These are Multiple Choice Questions, only need to choose one (alphabet) answer (from A to D) for each question. ONLY answer 3 questions. Q1) Louey's Greasy Spoon restaurant charges $15 for each dinner entree and $5 for each dessert selection, and they offer a dinner special that provide an entree and dessert for $18. If a dinner at Louey's assigns zero value to dessert and $19 to an entree, what is their optimal decision? A) Buy the dinner Special B) Buy only the entree C) Buy only the dessert selection D) We do not have enough information to determine the optimal decision Q2) The Acme Oil Company is a vertically integrated firm. It explored for and extracts crude oil. It also refines the crude oil into gasoline and other products, and sells these products to consumers. There are many other firms that extract and sell crude oil so that the market for crude oil is regarded by Acme Oil as competitive. The internal price that Acme Oil uses when the crude oil that it extracts is "sold" to one of its refineries: A) equals the market price for crude oil B) equals the market price for crude oil less a discount because Acme Oil does not to profit from itself C) is unrelated to the market price of crude oil D) is greater than the marginal cost of extracting crude oil Q3) What is the profit maximizing condition for a vertically integrated firm? A) Net marginal revenue equals the sum of the marginal costs of the intermediate inputs B) Marginal revenue equals the marginal cost of the final output C) Net marginal revenue equals the marginal cost of each intermediate good D) The sum of net marginal revenues equals the marginal cost of the final output
These are Multiple Choice Questions, only need to choose one (alphabet) answer (from A to D) for each question. ONLY answer 3 questions. Q1) Louey's Greasy Spoon restaurant charges $15 for each dinner entree and $5 for each dessert selection, and they offer a dinner special that provide an entree and dessert for $18. If a dinner at Louey's assigns zero value to dessert and $19 to an entree, what is their optimal decision? A) Buy the dinner Special B) Buy only the entree C) Buy only the dessert selection D) We do not have enough information to determine the optimal decision Q2) The Acme Oil Company is a vertically integrated firm. It explored for and extracts crude oil. It also refines the crude oil into gasoline and other products, and sells these products to consumers. There are many other firms that extract and sell crude oil so that the market for crude oil is regarded by Acme Oil as competitive. The internal price that Acme Oil uses when the crude oil that it extracts is "sold" to one of its refineries: A) equals the market price for crude oil B) equals the market price for crude oil less a discount because Acme Oil does not to profit from itself C) is unrelated to the market price of crude oil D) is greater than the marginal cost of extracting crude oil Q3) What is the profit maximizing condition for a vertically integrated firm? A) Net marginal revenue equals the sum of the marginal costs of the intermediate inputs B) Marginal revenue equals the marginal cost of the final output C) Net marginal revenue equals the marginal cost of each intermediate good D) The sum of net marginal revenues equals the marginal cost of the final output
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Transcribed Image Text:These are Multiple Choice Questions, only need to choose one (alphabet) answer (from A to D) for each question.
ONLY answer 3 questions.
Q1) Louey's Greasy Spoon restaurant charges $15 for each dinner entree and $5 for each dessert selection, and they offer
a dinner special that provide an entree and dessert for $18. If a dinner at Louey's assigns zero value to dessert and $19 to
an entree, what is their optimal decision?
A) Buy the dinner Special
B) Buy only the entree
C) Buy only the dessert selection
D) We do not have enough information to determine the optimal decision
Q2) The Acme Oil Company is a vertically integrated firm. It explored for and extracts crude oil. It also refines the crude oil
into gasoline and other products, and sells these products to consumers. There are many other firms that extract and sell
crude oil so that the market for crude oil is regarded by Acme Oil as competitive. The internal price that Acme Oil uses
when the crude oil that it extracts is "sold" to one of its refineries:
A) equals the market price for crude oil
B) equals the market price for crude oil less a discount because Acme Oil does not to profit from itself
C) is unrelated to the market price of crude oil
D) is greater than the marginal cost of extracting crude oil
Q3) What is the profit maximizing condition for a vertically integrated firm?
A) Net marginal revenue equals the sum of the marginal costs of the intermediate inputs
B) Marginal revenue equals the marginal cost of the final output
C) Net marginal revenue equals the marginal cost of each intermediate good
D) The sum of net marginal revenues equals the marginal cost of the final output
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