Econ 302 Study Guide Essay

8208 Words Aug 28th, 2013 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
The price-cost markup is 4% of the price
c. The price-cost markup is 25% of the marginal cost
Incorrect
d. The price-cost markup is 4% of the marginal cost
A doctor charges two different prices for medical services, and the price level depends on the patients' income such that wealthy patients are charged more than poorer ones. This pricing scheme represents a form of
Select one:
a. pricing at each consumer's reservation price.
b. first-degree price discrimination.
c. third-degree price discrimination.
Correct
d. second-degree price discrimination.
Sporto Auto Company manufacturers each of the aluminum engines used in their cars, and there is no outside market for these engines. Suppose the marginal cost of producing the aluminum engines is constant at all quantities. What happens to the optimal transfer price and the quantity of cars produced if the cost of assembly increases?
Select one:
a. Price and quantity decrease
b. Price and quantity remain the same
Incorrect
c. Price remains the same and quantity decreases
d. Price and quantity increase
DVDs can be produced at a constant marginal cost of \$10 per disk, and Roaring Lion Studios is releasing the DVDs for its last two major films. The DVD for Rambeau 17 is priced at \$20 per disk, and the DVD for Schreck 10 is priced at \$30 per disk. What are the Lerner indices for these two movies?
Select one:
a. 0.5 and 0.67, respectively
b. 2 and 3,