Question 1

If, at the output where marginal cost equals marginal revenue, both a pure competitor's and a monopolist's marginal revenue is $5.00:

both sellers' profit-maximizing price will be $5.00.
both sellers' profit-maximizing price will be greater than $5.00.
the pure competitor's profit-maximizing price will be $5.00, and the monopolist's profit-maximizing price will be greater than $5.00.
the monopolist's profit-maximizing price will be $5.00, and the pure competitor's profit-maximizing price will be greater than $5.00.
it is impossible to compare the output choice of the perfect competitor with that of the monopolist

Question 2

Firm A is concerned about the reactions of buyers to the price it sets for its product. Firm B is concerned about the reactions of buyers and its few rivals to the price it sets for its product. Firm C has no control over the price at which its product is sold. Which of the following best describes Firms A, B, and C respectively?

a monopolistic competitor, an oligopolist, and a pure competitor.
an oligopolist, a monopolistic competitor, and a pure competitor.
a monopolistic competitor, a pure competitor, and an oligopolist.
a pure competitor, an oligopolist, and a monopolistic competitor.
None of the above is correct.

Question 3

A firm in any market structure will maximize its profit or minimize its loss by operating where:

total revenue equals total cost.
total revenue equals marginal revenue.
marginal revenue is greater than marginal cost.
marginal revenue equals marginal cost.
None of the above is correct.

Question 4

Which of the following statements is FALSE?

A tariff is an example of a trade-restricting policy.
Dumping or increasing a tariff by a country could result in a trade war with another country.
International specialization can become more extensive as the markets in which trade occurs become larger.
The gains from trade include a greater variety of goods.
Noone benefits from trade-restricting policies.

Question 5

Consider the production of Higher Education (college and graduate school). Explain why you would ORwould not expect it to exhibit economies of scale. Use textual evidence from one or more of the required articles to support your point. 3-6 sentences.

Question 6

Below are some possible combinations of rice and fish for people living on the Islands of Alpha and Beta. Suppose the Alphas currently produce and consume 10 pounds of rice and 60 pounds of fish. The Betas currently produce 15 pounds of fish and 25 pounds of rice. Each island can produce any linear combination in between the points of producing only one type of good.

A. What is the opportunity cost of 1 pound of rice on Alpha Island? (Answer with a number and good. For example, "12 bicycles").
B. What is the opportunity cost of 1 pound of rice on Beta Island? (Answer with a number and good. For example, "12 bicycles").
C. Which island has the comparative advantage in rice production?
D. Suppose that the Alphas propose a trade in which they specialize in fish and give the Betas (who would specialize in rice) 15 pounds of fish and receive 10 pounds of rice in return. Would it be rational to agree? Explain why in terms of the class notes and/or Chapter 16 of the text. Connect your answer to evidence from one or more of the required articles. Answers should be 3-6 sentences.

Question 7

The Wall Street Journal reported the following news about Brazil on September 24, 2014: "With . . . inflation at 6.5%, Latin America's largest economy is in a straitjacket from which the new government may have a hard time escaping." Meanwhile, The Wall Street Journal reported in another article that in September 2014, inflation in the US has fallen for the first time since 2013.

Describe the impact on the market for Brazilian real of the changes in relative inflation rates by answering the following questions.

A. Brazil and the U.S. are trading partners. Given the news above, what is the net result on Brazil's inflation relative to U.S. inflation? (Answer simply either: increase, decrease, or no change).

B. Consider the market for the Brazilian real (BRL) and the demand and supply model used to depict the currency market in class and in the text.

* EXPLAIN whether all else equal, the demand for the BRL increases, decreases, or remains unchanged. Explain the reason for your answer and clearly explain who are the demanders of Brazilian real in this model, and distinguish a change in demand from a movement along the demand curve. 1-3sentences.

* EXPLAIN whether all else equal, the supply of the BRL increases, decreases, or remains unchanged. Explain the reason for your answer and clearly explain who are the suppliers of Brazilian real in this model, and distinguish a change in supply from a movement along the supply curve. 1-3 sentences.

C. Based on your answers to (A) and (B) above, tell what happens to the value of the BRL against the dollar (appreciates, depreciates, unchanged, undetermined. EXPLAIN the results in terms of the model. 1-3 sentences