Microeconomics Mock Exam

Which-one(s) of the following statement(s) is/are correct? 

I. Under the conditions of perfect competition, the supply function calculates the quantity a supplier is willing to produce in function of the selling price as well as the cost of the input factors needed for production, and the cost of complementary goods and/or substitutes.

II. Given everything else is held constant, an increase in the cost of labour leads to upward shift of the supply curve. Mathematically, this corresponds to a higher intercept.

III. An increase in the cost of the input factors has no effect on the supply curve because the market price decides, which quantity a firm is willing to supply. 

Which-one of the following statements is correct?

Given are the following denotations:

MP_L : marginal product of labour

MP_K : marginal product of capital

P_L : price of labour

P_K : price of capital

Which one of the following statements is correct? 

Given is the supply function of a specific firm:

QS x = –400 + 8Px

a) The inverse supply function is:

If the unit price is $200, how big is the quantity supplied and the corresponding producer surplus?

Assume that an individual supplier has the following supply function:

QS x = –200 + 4Px – 5 W

Where:            QS x : quantity supplied

Px : selling price for one unit

W : wage per hour

Which of the three functions below represents the aggregate market supply curve?
Assume that the wage per hour is 20, and that the market consists of 10 identical firms.

Which-one(s) of the following statement(s) is/are correct?

I. Consumer choice theory can be defined as the branch of microeconomics that relates consumer demand curves to production and cost theory.

II. A consumption bundle, or consumption basket, is a specific combination of goods and services that a consumer would like to consume.

III. Under reasonable assumptions, it is possible to come up with a rule that translates the quantities of goods in different baskets into a number. That assignment is called the utility function of that consumer.

Rowena and John both have identical bundles of good A and good B, however they are NOT on the same indifference curve.

The marginal rate of substitution MRSA for B for Rowena is 5, whereas the MRSA for B for John is 0.2 . They both agree to exchange one unit of A for one unit of B.

Which of the following statements is correct?

Which-one of the following statements is correct? 

A travel agent (operating in imperfect competition) offering package tour holidays to Iceland is considering a price reduction of 500 francs on two-week all-inclusive vacations to Iceland from 10,000 francs to 9,500 francs. The number of monthly bookings is, as a consequence, expected to increase from 5 to 7. Therefore, the marginal revenue earned per additional booking amounts to:

Which-one of the following statements is correct? 

A company introduces a new product. The product is patented, therefore they are the only supplier. Given a constant marginal cost of 10, and a price elasticity of demand of -1.11, the unit price, according the inverse elasticity pricing rule (IEPR), should be:

IEPR: (P* – MC* ) / P* = -1/ e_Q,P

Which-one(s) of the following statement(s) is/are correct? 

I. Price discrimination (charging different prices for different consumers) offers a firm with market power an opportunity to capture more surplus.

II. Block pricing is an example of third-degree price discrimination. So is the splitting of the price charged to consumers into a subscription and a usage charge.

III. Price discrimination (charging different prices for different consumers) offers a firm, given certain conditions are met, an opportunity to capture more surplus. Yet, this is not true for firms that have no information about so-called reservation prices (i.e., a consumer’s maximum willingness to pay for that unit) or about how the price-elasticity of demand differs across consumers. 

Which one of the following statements is correct? 

Which one of the following statements is correct?

Which one of the following statements is correct?

ROLEY is a high-end producer of smoothies. It is well known, and its products are truly sought-after. With respect to a box containing 10 bottles each, each of their clients has the following inverse demand function:

P = 12 – 0.5 Q^d

Q^d : quantity demanded

P : unit price

The marginal cost of producing one box of 10 bottles is 2. ROLEY now follows a pricing strategy based on block pricing. If the price of the first block is equal to the price charged in the absence of price discrimination, the unit price for the second block and the quantity of the second block (for each individual commercial client) are as follows: 

Which one of the following statements is correct?

I. A Nash equilibrium describes a situation in which there exists at least one dominant strategy for one player.

II. In a Nash equilibrium the aggregate payoff of the players is maximised.

III. At the Nash equilibrium, expected behaviour and actual behaviour converge

In a repeated prisoner’s dilemma game, the likelihood of a cooperative outcome increases if:

Which-one(s) of the following statement(s) is/are correct?

I. According to the theory of comparative advantage, free trade between two countries is mutually beneficial, if each country specialises in the production of those goods where the opportunity cost of producing another unit is only marginally higher than in the other country.

II. According to the theory of comparative advantage, free trade between two countries is mutually beneficial, if each country specialises in the production of those goods where the opportunity cost of producing another unit is lower than in the other country.

III. According to the theory of comparative advantage, free trade between two countries is mutually beneficial only, if at least one country has an absolute advantage in the production of one good.

For any particular good, an increase in the price of a complement would most likely result in?

Consider the following statements:

Statement I: If close substitutes are easily available for a particular good, the price elasticity of demand for that good cannot be identified.
Statement II: If a relatively large proportion of a person’s income is spent on a particular good, the price elasticity of demand for that good is most likely relatively high.

Which of the following is true?

Consider the following statements:

Statement I: If the price elasticity of demand for a good equals -1.25, an increase in price will result in a decrease in total revenue.

Statement II: If a decrease in price leads to a decrease in total revenue, demand for the good is price elastic.

Which of the following is true?

When a rent ceiling (maximum price) is imposed below the equilibrium market price, which of the following is most likely?

Which of the following is least likely regarding indifference curves?

Robert’s MRSxy is given by 2.5. If Good Y is on the y axis and Good X is on the x axis, the slope of the indifference curve is closest to?

This question addresses the budget constraint: The amount of Good A that a consumer would have to give up in order to consume 1 more unit of Good B is given by: 

For any particular good, an decrease in the price of a complement would most likely result in?  

Consider the following statements:

Statement I: The availability of close substitutes for a particular good A has no effect on the price elasticity of demand for that good A.

Statement II: If a comparatively small proportion of a person’s income is spent on a particular good, the price elasticity of demand for that good is comparatively high (i.e. very elastic).

Which of the following is most likely true? 

Consider the following statements:

Statement I: If the price elasticity of demand for a good equals -2.5, an increase in price will result in a decrease in total revenue.

Statement II: If a decrease in price leads to an increase in total revenue, the demand for that good is price elastic.

Which of the following is most likely true? 

When a price floor is imposed above the equilibrium market price, which of the following is most likely true? 

Which of the following statements is most likely true?

Peter’s MRSxy is given by 1.5. If Good Y is on the y axis and Good X is on the x axis, the slope of the indifference curve is closest to? 

This question addresses the budget constraint: The amount of Good A that a consumer would have to give up in order to consume one more unit of Good B is given by: 

Which one of the following statements is correct?

If a monopolist faces the inverse demand function P = 50 - 5Q, which of the following statements is true?

I. The equation of the average revenue curve is AR(Q) = 50 – 5Q.

II. The marginal revenue curve is twice as steep as the average revenue curve.

III. For outputs less than 5, marginal revenue is positive, for outputs more than 5, marginal revenue is negative. 

Suppose that a monopolist faced demand P = 120 - 4Q and has constant marginal cost MC = 30. If this monopolist engages in first degree price discrimination, total output will equal?