WGU C211: Additional Study - 4th Attempt OA Quizzes

In _____, clients pay contractors to design and construct new facilities and train personnel.

Turnkey Projects

The _____ theory is based on the assumption that the wealth of the world is fixed.

mercantilism

Suppose a monopolist is able to charge each customer a price equal to that customer's willingness-to-pay for the product. Then the monopolist is engaging in

perfect price discrimination

Monopolistic competition is considered inefficient because

price exceeds marginal cost

Product differentiation in monopolistically competitive markets ensures that, for profit-maximizing firms,

price will exceed marginal cost

If one firm left a duopoly market where the firms did not cooperate then

price would rise and quantity would fall

In the short run, a firm operating in a monopolistically competitive market

produces an output where marginal revenue equals marginal cost, and the price is determined by demand

The intersection of a firm's marginal revenue and marginal cost curves determines the level of output at which

profit is maximized

Professional organizations and producer groups have an incentive to

restrict advertising in order to reduce competition on the basis of price

The Sherman Antitrust Act

restricted the ability of competitors to engage in cooperative agreements

Assume the MPC is 0.625. Assume there is a multiplier effect and that the total crowding-out effect is $12 billion. An increase in government purchases of $30 billion will shift aggregate demand to the

right by $68 billion

A similarity between monopoly and monopolistic competition is that in both market structures

sellers are price makers rather than price takers

Which of the following is an example of public ownership of a monopoly?

U.S. Postal Service

If a firm produces nothing, which of the following costs will be zero?

Variable cost

Monopoly firms face

downward-sloping demand curves, so they can sell only the specific price-quantity combinations that lie on the demand curve

If marginal cost is rising,

marginal product must be falling

Changes in the interest rate

shift aggregate demand if they are caused by fiscal or monetary policy, but not if they are caused by changes in the price level.

Suppose there are both multiplier and crowding out effects but without any accelerator effects. An increase in government expenditures would

shift aggregate demand right by a larger, equal, or smaller amount than the increase in government expenditures.

Liquidity preference theory is most relevant to the

short run and supposes that the interest rate adjusts to bring money supply and money demand into balance.

In monopolistically competitive markets, economic losses

suggest that some existing firms will exit the market

A problem that the Fed faces when it attempts to control the money supply is that

the Fed does not control the amount of money that households choose to hold as deposits in banks

Billie Jo values a stainless steel dishwasher for her new house at $500, but she succeeds in buying one for $425. Billie Jo's willingness to pay for the dishwasher is

$500

Motor oil and gasoline are complements. If the price of motor oil increases, consumer surplus in the gasoline market

may increase, decrease, or remain unchanged.

The _____ theory viewed international trade as a zero-sum game.

mercantilism

In the national income accounts, depreciation is called

"consumption of fixed capital."

Suppose a firm in a competitive market produces and sells 150 units of output and earns $1,800 in total revenue from the sales. If the firm increases its output to 200 units, the average revenue of the 200th unit will be

$12

At Nick's Bakery, the cost to make a cheese danish is $1.50 per danish. As a result of selling 10 danishes, Nick experiences a producer surplus in the amount of $20. Nick must be selling his danishes for

$3.50 each

Suppose that for a particular firm the only variable input into the production process is labor and that output equals zero when no workers are hired. In addition, suppose that the average total cost when 5 units of output are produced is $30, and the marginal cost of the sixth unit of output is $60. What is the average total cost when six units are produced?

$35

Bob purchases a book for $6, and his consumer surplus is $2. How much is Bob willing to pay for the book?

$8

In the special case of the 100-percent-reserve banking, the money multiplier is

1 and banks do not create money

Which of the following is not one of the ways that antitrust laws promote competition?

Antitrust laws allow the government to shut down a firm if the government believes the firm has monopoly power.

Which of the following statements is correct?

Brand names may help consumers if they provide information about the quality of a product when acquiring such information is difficult.

Which of the following correctly orders U.S. income measures from largest to smallest?

Gross national product, net national product, national income, personal income, disposable personal income

A disadvantage of acquisitions is _____.

High development costs

Which of the following policies would be advocated by someone who wants the government to follow an active stabilization policy when the economy is experiencing severe unemployment?

Increase government expenditures

With respect to their impact on aggregate demand for the U.S. economy, which of the following represents the correct ordering of the wealth effect, interest-rate effect, and exchange-rate effect from most important to least important?

Interest-rate effect, exchange-rate effect, wealth effect

Which of the following is true of quantitative easing?

It depreciates the currency that is being printed.

Which of the following characterizes an MNE from a non-MNE?

It enjoys OLI advantages.

Suppose Japan exports cars to Russia and imports wine from France. This situation suggests

Japan has a comparative advantage relative to Russia in producing cars, and France has a comparative advantage relative to Japan in producing wine.

Which of the following events would increase producer surplus?

Sellers' costs stay the same and the price of the good increases.

When a country allows trade and becomes an exporter of a good, which of the following is not a consequence?

The losses of domestic consumers of the good exceed the gains of domestic producers of the good.

Which of the following items is the one type of household expenditure that is categorized as investment rather than consumption?

The purchase of a new house

Which of the following is included in the calculation of GDP?

The purchase of tutoring services from a tutor who holds citizenship outside the country but resides within the country.

A greenfield operation refers to _____.

a wholly owned subsidiary created by building a new factory and offices from scratch

Which of the following expressions is correct?

accounting profit = economic profit + implicit costs

In the context of NTBs, _____ are bureaucratic rules that make it harder to import foreign goods.

administrative policies

If an allocation of resources is efficient, then

all potential gains from trade among buyers are sellers are being realized.

In a simple circular-flow diagram, total income and total expenditure are

always equal because every transaction has a buyer and a seller.

The process of buying a good in one market at a low price and selling the good in another market for a higher price in order to profit from the price difference is known as

arbitrage

In a system of 100-percent-reserve banking,

banks do not influence the supply of money

In order for antitrust laws to raise social welfare, the government must

be able to determine which mergers are desirable and which are not

On a graph, consumer surplus is represented by the area

below the demand curve and above price.

When a country that imports a particular good imposes a tariff on that good,

consumer surplus decreases and total surplus decreases in the market for that good.

Cold Duck Airlines flies between Tacoma and Portland. The company leases planes on a year-long contract at a cost that averages $600 per flight. Other costs (fuel, flight attendants, etc.) amount to $550 per flight. Currently, Cold Duck's revenues are $1,000 per flight. All prices and costs are expected to continue at their present levels. If it wants to maximize profit, Cold Duck Airlines should

continue flying until the lease expires and then drop the run

Justin builds fences for a living. Justin's out-of-pocket expenses (for wood, paint, etc.) plus the value that he places on his own time amount to his

cost of building fences.

Steak and chicken are substitutes. A sharp reduction in the supply of steak would

decrease consumer surplus in the market for steak and increase producer surplus in the market for chicken.

The set of items that serve as media of exchange includes

demand deposits

If total spending rises from one year to the next, then

either the economy must be producing a larger output of goods and services, or goods and services must be selling at higher prices, or both.

According to the circular-flow diagram GDP, can be computed as

either the revenue firms receive from the sales of goods and services or the payments they make to factors of production.

During recessions, taxes tend to

fall and thereby increase aggregate demand

A transfer payment is a payment made by

government, but not in exchange for a currently produced good or service.

During a presidential campaign, the incumbent argues that he should be reelected because nominal GDP grew by 12 percent during his 4-year term in office. You know that population grew by 4 percent over the period and that the GDP deflator increased by 6 percent during the past 4 years. You should conclude that real GDP per person

grew, but by less than 12 percent.

Countries with low GDP per person tend to have

higher rates of infant mortality.

Disposable personal income is the income that

households and noncorporate businesses have left after paying taxes and non-tax payments to the government.

The problem with the protection-as-a-bargaining-chip argument for trade restrictions is

if it fails, the country faces a choice between two bad options.

Gross domestic product measures

income and expenditures.

If the cost of producing sofas decreases causing the price of sofas to decrease, consumer surplus in the sofa market will

increase

A Texas household receives a Social Security check for $1500, which it uses to purchase a $40 pair of shoes made in Thailand by a Thai firm, a $1240 television made by a Korean firm in Korea, and $220 on groceries from a local store. As a result, U.S. GDP

increases by $220.

A farmer produces oranges and sells them to Fresh Juice, which makes orange juice. The oranges produced by the farmer are called

intermediate goods.

The bandwagon effect is an example of the way _____ directly affects foreign exchange rates.

investor psychology

The GDP deflator is the ratio of

nominal GDP to real GDP multiplied by 100.

If real GDP doubles and the GDP deflator doubles, then nominal GDP

quadruples.

A tax on an imported good is called a

tariff

What happens to consumer surplus in the cell phone market if cell phones are normal goods and buyers of cell phones experience an increase in income?

Consumer surplus may increase, decrease, or remain unchanged.

_____ are politically motivated trade sanctions against foreign countries to signal displeasure.

Trade embargoes

Suppose the banking system currently has $400 billion in reserves, the reserve requirement is 8 percent, and excess reserves amount to $5 billion. What is the level of deposits?

$4,937.5 billion

_____ are the most basic non-equity mode of entry, capitalizing on economies of scale in production concentrated in the home country and providing better control over distribution.

Direct exports

Import quotas and tariffs produce some common results. Which of the following is not one of those common results?

Equal revenue is always raised for the domestic government.

Which of the following is true of modes of entry?

Equity modes are indicative of relatively larger, harder-to-reverse commitments.

Which of the following is an advantage of a weak US dollar?

Foreign tourists enjoy lower prices in the US

_____ have specified upper or lower bounds within which the exchange rate is allowed to fluctuate.

Target exchange rates

Which of the following is true of the strategic trade theory?

It provides direct policy advice.

Which of the following is a disadvantage of licensing and franchising?

Little control over marketing

If a certain market were a monopoly, then the monopolist would maximize its profit by producing 4,000 units of output. If, instead, that market were a duopoly, then which of the following outcomes would be most likely if the duopolists successfully collude?

One duopolist produces 2,400 units of output and the other produces 1,600 units of output

Which of the following conditions is characteristic of a monopolistically competitive firm in both the short run and the long run?

P > MC

Which of the following policies can the Fed follow to increase the money supply?

Reduce the interest rate on reserves

Which of the following is included in M2 but not in M1?

Savings deposits

The ____ is defined as the difference between the offer price and the bid price in a foreign exchange.

Spread

Which of the following methods is directly derived from the theory of purchasing power parity (PPP)?

The Big Mac index

Which of the following is correct?

The Federal Reserve has 12 regional banks. The Board of Governors has up to 7 members who serve 14-year terms.

Critics of advertising argue that in some markets advertising may

decrease elasticity of demand allowing firms to charge a larger markup over marginal cost

In recent years, the Federal Reserve has conducted policy by setting a target for the

federal funds rate

If the Fed conducts open-market purchases, the money supply

increases and aggregate demand shifts right.

A firm cannot price discriminate if

it operates in a competitive market

Factor endowment is _____.

the extent to which different countries possess various factors of production

Representative Vazquez cites the "jobs argument" when he argues before Congress in favor of restrictions on trade; he argues that everything can be produced at lower cost in other countries. The likely flaw in Representative Vazquez's reasoning is that he ignores the fact that

the gains from trade are based on comparative advantage.

Kate is a florist. Kate can arrange 20 bouquets per day. She is considering hiring her husband William to work for her. William can arrange 18 bouquets per day. What would be the total daily output of Kate's firm if she hired her husband?

38 Bouquets

If the MPC = 4/5, then the government purchases multiplier is

5

Which of the following both increase the money supply?

A decrease in the discount rate and a decrease in the interest rate on reserves

Which of the following firms is the closest to being a perfectly competitive firm?

A grain farmer in Illinois

Which of the following would be most likely to have monopoly power?

A local cable TV provider

Which of the following lists is included in what economists call "money"?

Cash

Which of the following is a classical theory of international trade?

Comparative advantage theory

Two suspected drug dealers are stopped by the highway patrol for speeding. The officer searches the car and finds a small bag of marijuana and arrests the two. During the interrogation, each is separately offered the following: "If you confess to dealing drugs and testify against your partner, you will be given immunity and released while your partner will get 10 years in prison. If you both confess, you will each get 5 years." If neither confesses, there is no evidence of drug dealing, and the most they could get is one year each for possession of marijuana. If each suspected drug dealer follows a dominant strategy, what should he/she do?

Confess regardless of the partner's decision

_____ is the difference between two cultures along identifiable dimensions.

Cultural distance

Which of the following describes the maturing stage in the product life cycle theory?

The demand and ability to produce the product grow in developed nations.

Bob's Butcher Shop is the only place within 100 miles that sells bison burgers. Assuming that Bob is a monopolist and maximizing his profit, which of the following statements is true?

The price of Bob's bison burgers will exceed Bob's marginal cost

A central issue in the Microsoft antitrust lawsuit involved Microsoft's integration of its Internet browser into its Windows operating system, to be sold as one unit. This practice is known as

Tying

A clean floating exchange rate policy is a government policy to _____.

allow a currency's value to fluctuate according to the foreign exchange rate

A firm produces 300 units of output at a total cost of $1,000. If fixed costs are $100,

average variable cost is $3

A movie theater can increase its profits through price discrimination by charging a higher price to adults and a lower price to children if it

can prevent children from buying the lower-priced tickets and selling them to adults

Suppose there was a large increase in net exports. If the Fed wanted to stabilize output, it could

decrease the money supply, which will increase interest rates

A trade _____ is an economic condition in which a nation imports more than it exports.

deficit

The world price of a ton of steel is $1,000. Before Russia allowed trade in steel, the price of a ton of steel there was $650. Once Russia allowed trade in steel with other countries, Russia began

exporting steel and the price per ton in Russia increased to $1,000.

One characteristic of an oligopoly market structure is

firms in the industry have some degree of market power

If the forward rate of the euro per dollar is higher than the spot rate, the euro has a _____.

forward discount

An oligopolist will increase production if the output effect is

greater than the price effect

In the LLL framework, _____ refers to an emerging MNE's ability to identify and bridge gaps in its market.

linkage

If the Korean steel industry subsidizes the steel that it sells to the United States, the

harm done to U.S. steel producers is less than the benefit that accrues to U.S. consumers of steel.

A difference between explicit and implicit costs is that

implicit costs do not require a direct monetary outlay by the firm, whereas explicit costs do

A firm that shuts down temporarily has to pay

its fixed costs but not its variable costs

A significant example of a temporary tax cut was the one announced in 1992 by President George H. W. Bush. The effect of that tax cut on consumer spending and aggregate demand was

likely smaller than if the cut had been permanent

Ms. Joplin sells colored pencils. The colored-pencil industry is competitive. Ms. Joplin hires a business consultant to analyze her company's financial records. The consultant recommends that Ms. Joplin increase her production. The consultant must have concluded that , at her current level of production, Ms. Joplin's

marginal revenue exceeds her marginal cost

Total cost is the

market value of the inputs a firm uses in production

If the distribution of water is a natural monopoly, then

multiple firms would likely each have to pay large fixed costs to develop their own network of pipes

Free entry means that

no legal barriers prevent a firm from entering an industry

The post-Bretton Woods system is a system of flexible exchange rate regimes with _____.

no official common denominator

Import quotas are a type of _____.

nontariff barrier

If the Fed increases the money supply,

the interest rate decreases, which tends to raise stock prices.

Money is

the most liquid asset but an imperfect store of value

The short-run supply curve for a firm in a perfectly competitive market is

the portion of its marginal cost curve that lies above its average variable cost

The competitive firm's long-run supply curve is that portion of the marginal cost curve that lies above average

total cost