Suppose demand for a good is QD = 100 - P and supply is QS = -20 + P. What is the consumer surplus?
a. 200
b. 400
c. 600
d. 800
d
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If consumers would be willing to purchase the same quantity of a good no matter what its price was, the demand curve would
a. be a vertical line, and demand would be perfectly inelastic. b. be a horizontal line, and the demand would be perfectly elastic. c. not exist. d. be identical to the supply curve for the good.
Suppose there is a 6 percent increase in the price of good X and a resulting 6 percent decrease in the quantity of X demanded. Price elasticity of demand for X is
a. 0. b. 1. c. 6. d. 36.
If only one of the independent variables has a measurement error, which of the following is generally true under the classical errors-in-variables (CEV) assumption?
A. The OLS estimators for coefficients on all other independent variables are also biased towards zero. B. The OLS estimators for coefficients on all other independent variables are still unbiased and consistent. C. The OLS estimators for coefficients on all other independent variables are also biased and inconsistent. D. The OLS estimators for coefficients on all other independent variables are biased but consistent.
Which of these will hold true for an unregulated, competitive industry?
A. The market price will be lower than the marginal cost of production. B. The marginal cost will be higher than the average cost of production. C. The marginal cost of production will be equal to the market price. D. The market price will be higher than the marginal cost of production.