Econ 302 Study Guide

8201 words 33 pages
A minimum wage policy induces an:
Select one:
a. elastic labor supply response.
b. excess supply of labor.
Correct
c. excess demand for labor.
d. efficient market outcome.
Suppose the demand and supply curve for good X are as follows: PD = 533 – 5Q
PS = 122 + 3Q where P is the price of X and Q is the quantity. Suppose an excise tax of $8 per unit of X is assessed on this market. What is the new equilibrium quantity of X? Answer
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The correct answer is: 50.375

Use the following statements to answer this question:
I. When the market price is held above the competitive price level, it is possible for the loss in consumer surplus to be fully captured by producers.
II. When the market price is held above
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Suppose the regular price of a first-class ticket is $800, the total price of the upgrade ticket (original price plus the upgrade) is $400, the marginal cost of serving both types of customers (full-fare and upgrade first-class flyers) is $100, and the airline maximizes profits. Which of the following statements is true?
Select one:
a. MR for the full-fare customers must be higher than the MR from upgrade customers.
b. MR = MC for the full-fare customers, but the airline is willing to collect any positive amount from the upgrade customers.
Incorrect
c. MR must be the same for both full-fare and upgrade customers.
d. MR for the full-fare customers may be higher or lower than the MR from upgrades.
Scenario 10.8:
Adriana is a monopolist producing green calculators. The average and marginal cost curves and average and marginal revenue curves for her product are given as follows: AC = Q + (10,000/Q) MC = 2Q AR = 30 - (Q/2) MR = 30 - Q

Refer to Scenario 10.8. Suppose that the regulatory agency sets your price where average revenue equals average cost. How much profit will Adriana make?
Select one:
a. She will lose money and will go out of business.
Incorrect
b. none of the above
c. She will break even.
d. She will make a profit.

Scenario 10.2:
A monopolist faces the following demand curve,

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