Question

The following are true statements about a Supply Curve that is Highly Inelastic, EXCEPT:

Question 4 options: (B is NOT the answer)

	A) It refers to the case where there is high Total Cost of Production.
	B) It reflects typically a case of high Adjustment Cost in Production.
	C) The Supply Curve is Highly Vertical.
	D) Over the supply curve, the change in quantity is less than proportional than the change in price.

The following are correct statements about a Price Floor if enforced, EXCEPT:

Question 6 options: (B is NOT the answer)

	A) It is a regulated price above the equilibrium price.
	B) It will lead to a contraction in quantity available.
	C) It will for sure increase total consumer's surplus.
	D) It will creates a Dead Weight Loss.

The following are true statement regarding the optimal Tax strategies from the Government’s perspective, EXCEPT:

Question 10 options:(D is NOT the answer)

	A) The government can generate total higher tax revenue on markets that are relatively more inelastic in demand, like gasoline and cigarettes.
	B) The government should impose a tax per unit that is not too large or too small, in order to maximize total tax revenue.
	C) For any market, is easy for the government to impose taxes on producers, because producers can easily pass that to the consumers.
	D) Higher tax per unit will always generate higher DWL.

The following are likely effects created by a Minimum Wage Regulation, based on the model presented in class, EXCEPT:

Question 14 options: (D is NOT the answer)

	A) Increase in the number of workers looking for jobs
	B) Decrease in the number of jobs available.
	C) It will for sure increase wages received by the lowest skilled workers.
	D) It will increase the level of Unemployment in the market.

The following are possible characteristics related to different market structures, EXCEPT:

Question 25 options:(C is NOT the answer)

	A) Monopoly always implies the existence of positive economic profits
	B) The key characteristic for Monopolistic Competition is product differentiation.
	C) Under Perfect Competition firms will compete only in price since the product is standard.
	D) Collusion is a profitable but unstable strategy under oligopoly.

Answer 1

4. A) It refers to the case where there is high Total Cost of Production.
(Highly inelastic supply curve means that it is highly vertical and proportionate change in quantity demanded < proportionate change in price. However, it does not refer to the case where there is hight cost of production.)

6. C) It will for sure increase total consumer's surplus.
(A price floor decreases consumer surplus for sure.)

10. C) For any market, is easy for the government to impose taxes on producers, because producers can easily pass that to the consumers.
(This is not an optimal tax strategy as burden of tax depends on elasticity of supply and demand)

14. C) It will for sure increase wages received by the lowest skilled workers.
(As there will be unemployment in the market so wages received by lowest skilled workers will decline because most of them will be unemployed.)

25. A) Monopoly always implies the existence of positive economic profits
(There might not be positive economic profits in monopoly under certain situations.)