QUESTION 1Refer to the graph below for the attached questions. (12 points; 3 points each).(1) Moving from Point A to Point B, what is the point price elasticity of demand? What is the dollar change in total revenue? Your answer: Elasticity:(Round your answer to one decimal place, unless your answer is an integer.) Dollar change:(Do NOT include "$"; Round your answer to one decimal place, unless your answer is an integer.)(2) Assuming that the demand curve is for a monopoly, what are the revenue maximizing quantity and price? Your answer: Quantity:(Do NOT include words; Round your answer to one decimal place, unless your answer is an integer.) Price:(Do NOT include "$"; Round your answer to one decimal place, unless your answer is an integer.)(3) Assuming that the monopoly's AC=MC=2 (constant), what are the monopoly's profit maximizing quantity and price?Your answer: Quantity:(Do NOT include words; Round your answer to one decimal place, unless your answer is an integer.) Price:(Do NOT include "$"; Round your answer to one decimal place, unless your answer is an integer.)(4) Assume that this were a perfectly competitive market and each firm's MC = 2. What would be the market equilibrium price? Compared with perfect competition, what is the deadweight loss caused by the monopoly?Your answer: Market price:(Do NOT include "$"; Round your answer to one decimal place, unless your answer is an integer.)Deadweight loss:(Do NOT include "$"; Round your answer to one decimal place, unless your answer is an integer.)12 points QUESTION 2Refer to the graph below (12 points; 3 points each).Only one choice is correct for each question and your answers for the following questions should be a, b, c or d.(1) At Point a, what is the price elasticity of demand? Your Answer: (fill in "a", "b", or "c")a. >1b. =1c. <1(2) At Point b, Your Answer: (fill in "a", "b", or "c")a. MR>0b. MR= 0c. MR<0(3) At Point c, Your Answer: (fill in "a", "b", or "c")a. total revenue is increasing.b. total revenue is decreasing.c. total revenue is not changing.(4) At Point b, Your Answer: (fill in "a", "b", "c", or "d")a. average revenue is maximized.b. profit is maximized.c. total revenue is maximized.d. marginal revenue is maximized.12 points QUESTION 3For a particular product, Country A's supply and demand are represented by the following functions: Qs = – 2 + P; Qd= 52 – P. Suppose Country A is a small country (it takes the world price as given) and the world price is $10 (PW = $10).Numerical answers are required for the questions. (12 points; 3 points each)(1) If the government of Country A imposes a 100% tariff on the imports, how much does Country A import?Your answer: units (Do NOT include words; Round your answer to one decimal place, unless your answer is an integer.)(2) Moving from free trade to the 100% tariff, by how much does the consumer's surplus change? (Positive number means a gain; a negative number means a loss)Your answer: $ (Do NOT include "$"; Round your answer to one decimal place, unless your answer is an integer.)(3) Moving from free trade to the 100% tariff, by how much does the producer's surplus change? (Positive number means a gain; a negative number means a loss)Your answer: $(Do NOT include "$"; Round your answer to one decimal place, unless your answer is an integer.)(4) What is the deadweight loss for Country A caused by the tariff?Your answer: $(Do NOT include "$"; Round your answer to one decimal place, unless your answer is an integer.)12 points QUESTION 4Which of the following is TRUE about the market economy?a.RESOURCES ARE SCARCE; A SOCIETY MUST DISTRIBUTE ITS RESOURCES AND PRODUCTS EQUALLY AMONG ALL INDIVIDUALS.b.RESOURCES ARE SCARCE; THE GOVERNMENT MUST GET THE UPPER HAND OVER THE "INVISIBLE HAND" TO ALLOCATE RESOURCES.c.RESOURCES ARE SCARCE; COMPETITION HELPS ACHIEVE EFFICIENT ALLOCATION OF RESOURCES.d.RESOURCES ARE SCARCE; ONLY THE GOVERNMENT CAN ALLOCATE THE RESOURCES EFFICIENTLY.3 points QUESTION 5Which of the following statement is CORRECT about a firm's shutdown condition?a.A FIRM SHOULD SHUT DOWN ITS OPERATION WHEN ITS ECONOMIC PROFIT IS ZERO.b.THE CRITICALLY LOW MARKET PRICE AT WHICH REVENUE JUST EQUAL FIXED COST IS CALLED THE SHUTDOWN POINT.c.A FIRM SHOULD SHUT DOWN ITS OPERATION WHEN THE MARKET PRICE IS EXACTLY THE SAME AS ITS MINIMUM AVERAGE COST.d.THE CRITICALLY LOW MARKET PRICE AT WHICH LOSSES EXACTLY EQUAL FIXED COST IS CALLED THE SHUTDOWN POINT.3 points QUESTION 6Which of the following is NOT true about a perfectly competitive market?a.At competitive equilibrium, MU=P=MC.b.The producer surplus is zero in a perfectly competitive market.c.The industry supply and demand interest to determine the equilibrium quantity and price.d.At competitive equilibrium, economic surplus is maximized.3 points QUESTION 7Perfectly competitive firms are described as _______ and face _______ demand curves.a.PRICE-TAKERS; VERTICALb.PRICE-MAKERS; HORIZONTALc.PRICE-TAKERS; HORIZONTALd.PRICE-MAKERS; VERTICAL3 points QUESTION 8Which of the following is NOT true about a monopoly?a.PROFIT MAXIMIZATION FOR A MONOPOLY REQUIRES THAT MC=MR<P.b.DEMAND IS DOWNWARD SLOPING AND AR>MR.c.THE QUANTITY AND PRICE FOR A MONOPOLY ARE DETERMINED BY THE INTERSECTION OF SUPPLY AND DEMAND IN THE MARKET.d.AT PROFIT MAXIMIZATION FOR A MONOPOLY, AR>MC.3 points QUESTION 9Under monopolistic competition, prices are ______ marginal costs, which lead to ______.a.ABOVE; ECONOMIC EFFICIENCYb.BELOW, ECONOMIC EFFICIENCYc.ABOVE; ECONOMIC INEFFICIENCYd.BELOW; ECONOMIC INEFFICIENCY3 points QUESTION 10The zero-profit point for a firm in a perfectly competitive market will occur where:a.MC=AVCb.AC=AVCc.MC=AC=Pd.MC=MP3 points QUESTION 11Which of the following is NOT consistent with what we learned in the course?a.INCREASING RETURNS TO SCALE ARE ALSO CALLED ECONOMIES OF SCALE.b.DECREASING RETURNS TO SCALE OCCUR BECAUSE OF THE LAW OF DIMINISHING RETURNS.c.ECONOMIES OF SCOPE OCCUR WHEN A NUMBER OF DIFFERENT PRODUCTS CAN BE PRODUCED MORE EFFICIENTLY TOGETHER THAN APART.d.CONSTANT RETURNS TO SCALE DENOTE A CASE WHERE A CHANGE IN ALL INPUTS LEADS TO A PROPORTIONAL CHANGE IN OUTPUT.3 points QUESTION 12Which of the following is NOT a correct description of the marginal principles?a.A MONOPOLY'S PROFIT MAXIMIZATION: MC = P.b.CONSUMER UTILITY MAXIMIZATION: MUGOOD1 / PGOOD1 = MUGOOD2 / PGOOD2c.A PERFECTLY COMPETITIVE FIRM'S PROFIT MAXIMIZATION: MC = P.d.PRODUCER PROFIT MAXIMIZATION: MPL / PL = MPK / PK3 points QUESTION 13The Lorenz curve ________; the further away of the actual income distribution curve from the absolute equality curve, the ___the inequality.a.SHOWS THE LEVELS OF INCOME AND WEALTH INEQUALITY IN AN ECONOMY; HIGHERb.SHOWS THE DIFFERENCE BETWEEN THE SUPPLY AND DEMAND CURVES AT ALL PRICES; HIGHERc.SHOWS THE LEVEL OF IMPORTS AND EXPORTS IN AN ECONOMY; LOWER3 points QUESTION 14Which of the following does NOT represent a market failure?a.IMPERFECT COMPETITION SUCH AS MONOPOLIES.b.BANKRUPTCIES EXIST IN THE ECONOMY.c.INSUFFICIENT PRODUCTION OF PUBLIC GOODS, SUCH AS HIGHWAYS AND NATIONAL DEFENSE.d.NEGATIVE EXTERNALITIES SUCH AS POLLUTION.3 points QUESTION 15Most favored nations (MFN) treatment basically means:a.EXTENDING TO ANY TRADING PARTNER WITH MFN STATUS THE SAME PRIVILEGES AND CONCESSIONS THAT HAVE BEEN GRANTED IN NEGOTIATION TO ANY OTHER TRADE PARTNER.b.GRANTING SPECIALLY PRIVILEGES AND CONCESSIONS TO A PARTICULAR NATION THAT ARE NOT ENJOYED BY ANY OTHER NATIONS.c.TREATING SOME COUNTRIES WITH SPECIAL PRIVILEGE WHILE DISCRIMINATING AGAINST OTHERS.d.GRANTING FIRST AND MOST FAVORABLE TREATMENT TO A NATION OR NATIONS THAT OTHER NATIONS DO NOT GENERALLY GET.3 points QUESTION 16Which of the following statement is NOT consistent with our analysis of supply and demand? (Note: In each statement, we assume everything else is unchanged.)a.IF DEMAND FALLS, THE DEMAND CURVE SHIFTS TO THE LEFT, EQUILIBRIUM PRICE AND QUANTITY WILL BOTH DECREASE.b.IF DEMAND RISES, THE DEMAND CURVE SHIFTS TO THE RIGHT, EQUILIBRIUM PRICE AND QUANTITY WILL BOTH INCREASE.c.IF SUPPLY FALLS, THE SUPPLY CURVE SHIFTS TO THE LEFT, EQUILIBRIUM PRICE WILL INCREASE AND EQUILIBRIUM QUANTITY WILL DECREASE.d.IF SUPPLY RISES, THE SUPPLY CURVE SHIFTS TO THE RIGHT, EQUILIBRIUM PRICE AND QUANTITY WILL BOTH INCREASE.3 points QUESTION 17Based on the trade theories we have discussed in the course, which of the following statement is NOT true?a.TRADE IS GOOD FOR THE EXPORTING COUNTRY AND BAD FOR THE IMPORTING COUNTRY AS IT CAUSES JOB LOSS IN THE IMPORTING COUNTRY.b.TRADE ALLOWS A TRADING NATION TO CONSUME BEYOND ITS PRODUCTION CAPACITY.c.TRADE CAUSES EXPANSION IN THE EXPORT SECTOR AND CONTRACTION IN THE IMPORT-COMPETING SECTOR.d.TRADE IS MUTUALLY BENEFICIAL FOR ALL TRADING NATIONS.3 points QUESTION 18Refer to the graph below. Which line represents the consumption possibilities in Country II with free trade?a.LINE 2.b.LINE 3.c.LINE 1.3 points QUESTION 19Which of the following is NOT a main economic function of the government in a market economy?a.GOVERNMENT PROMOTE EQUITY BY USING TAX AND EXPENDITURE PROGRAMS TO REDISTRIBUTE INCOME TOWARD PARTICULAR GROUPS.b.GOVERNMENT INCREASE EFFICIENCY BY PROVIDING PUBLIC GOODS.c.GOVERNMENT INCREASE EFFICIENCY BY PROMOTING COMPETITION AND CURBING EXTERNALITIES LIKE POLLUTION.d.GOVERNMENT USE THE VISIBLE HAND TO GET THE UPPER HAND OVER THE INVISIBLE HAND SO AS TO OVERCOME THE SCARCITY OF RESOURCES.3 points QUESTION 20Refer to the table below for the input and output information for a firm.Your answer: $(Do NOT include words or "$"; Round your answer to one decimal place, unless your answer is an integer.)3 points QUESTION 21Refer to the graph below for a monopoly.CONSISTENT with the information provided in the graph and the concepts of a monopoly?a.THE MONOPOLY'S PROFIT IS MAXIMIZED WHEN THE OUTPUT IS 4 UNITS WITH A TOTAL PROFIT OF $230.b.THE MONOPOLY'S PROFIT IS MAXIMIZED WHEN THE OUTPUT IS 6 UNITS WITH A TOTAL PROFIT OF $200.c.THE MONOPOLY'S PROFIT IS MAXIMIZED WHEN THE OUTPUT IS 4 UNITS WITH A TOTAL PROFIT OF $320.d.THE MONOPOLY'S PROFIT IS MAXIMIZED WHEN THE OUTPUT IS 6 UNITS WITH A TOTAL PROFIT OF $480.QUESTION 22Briefly comment on the following statement: "The first law of economics is scarcity, and the first law of politics is to disregard the first law of economics".5 points QUESTION 23Define the major market structures in the economy and briefly describe their major differences.

Please complete the essay question and follow the Lecture 2 file. Please answer the questions in as much detail as possible.