ECO/561 Week 6 Knwoledge Check (100%) - 65370

Solution Posted by
HomeworkBest

HomeworkBest

Rating : (5)A+
Solution Detail
Price: $6.00
  • From: ,
  • Posted on: Thu 05 Jun, 2014
  • Request id: None
  • Purchased: 0 time(s)
  • Average Rating: No rating
Request Description

 

1. If the demand curve is QD = 100 – 10P and there is a $1 price increase, then the elasticity of demand at P = 2 is

  • A. -0.25
  • B. -0.5
  • C. -0.75
  • D. -1

2. If the absolute value of a demand elasticity is less than 1, then

  • A. the demand is inelastic, and a price rise will reduce the total revenue
  • B. the demand is inelastic, and a price rise will increase the total revenue
  • C. the demand is elastic, and a price rise will reduce the total revenue
  • D. the demand is elastic, and a price rise will increase the total revenue

3. If the cross-price elasticity is negative, then the two goods are

  • A. unrelated
  • B. substitutes
  • C. complements
  • D. normal goods

4. Under perfect competition, a firm maximizes its profit by setting

  • A. P = MC because P = MR
  • B. P above MC where MC = MR
  • C. P = FC

5. In a large city, a good, real-world example for perfect competition would be

  • A. lawyers
  • B. gas stations
  • C. Time Warner Cable
  • D. clothing stores

 

6. A firm under monopolistic competition will earn

  • A. positive economic profit because it has some monopoly power
  • B. zero economic profit because it sets P = MC
  • C. zero economic profit because its P = ATC
  • D. positive economic profit because it sets MC = MR

 

Solution Description

ECO/561 Week 6

Attachments
Week 6 Questions.docx
Week 6 Question...