SlideShare a Scribd company logo
Economics-2 Final Examination 
PART-A 
Question-1 : Describe the difference between marginal cost and average total cost. Why are both of 
these costs important to a profit-maximizing firm? 
Question-2: Assume that a local bank sells two services, checking accounts and ATM card services. Mr. 
Donethat is willing to pay $8 a month for the bank to service his checking account and $10 a month for 
unlimited use of his ATM card. Ms. Beenthere is willing to pay only $5 for a checking account, but is 
willing to pay $15 for unlimited use of her ATM card. Assume that the bank can provide each of these 
services at zero marginal cost. 
A. If the bank is unable to use tying, what is the profit-maximizing price to charge for a checking 
account? 
B. If the bank is unable to use tying, what is the profit-maximizing price to charge for unlimited use of an 
ATM card? 
C. If the bank is able to use tying to price checking account and ATM service, what is the profit-maximizing 
price to charge for the “tied” good? 
D. How much additional profit does the bank make when it switches to use of a tying strategy to price 
checking account and ATM service? 
E. How much total surplus is generated from using tying to price the checking account and ATM service? 
How does that compare to the nontied pricing strategy? Which strategy has the largest deadweight 
loss? 
Question-3: Describe a government created monopoly. Why might one be created? Give an example. 
PART-II 
Question-1: The consumption of alcohol is often cited as an example of a negative externality. Explain a 
situation in which the consumption of alcohol would be considered to be a negative externality. 
Question-2: Identify each of the following goods as a private good, a common resource, a natural 
monopoly, or a public good, according to the classification presented in your textbook. 
A. A shared apartment 
B. A national monument 
C. Cable TV
Question-3: Explain the role of opportunity cost in differentiating between economic profits and 
accounting profits. 
Question-4: Let’s assume that a monopolist decides to maximize revenue rather than profit. How does 
this operating objective change the size of the deadweight loss? If you’re a “benevolent” manager of a 
monopoly firm and are interested in reducing the deadweight loss of monopoly, should you maximize 
profits or maximize revenue? Carefully explain your answer. 
Question-5: Professional organizations (such as the American Medical Association and the American Bar 
Association) have actively advocated regulation to restrict the right of professionals to advertise. 
Describe the economic incentives that might exist for incumbent professionals to restrict advertising. 
Question-6: Joe Kelp owns a commercial fishing fleet, and hires a captain for each boat in his fleet. These 
workers are considered to be part of the crew. In the market for fresh Pacific salmon, Joe is one of 
thousands of fishermen. Although Joe usually catches a significant number of fish each year, his 
contribution to the entire salmon harvet is negligible relative to the size of the market. Joe is considered 
to be a perfect competitor in the output market. If so, explain why his demand curve for labor (crew 
workers) is downward-sloping, and his supply curve for labor is perfectly elastic at the market wage. 
Question-7: Describe the role that diminishing marginal utility plays in the utilitarian argument for 
redistribution of income. 
Question-8: Describe the purpose of antitrust laws. What do they accomplish? 
Question-9: What is the effective marginal tax rate of a government antipoverty program that 
guarantees every family a minimum income? Explain. Why might trying several antipoverty benefits to 
income level lead to an effective marginal tax rate of greater than 100 percent? 
Question-10: Explain the difference between inferior goods and normal goods. As a developing economy 
experiences increases in income (measured by GDP), what do you predict will happen to the demand for 
inferior goods?
Get Answer From: http://homework.ecrater.com/p/21200588/hw-1515- 
economics-2-final-examination

More Related Content

Viewers also liked

Essay n.3
Essay n.3Essay n.3
Essay n.3
Francesco Pace
 
Giuseppe Modrich - La Dalmazia: Romana - Veneta - Moderna : Note e ricordi di...
Giuseppe Modrich - La Dalmazia: Romana - Veneta - Moderna : Note e ricordi di...Giuseppe Modrich - La Dalmazia: Romana - Veneta - Moderna : Note e ricordi di...
Giuseppe Modrich - La Dalmazia: Romana - Veneta - Moderna : Note e ricordi di...Movimento Irredentista Italiano
 
Frameworks para C 3º DeSif
Frameworks para C 3º DeSifFrameworks para C 3º DeSif
Frameworks para C 3º DeSif
Gleison Rodrigues
 
Audience overview 17_6
Audience overview 17_6Audience overview 17_6
Audience overview 17_6ep13equipa50
 
Lights Slideshow
Lights SlideshowLights Slideshow
Lights Slideshow
megkovalcik
 
U scoot - hipótese #06
U scoot - hipótese #06U scoot - hipótese #06
U scoot - hipótese #06João Ferro
 
Jannie
JannieJannie
Jannie
Biebjes
 
Foda de mi primera jornada
Foda de mi primera jornadaFoda de mi primera jornada
Foda de mi primera jornada
maggybine1
 
Stump The Sugas
Stump The SugasStump The Sugas
Stump The Sugas
Jason Nassi
 
Plus près, plus près… NFC et la communication à proximité dans Windows 8 et W...
Plus près, plus près… NFC et la communication à proximité dans Windows 8 et W...Plus près, plus près… NFC et la communication à proximité dans Windows 8 et W...
Plus près, plus près… NFC et la communication à proximité dans Windows 8 et W...
Microsoft
 
Reading a z
Reading a zReading a z
Reading a z
mihandoust2001
 
香港六合彩 » SlideShare
香港六合彩 » SlideShare香港六合彩 » SlideShare
香港六合彩 » SlideShare
osaanwrs
 

Viewers also liked (18)

Essay n.3
Essay n.3Essay n.3
Essay n.3
 
Giuseppe Modrich - La Dalmazia: Romana - Veneta - Moderna : Note e ricordi di...
Giuseppe Modrich - La Dalmazia: Romana - Veneta - Moderna : Note e ricordi di...Giuseppe Modrich - La Dalmazia: Romana - Veneta - Moderna : Note e ricordi di...
Giuseppe Modrich - La Dalmazia: Romana - Veneta - Moderna : Note e ricordi di...
 
Frameworks para C 3º DeSif
Frameworks para C 3º DeSifFrameworks para C 3º DeSif
Frameworks para C 3º DeSif
 
Data entry india
Data entry indiaData entry india
Data entry india
 
Audience overview 17_6
Audience overview 17_6Audience overview 17_6
Audience overview 17_6
 
Lights Slideshow
Lights SlideshowLights Slideshow
Lights Slideshow
 
Métricas week5
Métricas week5Métricas week5
Métricas week5
 
U scoot - hipótese #06
U scoot - hipótese #06U scoot - hipótese #06
U scoot - hipótese #06
 
Jannie
JannieJannie
Jannie
 
Foda de mi primera jornada
Foda de mi primera jornadaFoda de mi primera jornada
Foda de mi primera jornada
 
Stump The Sugas
Stump The SugasStump The Sugas
Stump The Sugas
 
1345486916110
13454869161101345486916110
1345486916110
 
Plus près, plus près… NFC et la communication à proximité dans Windows 8 et W...
Plus près, plus près… NFC et la communication à proximité dans Windows 8 et W...Plus près, plus près… NFC et la communication à proximité dans Windows 8 et W...
Plus près, plus près… NFC et la communication à proximité dans Windows 8 et W...
 
E02 ll06
E02 ll06E02 ll06
E02 ll06
 
Krvna plazma Aleksandra Copic
Krvna plazma Aleksandra CopicKrvna plazma Aleksandra Copic
Krvna plazma Aleksandra Copic
 
Herramientas web 2
Herramientas web 2Herramientas web 2
Herramientas web 2
 
Reading a z
Reading a zReading a z
Reading a z
 
香港六合彩 » SlideShare
香港六合彩 » SlideShare香港六合彩 » SlideShare
香港六合彩 » SlideShare
 

Similar to Economics 2 final examination

A ot e, ly ~n ~s, to [lS ly 1te .docx
A ot e, ly ~n ~s, to [lS ly 1te .docxA ot e, ly ~n ~s, to [lS ly 1te .docx
A ot e, ly ~n ~s, to [lS ly 1te .docx
evonnehoggarth79783
 
Eco 204 week 3 quiz
Eco 204 week 3 quizEco 204 week 3 quiz
Eco 204 week 3 quiz
breakamguimy1970
 
Eco 365 Education Specialist-snaptutorial.com
Eco 365 Education Specialist-snaptutorial.comEco 365 Education Specialist-snaptutorial.com
Eco 365 Education Specialist-snaptutorial.com
robertledwes1
 
Eco 550 entire course
Eco 550 entire courseEco 550 entire course
Eco 550 entire courseEco550
 
Eco 550 entire course
Eco 550 entire courseEco 550 entire course
Eco 550 entire courseEco550
 
Eco 550 entire course
Eco 550 entire courseEco 550 entire course
Eco 550 entire coursekjhkh97097
 
Eco 550 entire course
Eco 550 entire courseEco 550 entire course
Eco 550 entire courseEco550
 
Mankiew Chapter 1.ppt
Mankiew Chapter 1.pptMankiew Chapter 1.ppt
Mankiew Chapter 1.ppt
MOHAMMADSHOYEB9
 
1Practice with simple calculations related to Fiscal Polic.docx
1Practice with simple calculations related to Fiscal Polic.docx1Practice with simple calculations related to Fiscal Polic.docx
1Practice with simple calculations related to Fiscal Polic.docx
eugeniadean34240
 
Macro
MacroMacro
macro 1.pdf
macro 1.pdfmacro 1.pdf
macro 1.pdf
aliyaqobi1
 
ECO 365 MART Wonderful Education--eco365mart.com
ECO 365 MART Wonderful Education--eco365mart.comECO 365 MART Wonderful Education--eco365mart.com
ECO 365 MART Wonderful Education--eco365mart.com
Jaseetha20
 
His 204 new ver week 2 quiz
His 204 new ver week 2 quizHis 204 new ver week 2 quiz
His 204 new ver week 2 quiz
chedystaisi1972
 
Chapter 1KEY TERMS Define each of the following termsa. Sar.docx
Chapter 1KEY TERMS Define each of the following termsa. Sar.docxChapter 1KEY TERMS Define each of the following termsa. Sar.docx
Chapter 1KEY TERMS Define each of the following termsa. Sar.docx
cravennichole326
 
Imt ghaziabad solved case studies
Imt ghaziabad solved case studiesImt ghaziabad solved case studies
Imt ghaziabad solved case studies
smumbahelp
 
His 204 new ver week 5 final paper
His 204 new ver week 5 final paperHis 204 new ver week 5 final paper
His 204 new ver week 5 final paper
adsicoundelf1979
 
Principles of economics (Chapter 1)
Principles of economics (Chapter 1)Principles of economics (Chapter 1)
Principles of economics (Chapter 1)Yowela Estanislao
 
Title: collaborating across culture3 partsParts1:differ.docx
Title:    collaborating across culture3 partsParts1:differ.docxTitle:    collaborating across culture3 partsParts1:differ.docx
Title: collaborating across culture3 partsParts1:differ.docx
edwardmarivel
 

Similar to Economics 2 final examination (20)

A ot e, ly ~n ~s, to [lS ly 1te .docx
A ot e, ly ~n ~s, to [lS ly 1te .docxA ot e, ly ~n ~s, to [lS ly 1te .docx
A ot e, ly ~n ~s, to [lS ly 1te .docx
 
Eco 204 week 3 quiz
Eco 204 week 3 quizEco 204 week 3 quiz
Eco 204 week 3 quiz
 
Eco 365 Education Specialist-snaptutorial.com
Eco 365 Education Specialist-snaptutorial.comEco 365 Education Specialist-snaptutorial.com
Eco 365 Education Specialist-snaptutorial.com
 
Eco 550 entire course
Eco 550 entire courseEco 550 entire course
Eco 550 entire course
 
Eco 550 entire course
Eco 550 entire courseEco 550 entire course
Eco 550 entire course
 
Eco 550 entire course
Eco 550 entire courseEco 550 entire course
Eco 550 entire course
 
Eco 550 entire course
Eco 550 entire courseEco 550 entire course
Eco 550 entire course
 
Eco 550 entire course
Eco 550 entire courseEco 550 entire course
Eco 550 entire course
 
Eco 550 entire course
Eco 550 entire courseEco 550 entire course
Eco 550 entire course
 
Mankiew Chapter 1.ppt
Mankiew Chapter 1.pptMankiew Chapter 1.ppt
Mankiew Chapter 1.ppt
 
1Practice with simple calculations related to Fiscal Polic.docx
1Practice with simple calculations related to Fiscal Polic.docx1Practice with simple calculations related to Fiscal Polic.docx
1Practice with simple calculations related to Fiscal Polic.docx
 
Macro
MacroMacro
Macro
 
macro 1.pdf
macro 1.pdfmacro 1.pdf
macro 1.pdf
 
ECO 365 MART Wonderful Education--eco365mart.com
ECO 365 MART Wonderful Education--eco365mart.comECO 365 MART Wonderful Education--eco365mart.com
ECO 365 MART Wonderful Education--eco365mart.com
 
His 204 new ver week 2 quiz
His 204 new ver week 2 quizHis 204 new ver week 2 quiz
His 204 new ver week 2 quiz
 
Chapter 1KEY TERMS Define each of the following termsa. Sar.docx
Chapter 1KEY TERMS Define each of the following termsa. Sar.docxChapter 1KEY TERMS Define each of the following termsa. Sar.docx
Chapter 1KEY TERMS Define each of the following termsa. Sar.docx
 
Imt ghaziabad solved case studies
Imt ghaziabad solved case studiesImt ghaziabad solved case studies
Imt ghaziabad solved case studies
 
His 204 new ver week 5 final paper
His 204 new ver week 5 final paperHis 204 new ver week 5 final paper
His 204 new ver week 5 final paper
 
Principles of economics (Chapter 1)
Principles of economics (Chapter 1)Principles of economics (Chapter 1)
Principles of economics (Chapter 1)
 
Title: collaborating across culture3 partsParts1:differ.docx
Title:    collaborating across culture3 partsParts1:differ.docxTitle:    collaborating across culture3 partsParts1:differ.docx
Title: collaborating across culture3 partsParts1:differ.docx
 

Recently uploaded

The approach at University of Liverpool.pptx
The approach at University of Liverpool.pptxThe approach at University of Liverpool.pptx
The approach at University of Liverpool.pptx
Jisc
 
The basics of sentences session 5pptx.pptx
The basics of sentences session 5pptx.pptxThe basics of sentences session 5pptx.pptx
The basics of sentences session 5pptx.pptx
heathfieldcps1
 
The Roman Empire A Historical Colossus.pdf
The Roman Empire A Historical Colossus.pdfThe Roman Empire A Historical Colossus.pdf
The Roman Empire A Historical Colossus.pdf
kaushalkr1407
 
Honest Reviews of Tim Han LMA Course Program.pptx
Honest Reviews of Tim Han LMA Course Program.pptxHonest Reviews of Tim Han LMA Course Program.pptx
Honest Reviews of Tim Han LMA Course Program.pptx
timhan337
 
Unit 2- Research Aptitude (UGC NET Paper I).pdf
Unit 2- Research Aptitude (UGC NET Paper I).pdfUnit 2- Research Aptitude (UGC NET Paper I).pdf
Unit 2- Research Aptitude (UGC NET Paper I).pdf
Thiyagu K
 
TESDA TM1 REVIEWER FOR NATIONAL ASSESSMENT WRITTEN AND ORAL QUESTIONS WITH A...
TESDA TM1 REVIEWER  FOR NATIONAL ASSESSMENT WRITTEN AND ORAL QUESTIONS WITH A...TESDA TM1 REVIEWER  FOR NATIONAL ASSESSMENT WRITTEN AND ORAL QUESTIONS WITH A...
TESDA TM1 REVIEWER FOR NATIONAL ASSESSMENT WRITTEN AND ORAL QUESTIONS WITH A...
EugeneSaldivar
 
Guidance_and_Counselling.pdf B.Ed. 4th Semester
Guidance_and_Counselling.pdf B.Ed. 4th SemesterGuidance_and_Counselling.pdf B.Ed. 4th Semester
Guidance_and_Counselling.pdf B.Ed. 4th Semester
Atul Kumar Singh
 
Home assignment II on Spectroscopy 2024 Answers.pdf
Home assignment II on Spectroscopy 2024 Answers.pdfHome assignment II on Spectroscopy 2024 Answers.pdf
Home assignment II on Spectroscopy 2024 Answers.pdf
Tamralipta Mahavidyalaya
 
Operation Blue Star - Saka Neela Tara
Operation Blue Star   -  Saka Neela TaraOperation Blue Star   -  Saka Neela Tara
Operation Blue Star - Saka Neela Tara
Balvir Singh
 
Phrasal Verbs.XXXXXXXXXXXXXXXXXXXXXXXXXX
Phrasal Verbs.XXXXXXXXXXXXXXXXXXXXXXXXXXPhrasal Verbs.XXXXXXXXXXXXXXXXXXXXXXXXXX
Phrasal Verbs.XXXXXXXXXXXXXXXXXXXXXXXXXX
MIRIAMSALINAS13
 
How libraries can support authors with open access requirements for UKRI fund...
How libraries can support authors with open access requirements for UKRI fund...How libraries can support authors with open access requirements for UKRI fund...
How libraries can support authors with open access requirements for UKRI fund...
Jisc
 
Polish students' mobility in the Czech Republic
Polish students' mobility in the Czech RepublicPolish students' mobility in the Czech Republic
Polish students' mobility in the Czech Republic
Anna Sz.
 
Embracing GenAI - A Strategic Imperative
Embracing GenAI - A Strategic ImperativeEmbracing GenAI - A Strategic Imperative
Embracing GenAI - A Strategic Imperative
Peter Windle
 
Thesis Statement for students diagnonsed withADHD.ppt
Thesis Statement for students diagnonsed withADHD.pptThesis Statement for students diagnonsed withADHD.ppt
Thesis Statement for students diagnonsed withADHD.ppt
EverAndrsGuerraGuerr
 
BÀI TẬP BỔ TRỢ TIẾNG ANH GLOBAL SUCCESS LỚP 3 - CẢ NĂM (CÓ FILE NGHE VÀ ĐÁP Á...
BÀI TẬP BỔ TRỢ TIẾNG ANH GLOBAL SUCCESS LỚP 3 - CẢ NĂM (CÓ FILE NGHE VÀ ĐÁP Á...BÀI TẬP BỔ TRỢ TIẾNG ANH GLOBAL SUCCESS LỚP 3 - CẢ NĂM (CÓ FILE NGHE VÀ ĐÁP Á...
BÀI TẬP BỔ TRỢ TIẾNG ANH GLOBAL SUCCESS LỚP 3 - CẢ NĂM (CÓ FILE NGHE VÀ ĐÁP Á...
Nguyen Thanh Tu Collection
 
A Strategic Approach: GenAI in Education
A Strategic Approach: GenAI in EducationA Strategic Approach: GenAI in Education
A Strategic Approach: GenAI in Education
Peter Windle
 
Language Across the Curriculm LAC B.Ed.
Language Across the  Curriculm LAC B.Ed.Language Across the  Curriculm LAC B.Ed.
Language Across the Curriculm LAC B.Ed.
Atul Kumar Singh
 
Introduction to AI for Nonprofits with Tapp Network
Introduction to AI for Nonprofits with Tapp NetworkIntroduction to AI for Nonprofits with Tapp Network
Introduction to AI for Nonprofits with Tapp Network
TechSoup
 
Palestine last event orientationfvgnh .pptx
Palestine last event orientationfvgnh .pptxPalestine last event orientationfvgnh .pptx
Palestine last event orientationfvgnh .pptx
RaedMohamed3
 
Digital Tools and AI for Teaching Learning and Research
Digital Tools and AI for Teaching Learning and ResearchDigital Tools and AI for Teaching Learning and Research
Digital Tools and AI for Teaching Learning and Research
Vikramjit Singh
 

Recently uploaded (20)

The approach at University of Liverpool.pptx
The approach at University of Liverpool.pptxThe approach at University of Liverpool.pptx
The approach at University of Liverpool.pptx
 
The basics of sentences session 5pptx.pptx
The basics of sentences session 5pptx.pptxThe basics of sentences session 5pptx.pptx
The basics of sentences session 5pptx.pptx
 
The Roman Empire A Historical Colossus.pdf
The Roman Empire A Historical Colossus.pdfThe Roman Empire A Historical Colossus.pdf
The Roman Empire A Historical Colossus.pdf
 
Honest Reviews of Tim Han LMA Course Program.pptx
Honest Reviews of Tim Han LMA Course Program.pptxHonest Reviews of Tim Han LMA Course Program.pptx
Honest Reviews of Tim Han LMA Course Program.pptx
 
Unit 2- Research Aptitude (UGC NET Paper I).pdf
Unit 2- Research Aptitude (UGC NET Paper I).pdfUnit 2- Research Aptitude (UGC NET Paper I).pdf
Unit 2- Research Aptitude (UGC NET Paper I).pdf
 
TESDA TM1 REVIEWER FOR NATIONAL ASSESSMENT WRITTEN AND ORAL QUESTIONS WITH A...
TESDA TM1 REVIEWER  FOR NATIONAL ASSESSMENT WRITTEN AND ORAL QUESTIONS WITH A...TESDA TM1 REVIEWER  FOR NATIONAL ASSESSMENT WRITTEN AND ORAL QUESTIONS WITH A...
TESDA TM1 REVIEWER FOR NATIONAL ASSESSMENT WRITTEN AND ORAL QUESTIONS WITH A...
 
Guidance_and_Counselling.pdf B.Ed. 4th Semester
Guidance_and_Counselling.pdf B.Ed. 4th SemesterGuidance_and_Counselling.pdf B.Ed. 4th Semester
Guidance_and_Counselling.pdf B.Ed. 4th Semester
 
Home assignment II on Spectroscopy 2024 Answers.pdf
Home assignment II on Spectroscopy 2024 Answers.pdfHome assignment II on Spectroscopy 2024 Answers.pdf
Home assignment II on Spectroscopy 2024 Answers.pdf
 
Operation Blue Star - Saka Neela Tara
Operation Blue Star   -  Saka Neela TaraOperation Blue Star   -  Saka Neela Tara
Operation Blue Star - Saka Neela Tara
 
Phrasal Verbs.XXXXXXXXXXXXXXXXXXXXXXXXXX
Phrasal Verbs.XXXXXXXXXXXXXXXXXXXXXXXXXXPhrasal Verbs.XXXXXXXXXXXXXXXXXXXXXXXXXX
Phrasal Verbs.XXXXXXXXXXXXXXXXXXXXXXXXXX
 
How libraries can support authors with open access requirements for UKRI fund...
How libraries can support authors with open access requirements for UKRI fund...How libraries can support authors with open access requirements for UKRI fund...
How libraries can support authors with open access requirements for UKRI fund...
 
Polish students' mobility in the Czech Republic
Polish students' mobility in the Czech RepublicPolish students' mobility in the Czech Republic
Polish students' mobility in the Czech Republic
 
Embracing GenAI - A Strategic Imperative
Embracing GenAI - A Strategic ImperativeEmbracing GenAI - A Strategic Imperative
Embracing GenAI - A Strategic Imperative
 
Thesis Statement for students diagnonsed withADHD.ppt
Thesis Statement for students diagnonsed withADHD.pptThesis Statement for students diagnonsed withADHD.ppt
Thesis Statement for students diagnonsed withADHD.ppt
 
BÀI TẬP BỔ TRỢ TIẾNG ANH GLOBAL SUCCESS LỚP 3 - CẢ NĂM (CÓ FILE NGHE VÀ ĐÁP Á...
BÀI TẬP BỔ TRỢ TIẾNG ANH GLOBAL SUCCESS LỚP 3 - CẢ NĂM (CÓ FILE NGHE VÀ ĐÁP Á...BÀI TẬP BỔ TRỢ TIẾNG ANH GLOBAL SUCCESS LỚP 3 - CẢ NĂM (CÓ FILE NGHE VÀ ĐÁP Á...
BÀI TẬP BỔ TRỢ TIẾNG ANH GLOBAL SUCCESS LỚP 3 - CẢ NĂM (CÓ FILE NGHE VÀ ĐÁP Á...
 
A Strategic Approach: GenAI in Education
A Strategic Approach: GenAI in EducationA Strategic Approach: GenAI in Education
A Strategic Approach: GenAI in Education
 
Language Across the Curriculm LAC B.Ed.
Language Across the  Curriculm LAC B.Ed.Language Across the  Curriculm LAC B.Ed.
Language Across the Curriculm LAC B.Ed.
 
Introduction to AI for Nonprofits with Tapp Network
Introduction to AI for Nonprofits with Tapp NetworkIntroduction to AI for Nonprofits with Tapp Network
Introduction to AI for Nonprofits with Tapp Network
 
Palestine last event orientationfvgnh .pptx
Palestine last event orientationfvgnh .pptxPalestine last event orientationfvgnh .pptx
Palestine last event orientationfvgnh .pptx
 
Digital Tools and AI for Teaching Learning and Research
Digital Tools and AI for Teaching Learning and ResearchDigital Tools and AI for Teaching Learning and Research
Digital Tools and AI for Teaching Learning and Research
 

Economics 2 final examination

  • 1. Economics-2 Final Examination PART-A Question-1 : Describe the difference between marginal cost and average total cost. Why are both of these costs important to a profit-maximizing firm? Question-2: Assume that a local bank sells two services, checking accounts and ATM card services. Mr. Donethat is willing to pay $8 a month for the bank to service his checking account and $10 a month for unlimited use of his ATM card. Ms. Beenthere is willing to pay only $5 for a checking account, but is willing to pay $15 for unlimited use of her ATM card. Assume that the bank can provide each of these services at zero marginal cost. A. If the bank is unable to use tying, what is the profit-maximizing price to charge for a checking account? B. If the bank is unable to use tying, what is the profit-maximizing price to charge for unlimited use of an ATM card? C. If the bank is able to use tying to price checking account and ATM service, what is the profit-maximizing price to charge for the “tied” good? D. How much additional profit does the bank make when it switches to use of a tying strategy to price checking account and ATM service? E. How much total surplus is generated from using tying to price the checking account and ATM service? How does that compare to the nontied pricing strategy? Which strategy has the largest deadweight loss? Question-3: Describe a government created monopoly. Why might one be created? Give an example. PART-II Question-1: The consumption of alcohol is often cited as an example of a negative externality. Explain a situation in which the consumption of alcohol would be considered to be a negative externality. Question-2: Identify each of the following goods as a private good, a common resource, a natural monopoly, or a public good, according to the classification presented in your textbook. A. A shared apartment B. A national monument C. Cable TV
  • 2. Question-3: Explain the role of opportunity cost in differentiating between economic profits and accounting profits. Question-4: Let’s assume that a monopolist decides to maximize revenue rather than profit. How does this operating objective change the size of the deadweight loss? If you’re a “benevolent” manager of a monopoly firm and are interested in reducing the deadweight loss of monopoly, should you maximize profits or maximize revenue? Carefully explain your answer. Question-5: Professional organizations (such as the American Medical Association and the American Bar Association) have actively advocated regulation to restrict the right of professionals to advertise. Describe the economic incentives that might exist for incumbent professionals to restrict advertising. Question-6: Joe Kelp owns a commercial fishing fleet, and hires a captain for each boat in his fleet. These workers are considered to be part of the crew. In the market for fresh Pacific salmon, Joe is one of thousands of fishermen. Although Joe usually catches a significant number of fish each year, his contribution to the entire salmon harvet is negligible relative to the size of the market. Joe is considered to be a perfect competitor in the output market. If so, explain why his demand curve for labor (crew workers) is downward-sloping, and his supply curve for labor is perfectly elastic at the market wage. Question-7: Describe the role that diminishing marginal utility plays in the utilitarian argument for redistribution of income. Question-8: Describe the purpose of antitrust laws. What do they accomplish? Question-9: What is the effective marginal tax rate of a government antipoverty program that guarantees every family a minimum income? Explain. Why might trying several antipoverty benefits to income level lead to an effective marginal tax rate of greater than 100 percent? Question-10: Explain the difference between inferior goods and normal goods. As a developing economy experiences increases in income (measured by GDP), what do you predict will happen to the demand for inferior goods?
  • 3. Get Answer From: http://homework.ecrater.com/p/21200588/hw-1515- economics-2-final-examination