6. In the figure on the above, the marginal cost curve is curve
(A) A.
(B) B.
(C) C.
(D) D.

| | | Uber Eats | |
| --- | --- | --- | --- |
| | Campaign Choices | Yes | No |
| Food Panda | Yes | UE: $5 FP: $5 | UE: $1 FP: $30 |
| | No | UE: $30 FP: $1 | UE: $20 FP: $20 |

7. Uber Eats and Food Panda must decide whether or not to start a promotional campaign in the Sanxia area. The potential economic profit by each food delivery services, depicted in the payoff matrix above, depends on whether the other service also start a campaign. Which of the following statements is true? (A) If Food Panda starts a campaign and Uber Eats does not, Food Panda will earn a $20 million economic profit. (B) If Uber Eats starts a campaign and Food Panda does not, Uber Eats will earn a $20 million economic profit. (C) The Nash Equilibrium of the game is when both Food Panda and Uber Eats do not a campaign. (D) Food Panda and Uber Eats can work out a joint strategy that can generate an outcome better than the Nash Equilibrium. Price (dollars per kilogram) Quantity (kilograms of salmons)

8. In the figure above, which movement represents an increase in quantity demanded but NOT an increase in demand? (A) From point c to point a. (B) From point c to point b. (C) From point c to point d. (D) From point c to point e.

9. The indifference curve in the figure on the above (A) illustrates two goods that are perfect substitutes. (B) illustrates two goods that are perfect complements. (C) violates assumptions about preferences. (D) illustrates the utility function of \( \mathrm{U} = \max \) (quantity of good A, quantity of good B)

10. Simpsons will temporarily lay off 300 workers as the company stops production of the flying car, Batmobile, for a month. Simpsons had hoped to sell 100 Batmobile last year, but fell short of the expectation. Under what conditions would this shutdown decision maximize Batmobile's economic profit? (A) When the price of Batmobile is less than the average variable cost (AVC) (B) When marginal revenue (MR) of Batmobile is less than the average total cost (ATC). (C) When the price of Batmobile is less than the average fixed cost (AFC) (D) When the price of Batmobile is less than the average total cost (ATC).

11. Statistics shows that wedding spending declines when the economic prospect is gloomy negative. Which of the following statements is correct? (A) Wedding events are a normal good. (B) Wedding events are an inferior good. (C) Wedding events are a Giffen good. (D) Wedding events are a superior good.

12. Wedding events are not mandatory because couples can simply marry at the district offices. Based on the observation, wedding events are (A) a luxury good and their income elasticity of demand is greater than 1 (B) a luxury good and their income elasticity of demand is less than 1 (C) a necessity good and their income elasticity of demand is greater than 1 (D) a necessity good and their income elasticity of demand is less than 1 | Wealth (dollars) | Utility (units) | | --- | --- | | 5,000 | 150 | | 4,000 | 140 | | 3,000 | 120 | | 2,000 | 90 | | 1,000 | 50 | | 0 | 0 | (Question 13-14) On the above is Kristoff's utility of wealth schedule. Kristoff's wealth is $5,000 and it consists entirely of his share in a risky ice harvesting business. If the summer is cold, the business will fail, and he will have no wealth. Where Kristoff lives there is a 40 percent chance each year that Elsa will start snow storms and then the summer will be cold.

13. What is his expected wealth and utility respectively? (A) $3,000, 120 (B) $2,000, 90 (C) $3,000, 90 (D) $2,000, 60

14. Arendelle Capital, an insurance company, is willing to sell Kristoff cold-summer insurance and promises to pay him $5,000 if the summer is cold and the business fails. Is Kristoff willing to pay $1,000 for the insurance? Is Kristoff willing to pay $2,000 for the insurance? (A) Kristoff is willing to pay $1,000, even $2,000 for the insurance. (B) Kristoff is only willing to pay $1,000, not $2,000 for the insurance. (C) It is not worth it for Kristoff to purchase either insurance. (D) There is no way that an insurance company can lower the risk for Elsa to start snow storms, so it is not worth it for Kristoff to purchase any insurance.

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