Allison's Auto Art is a company that applies pinstripes to vehicles. Allison's cost for a basic 1-color pinstriping job is $35, and she charges $95 for this service. For a total price of $175, Allison will apply a fancier 3-color pinstripe application to
an automobile, a service that adds an additional $40 to the total cost of the package. What is the marginal cost of moving up from the 1-color application to the 3-color application?
A) $35
B) $40
C) $80
D) $175
Answer: B
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Suppose that a bank has $250 in vault cash, $750 in deposits at the Federal Reserve, $9,000 of loans, and deposits of $10,000. What is the bank's reserve ratio?
a) 2.5% b) 10% c) 33% d) 90%
Which set of actions will help three oligopolistic firms to achieve joint profit maximization?
a. They decide not to cooperate, and each pursues its individual self-interest. b. They decide to collude and to trust each other not to defect from the agreement. c. They sign a cartel agreement, and then each firm cheats on it. d. They choose a dominant firm, and then they take turns being the price leader.