6.As long as it does not shut down, a perfectly competitive firm earrs the maximum profit as long as it operates so that
(A) its price exceeds its average total cost.
(B)market demand is inelastic.
(C)its marginal revenue
(D) its marginal revenue equals its marginal cost.

1.The result that, under certain circumstances, no government action is needed to control an externality because it can be eliminated by bargaining between the affected parties is called (A) a Nash Equilibrium. (B)Coase Theorem. (C)Bargaining Theorem. (D)English Bargaining.

2.A risk-neutral individual will make investment decisions purely based on net present value because (A) she doesn't care about utility. (B)because utility is a linear function of wealth. (C)she loves to take risk. (D)net present value is always more than expected utility.

複選題3.The general equilibrium analysis of a minimum wage applied to only some sectors of the economy suggests that (A) workers in all sectors will face increased wages. (B)some workers in the covered sectors will lose their jobs and remain unemployed. (C)some workers originally employed in the covered sectors will move to the uncovered sectors, driving down wages in the uncovered sectors. (D)all workers will be worse off.

4.An employee gains S500 from shirking. Thus, to deter shirking, the employer makes employees post a bond equal to $1,000, and installs monitoring devices to detect shirking. What is the probability that these devices can detect shirking? (A) 30% (B)100% (C)50% (D)95%

5.Johnny has allocated $30 toward coffee and tea and feels that coffee and tea are perfect substitutes. Due to differences in caffeine levels, his MRS of tea for coffee equals 2. If coffee and tea sell for the same price, Johnny will (A) spend all $30 on tea. (B)spend all $30 on coffee. (C)spend $20 on coffee and $10 on tea. (D)be indifferent between any bundle of coffee and tea costing $30.

7.A single-period duopoly firm can choose output level A or B. The firm decides it will produce level A regardless of what the other firm produces. This decision may occur because (A) producing the output level A is a dominant strategy. (B)this firm has simply decided to always produce at level A. (C)Both A and B are possible. (D)None of the above.

8.A person who practices poisonous snake charming and does not reveal this to her health insurance company before purchasing insurance is an example of (A) moral hazard. (B)adverse selection. (C)signaling. (D)screening.

9.The current price floor in the agricultural lettuce market makes it such that price of lettuce is 25% higher than equilibrium price and 100 heads of lettuce are demanded. Assuming that the elasticity of demand for lettuce is -0.50, what would be the equilibrium price and quantity of lettuce if the government removed the current price floor? (A) Price = 0.875, Quantity = 125 (B)Price = 1, Quantity = 112.5 (C)Price = $0.75, Quantity = 112.5 (D)Price = $0.75, Quantity = 125

10.If the government desires to raise a certain amount of revenue by taxing a monopoly, an ad valorem tax will (A) generate the same loss of consumer surplus as a specific tax. (B)generate a greater loss of consumer surplus than a specific tax. (C)generate a smaller loss of consumer surplus than a specific tax. (D)generate no loss of consumer surplus.

11.Which of te tlowing wih hot incese eoutorimn Ousut in theShort Eun? (A) increases in R&D (B)increases in consumer confidence (C)increases in investment demand (D)increases in government spending

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