Figure 11-2
Which graph in Figure 11-2 best reflects a Keynesian view of the impact of a $500-per-person tax cut?
a.
1
b.
2
c.
3
d.
4
b
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To maximize its profit, in the short run a perfectly competitive firm decides
A) what price to charge for its product. B) what quantity of output to produce. C) whether to exit the market. D) whether to increase the size of its plant. E) how much advertising it should undertake.
Imagine a baker who has the opportunity to bid on a contract to supply a local military base with bread for an entire year. The problem is the baker must commit to a price today and hold to that price for the entire year. Identify the risk faced by the baker, and explain how the use of a futures contract could transfer the risk.
What will be an ideal response?
Two firms compete as a Stackelberg duopoly. The demand they face is P = 24 ? Q. The cost function for each firm is C(Q) = 4Q. The profits of the two firms are:
A. ?L = $100; ?F = $50. B. ?L = $20; ?F = $10. C. ?L = $50; ?F = $25. D. ?L = $25; ?F = $12.5.
A purely monopolistic firm:
A. has no entry barriers. B. faces a downsloping demand curve. C. produces a product or service for which there are many close substitutes. D. earns only a normal profit in the long run.