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Managerial Economics HOMEWORK SET#1 Name: Class: Student #: (Due day: Next class) Part 1: A perfectly competitive market has: many buyers and sellers. several large buyers. a meeting place for buyers and sellers. a) and b) a) and c) Choose: a) There must be numerous small buyers and sellers for a market to be perfectly competitive. A meeting place is unnecessary. 2. Boeing Corporation and Airbus Industries are the only two producers of long-range commercial aircraft. This market is not perfectly competitive because: a) Each company has annual sales over $10 billion. b) Each company can significantly affect prices. c) Airbus receives subsidies from the European Union. d) Airbus cannot sell aircraft to the United States government. e) All of the above. Choose: b) The character of monopoly market is each firm can affect prices. If the real price of a college education has risen during a period of inflation: its nominal price has not changed. its nominal price has risen slower than a general index of prices. its nominal price has risen faster than a general index of prices. its current dollar price has not changed. None of the above is correct. Choose: c) When the nominal price of a college education rises faster than the rate of inflation, the real price of a college education will rise. 4. The constant dollar price of a good: a) is the same as its real price. b) is the same as its nominal price. c) adjusts for inflation in the overall price level. d) b) and c) e) a) and c) Choose: e) By definition, the constant dollar price is equal to the real price, and both adjust the nominal price for the effects of the inflation. 5. The price of a sandwich was $0.29 in 1970 and $0.99 in 1993. The CPI was 38.8 in 1970 and 144.0 in 1993. The 1993 price of a sandwich in 1970 dollars is: a) $0.08. b) $0.27. c) $0.34. d) $3.67. Choose: b) 0.99/x=144/38.8 x=0.27 6. Which of the following would shift the deman