1. The demand for coal briquettes is given by the following: p=200-0.5*Q. The private marginal cost of coal briquettes is given by the following: MC=20+0.5Q. In addition, there is an external cost of coal briquettes (E) to residents who live near the coal mine given by the following: E=Q.
If the market for coal briquettes is competitive, the deadweight loss to society is equal to:
0
4500
8100
9000
None of the above
2. Consider the following game. Roger and Jemima are roommates who must make decisions about cleaning. Roger’s payoff is the first number in each cell and a higher number is a better outcome:
This game has no Nash equilibrium.
This game has a single Nash equilibrium.
This game has more than one Nash equilibrium.
Both Roger and Jemima have a strictly dominant strategy.
Both b and d are correct.
(Please explain your chosen answer)
3. Assume that there is a world price for corn and that the domestic market has the usual downward sloping demand curve and upward sloping supply curve. Which of the following statements is true for a country that exhibits an absolute disadvantage in the production of corn?
The country will import corn and consumer surplus will increase relative to the no trade situation.
The country will import corn and producer surplus will increase relative to the no trade situation.
The country will export corn and consumer surplus will increase relative to the no trade situation.
The country will export corn and producer surplus will increase relative to the no trade situation.
More information is required.
4. Two shops in Newtown, “Artisan Pens” and the Thrift Shop, are deciding whether to hire a security guard. The security guard represents a public good in that the guard will provide deterrence to both stores. The cost of hiring a guard is $20 in total or $10 per store if the cost is shared. Each store will benefit from the presence of a security guard by reducing theft by $12. The payoffs for the Thrift Shop are shown…