unable to make any accounting profits
?Refer to Exhibit 15-5. In the game:
a. ?the dominant strategy of General Mills is to set a high price.
b. ?the dominant strategy of Kellogg's is to set a low price.
c. ?the dominant strategy of Kellogg's is to set a high price.
d. ?neither firm has a dominant strategy.
The basic formula for price elasticity of demand is
A. The percentage change in income divided by the percentage change in price. B. The percentage change in quantity demanded divided by the percentage change in price. C. The percentage change in price divided by the percentage change in quantity demanded. D. The change in quantity demanded divided by the change in price.
What is one reason firms might lobby to prevent entry into their market?
A) The long run equilibrium might be characterized by P = MC = ATC. B) The long run equilibrium might be characterized by P = MC < ATC. C) The long run equilibrium might be characterized by P > MC = ATC. D) The long run equilibrium might be characterized by P = MC > ATC.