Question One Window taxes were imposed on properties in the eighteenth and nineteenth centuries. The more windows a house had, the greater the tax which had to be paid. In response, people blocked u

Question One

Window taxes were imposed on properties in the eighteenth and nineteenth centuries. The more windows a house had, the greater the tax which had to be paid. In response, people blocked up some of their windows. Which part of the xLaffer curve is relevant in this case?

Possible answers

(remember the order of answer may be randomised by Blackboard)

a)    The point where the Laffer curve cuts the y axis

b)    The point where the Laffer curve cuts the x axis (but not the origin)

c)     To the right of the maximum point on the Laffer curve

d)    The Laffer curve is irrelevant in this case

Question Two

England and Portugal can each produce wine and cloth. It takes England 12 hours to make 10 units of cloth. It takes England 5 hours to make 10 units of wine. It takes Portugal 15 hours to make 10 units of wine and 14 hours to make 10 units of cloth. Which of the following statements is correct?

a)    England can produce 1 unit of cloth and 1 unit of wine in 17 hours.

b)    Portugal can produce 1 unit of cloth and 1 unit of wine in 29 hours.

c)     England can produce 10 units of each good in 17 hours.

d)    Portugal can produce 10 units of each good in 17 hours.

Question Three

England and Portugal can each produce wine and cloth. It takes England 12 hours to make 10 units of cloth. It takes England 5 hours to make 10 units of wine. It takes Portugal 15 hours to make 10 units of wine and 14 hours to make 10 units of cloth. Which of the following statements is correct?

a)    England has a comparative advantage but not an absolute advantage in either good.

b)    Portugal has an absolute advantage in the production of wine.

c)     Portugal has an absolute advantage in the production of cloth.

d)    Portugal has a comparative advantage in the production of cloth.

Question Four

England and Portugal can each produce wine and cloth. It takes England 12 hours to make 10 units of cloth. It takes England 5 hours to make 10 units of wine. It takes Portugal 15 hours to make 10 units of wine and 14 hours to make 10 units of cloth. Which one of the following choices is correct?

a)    England has an absolute advantage in both goods. It does not need to trade.

b)    England should make both wine and cloth and Portugal should make nothing. Portugal should buy all of its wine and cloth from England.

c)     England should make cloth and Portugal should make wine. Then they can trade.

d)    England should make wine and Portugal should make cloth. Then they can trade.

Question Five

The supply and demand schedules for red apples are as follows:

P=2+QS

P=20-2QD

Price is in pence.

The government imposes a tax. This shifts the supply schedule to become:

P=8+QS

Which of the following statements is true?

a)    The tax is 12 pence per apple.

b)    No apples are sold after the tax is imposed.

c)     The tax is 8 pence per apple

d)    Buyers pay 4 pence per apple in tax.

e)    Sellers pay 6 pence per apple in tax.

f)      Buyers pay 6 pence per apple in tax

Question Six

The supply and demand schedules for red apples are as follows:

P=2+QS

P=20-2QD

Price is in pence.

The government imposes a tax. This shifts the supply schedule to become:

P=8+QS

Fill in the blank.

The total tax revenue received by the government (in pence) is …..

Question Seven

The supply and demand schedules for red apples are as follows:

P=2+QS

P=20-2QD

Price is in pence.

The government imposes a tax. This shifts the supply schedule to become:

P=8+QS

Fill in the blank.

The total deadweight loss caused by the tax is ….

Question Eight

Mercantilist approaches treat international trade as an example of:

a)    A cartel arrangement

b)    Comparative Advantage

c)     Absolute Advantage

d)    A Zero Sum Game

e)    A Pareto Improvement

Question Nine

Company A and Company B are in competition to sell double-glazed windows. If they both charge high prices, they make revenues of £50 million each. If they both charge low prices, they will make revenues of £10 million each. If one charges a high price and the other a low price, then the high priced one will sell nothing. The lower priced competitor will make £200 million in revenues.

What will happen?

a)    With no collusion, both will choose a low price.

b)    With no collusion, one will choose a low price and the other a high price.

c)     With no collusion, both will choose a high price.

Question Ten

Company A and Company B are in competition to sell double-glazed windows. If they both charge high prices, they make revenues of £50 million each. If they both charge low prices, they will make revenues of £10 million each. If one charges a high price and the other a low price, then the high priced one will sell nothing. The lower priced competitor will make £200 million in revenues.

If both decide to charge low prices, what is this an example of?

a)    A revenue-maximising outcome for both of them

b)    A Nash equilibrium

c)     A cartel arrangement

d)    A monopoly arrangement

e)    Perfect competition

Question Eleven

A monopolist faces the following demand schedule:

P=10-2Qd

Marginal cost is equal to 4.

Price is in pounds.

If the monopolist does not use price discrimination, what is the price that the monopolist will set?

Enter a number into the box. Do not add a £ sign.

Question Twelve

A monopolist faces a marginal revenue schedule as follows:

MR=20-6Q

Marginal cost is equal to 2. Price is in pounds.

The monopolist is able to practice perfect price discrimination. What is the quantity that the monopolist will produce?

Enter a number into the box.