For the good Bassingers mentioned in the previous problem, suppose the PED is -2.90 and the PES is 0.5. If a tax was applied in this market, what could we say about the tax burden?

Suppose this good’s demand became more inelastic. What effect would this change have on the effect of a tax applied on this market?

Recall the market for cosmetics whose IED<0. If the economy goes through a recession (when incomes fall), what would happen to the demand curve for cosmetics?

Consider the following items: marijuana and crystal meth. Meth is a very dangerous drug while marijuana is not. One issue is whether people will take marijuana instead of meth. Suppose the CPED for these two items is -0.2. This statistic would be evidence for which argument?

Suppose you have two unrelated goods: a flash drive and a dog collar. What would be the CPED for these two items?

What is the definition of Behavioral Economics?

Think about the following concerning your instructor. When I played video games a lot, I would have thought that I was an above average player. However, I did not have any data (like comparisons with other players’ stats) to back up my claim. My belief may be an example of what cognitive bias?

Consider the following statement: “Crime must be increasing. I just heard last month that a house down my street suffered a burglary. That has never happened before.” This statement is an example of what flaw in human reasoning?

Suppose you have another friend who has concluded that “Gay men are more financially successful than heterosexual men.” You try to tell your friend that several studies show that is not the case as only more affluent gays are willing to be open about their sexuality. Your friend pays no attention to your response. What cognitive bias might be relevant here?

Your instructor was recently charged $20 for being late to pick up his sons from school. If asked why, he would admit he always underestimates how long it takes to get ready and drive to his sons’ school. What type of bias does your silly instructor suffer from?

According to what was said in class, which of the following is true concerning Behavioral Economics?

Behavioral Economics can be used to help push people into decisions that could be in their long run self-interest without depriving them of individual choice.

Suppose AVC=$75, FC=$9,000 and TC=$39,000. What is the ATC?

Consider the following information. Assume FC=$11,900. Also, assume when q=19 that AVC=$950 and when q=20 then ATC=$1,500. What is MC for the 20th unit?

Assume FC=$11,900. Also, assume that when q=19 that AVC=$950 and when q=20 then ATC=$1,500. If the firm decides to make 20 units (q=20), what is the MR at q=20?

Suppose a company called Dallas M. Inc. is selling a product known as “Sahand’s Giant Birthday Candles”. The company has the following table: q P TR TC Profit MR MC ∆Profit 0 12 4 --- --- --- 1 11 7 2 10 8 3 9 3 4 8 5 5 7 29 What is the quantity produced?

Again, suppose a company called Dallas M. Inc. is selling a product known as “Sahand’s Giant Birthday Candles”. As shown above, the company has the following table: q P TR TC Profit MR MC ∆Profit 0 12 4 --- --- --- 1 11 7 2 10 8 3 9 3 4 8 5 5 7 29 Given this information from the previous problem, what is the relevant market structure?

Suppose we have a market where there are 100 firms and the economic profit to each firm is $10,000. If the market is competitive, what we do know will happen in the long run?

Suppose a firm in the competitive market faces the following cost and revenue conditions: MC=$10; MR=$12. The firm should…

Suppose a firm in a competitive market is earning zero economic profits. As a result, what will it do in the long run?

Which of the following might explain why a competitive market is considered more theoretical?

Suppose we have the following information for a firm in the competitive market: P=$110; q=100; TC=$10,000 for q=0; AVC=$20 for q=100; Which of the following is true for q=100?

Using the numbers from the previous problem, we know which of the following?

Consider a firm in the competitive market. No matter whether the market’s demand curve shifts left or right, we know in the long run its economic profit will be 0.

Which of the following is true concerning the Prize Linked Savings Accounts (PLSAs)?

In a monopoly…

How many firms are there in a monopoly?

Which of the following equations will definitely apply for a monopoly and a competitive firm in terms of the quantity it chooses to produce?

According to this class, what is the main constraint on a monopoly?

Suppose the firm faces a horizontal demand curve. Which of the following is true?

In terms of which of the following is the competitive market NOT the exact opposite of a monopoly?

Recall the company called Dallas M. Inc. that is selling a product known as “Sahand’s Giant Birthday Candles”. Again, the company has the following table: q P TR TC Profit MR MC ∆Profit 0 12 4 --- --- --- 1 11 7 2 10 8 3 9 3 4 8 5 5 7 29 What is the change in profit when q = 5?

Suppose a competitive firm for hardwood floors is at a point where economic profits are zero. Suddenly there is a decrease in tastes and preferences for these floors. In the short run, what happens to the P and q?

From the previous problem, suppose a competitive firm for hardwood floors is at a point where profits are zero. As stated, there is a sudden decrease in tastes and preferences for these floors. In the long run, what happens to its profit (relative to the initial equilibrium)?

The diamond industry convinced men (and most women) it was essential to use a diamond to propose to a woman. Which of the following elasticities for diamonds demonstrates such a belief by men (and most women)?

Suppose the company Intel is making positive profits initially. It has a monopoly on microprocessors – what are used as the brain for desktops and for laptops. Due to the rise of smart phones and tablets, the tastes and preferences for microprocessors has been decreasing. In the long run, what happens to the P and q?

Again, suppose the company Intel is making positive profits initially. It has a monopoly on microprocessors – what are used as the brain for a desktop and laptop. As stated, due to the rise of smart phones and tablets, the tastes and preferences for microprocessors has been decreasing. In the long run, what happens to its profit?

If a firm produces only one good but has a monopoly for that good, the firm will always be profitable.

Suppose a market is initially a monopoly. Then, due to government intervention, the firm is unable to block hundreds of new entrants that compete with the original firm. As a result of what will happen to the market price and the quantity, the market will become more efficient and be better for consumers.