Econ Final

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​A monopolist that engages in perfect price discrimination: a. ​charges the same price for every unit sold. b. ​charges a high price to bulk consumers of its product. c. ​charges a different price for every unit sold. d. ​refuses to sell its output to consumers of rival brands. e. ​divides all buyers into two mutually exclusive groups

c. ​charges a different price for every unit sold.

​The exchange rate is the: a. ​rate that central banks charge each other for currency exchanges. b. ​ratio of exports to imports. c. ​cost of one nation's currency in terms of another nation's currency. d. ​interest rate the U.S. government charges on international loans. e. percentage of domestic goods that are exported.

c. ​cost of one nation's currency in terms of another nation's currency.

​Suppose a person serves on the boards of directors of competing firms. The term used to describe this practice is _____. a. ​mediation b. ​free riding c. ​interlocking directorate d. ​exclusive dealing e. ​arbitration

c. ​interlocking directorate

​For a natural monopolist, _____ throughout the range of market demand. a. ​average cost decreases b. ​average cost increases c. ​average cost remains constant d. ​there exist diseconomies of scale e. ​marginal cost exceeds average cost

a. ​average cost decreases

​The rule of reason: a. ​applies to business practices that are illegal regardless of their economic rationale or their consequences. b. ​is based on the idea that business practices cannot be proven to be illegal, and a consent decree is required to halt the practices. c. ​applies to business practices that are legal regardless of their consequences. d. ​considers why a certain business practice was adopted and what the effects on competition are before determining whether the practice is illegal. e. ​focuses on market structure rather than on the behavior of firms in determining whether antitrust violations have occurred.

d. ​considers why a certain business practice was adopted and what the effects on competition are before determining whether the practice is illegal.

In game theory, the main difference between a dominant strategy & a Nash equilibrium is that with a dominant strategy, players choose their best strategy given what others choose; while in a Nash equilibrium players choose their best strategy regardless of what others choose.

False

​Which of the following is not a condition for price discrimination? a. ​The presence of strong diseconomies of scale b. ​The presence of different groups of buyers with different price elasticity of demand c. ​The presence of some amount of market power with a producer d. ​The absence of a scope for reselling a product e. ​A downward-sloping demand curve for products

a. ​The presence of strong diseconomies of scale

​A country has an absolute advantage in the production of a good if that country: a. ​can produce the good using fewer resources than another country would require. b. ​has the greatest opportunity cost of producing the good, regardless of whether it is produced with the fewest resources. c. ​has the lowest opportunity cost of producing the good and can produce it with the fewest resources. d. ​has the greatest opportunity cost of producing the good and produces it with the fewest resources. e. ​has the lowest opportunity cost of producing the good, regardless of whether it is produced with the fewest resources.

a. ​can produce the good using fewer resources than another country would require.

​Comparative advantage refers to: a. ​the ability of an individual to produce a good at a lower opportunity cost than some other individual can. b. ​the amount of labor a particular individual needs to produce a fixed amount of capital goods. c. ​the ability of an individual to specialize and produce a greater amount of some good than another individual. d. ​the ability of an individual to produce a good using fewer labor hours than other individuals. e. ​the number of units of a good given up in order to acquire something.

a. ​the ability of an individual to produce a good at a lower opportunity cost than some other individual can

​If on Monday of a week $1 = 146 Japanese yen and on Friday of the same week $1 = 147 yen, the dollar is said to have appreciated and the yen is said to have depreciated. a. True b. False

a. True

​If the U.S. dollar appreciates in the foreign exchange market, then: a. ​U.S. exports will increase. b. ​American goods will become more expensive for foreign buyers and foreign goods will be cheaper for Americans. c. ​American goods will become less expensive for foreign buyers and foreign goods will be more expensive for Americans. d. ​neither the price of U.S. exports nor the price of U.S. imports will change. e. ​more U.S. dollars will be required to buy a foreign currency.

b. ​American goods will become more expensive for foreign buyers and foreign goods will be cheaper for Americans.

​In which of the following ways can the government increase social welfare in an unregulated monopoly? a. ​By allowing the monopolist to maximize profit b. ​By forcing the monopolist to lower the price and expand output c. ​By providing tax exemptions to the monopolist d. ​By increasing corporate tax rates e. ​By forcing the monopolist to shut down operations

b. ​By forcing the monopolist to lower the price and expand output

​Which act of Congress declared tying contracts, exclusive dealing, and price discrimination illegal? a. ​The Wheeler-Lea Act b. ​The Clayton Act c. ​The Celler-Kefauver Anti-Merger Act d. ​The Wheeler-Kefauver Act e. ​The Sherman Antitrust Act

b. ​The Clayton Act

​The first federal antitrust law enacted in the United States was: a. ​The Federal Trade Commission Act. b. ​The Sherman Antitrust Act. c. ​The Herfindahl-Hirschman Act. d. ​The Clayton Act. e. ​The Robinson-Patman Act.

b. ​The Sherman Antitrust Act.

​When government regulations force a natural monopoly to produce where price equals average total cost, social welfare is: a. ​less than it would be without regulation. b. ​greater than it would be without regulation, but it is not maximized. c. ​minimum. d. ​exactly the same as it would be without regulation. e. ​maximum.

b. ​greater than it would be without regulation, but it is not maximized.

​When a price-discriminating monopolist divides its customers into two market segments, the price in each segment is determined by finding the level of output where that market's: a. ​marginal revenue equals average total cost. b. ​marginal revenue equals marginal cost. c. ​marginal cost equals average total cost. d. ​average revenue equals average variable cost. e. ​average revenue equals average total cost

b. ​marginal revenue equals marginal cost.

​The practice of charging different prices to different consumers for the same product is called: a. ​arbitration. b. ​price discrimination. c. ​marginal cost pricing. d. ​unit pricing. e. ​predatory pricing.

b. ​price discrimination.

​The Sherman Act _____. a. ​regulated the railroads b. ​prohibited restraint of trade c. ​exempted insurance companies from antitrust laws d. ​created the Federal Trade Commission e. ​prohibited fraudulent advertising

b. ​prohibited restraint of trade

​The purpose of antitrust laws is to _____. a. ​prevent large-scale production b. ​reduce anticompetitive activities c. ​guarantee worker safety d. ​increase anticompetitive activities e. ​promote quality products

b. ​reduce anticompetitive activities

​An import quota is a tax on imports. a. True b. False

b. False

​U.S. consumers would be better off if they bought only U.S.-produced goods. a. True b. False

b. False

​Which of the following is the best example of a natural monopoly? a. ​IBM producing computers b. ​A company involved in gold mining in the Colorado Rocky Mountains c. ​A company providing electrical service to homes in Seattle d. ​Kodak producing film e. ​A company involved in filmmaking in Hollywood

c. ​A company providing electrical service to homes in Seattle

​For which of the following products would price discrimination be easiest? a. ​Diamonds b. ​Compact disks c. ​Haircuts d. ​Gasoline e. ​Orange juice

c. ​Haircuts

​A requirement that buyers of one service must also purchase another service from the same seller is called _____. a. ​an interlocking merger b. ​a vertical merger c. ​a tying contract d. ​exclusive dealing e. ​a legal agreement

c. ​a tying contract

​International trade is most likely to occur whenever: a. ​world production equals world consumption. b. ​nations have an absolute advantage in the production of goods. c. ​each of the trading nations gains from trade. d. ​all of the trading nations are self-sufficient. e. ​labor is cheaper abroad.

c. ​each of the trading nations gains from trade.

​A price-discriminating monopolist divides its customers into two segments based on price elasticity of demand. If it sells its product for a price of $42 in the market segment where demand is relatively less price elastic, the price in the market segment where demand is more price elastic will be: a. ​equal to the marginal revenue in that market segment. b. ​$42. c. ​less than $42. d. ​greater than $42. e. ​less than the marginal revenue in that market segment.

c. ​less than $42.

​_____ handle antitrust matters in the U.S. a. ​The Department of Justice and the Council of Economic Advisors b. ​The Federal Trade Commission and the Securities and Exchange Commission c. ​The Department of Justice and Congress d. ​The Department of Justice and the Federal Trade Commission e. ​The Federal Trade Commission and Congress

d. ​The Department of Justice and the Federal Trade Commission

​Which agency was created by Congress in 1914 to investigate and regulate unfair methods of competition? a. ​The Interstate Commerce Commission b. ​The General Accounting Office c. ​The Council on Competitiveness d. ​The Federal Trade Commission e. ​The Department of Justice

d. ​The Federal Trade Commission

​Which of the following is the main criticism of the Sherman Act? a. ​The Sherman Act has been criticized to be unnecessary at the time. b. ​The Sherman Act has been criticized to be overly harsh. c. ​The Sherman Act has been criticized to have come into effect too late. d. ​The Sherman Act has been criticized to be too vague. e. ​The Sherman Act has been criticized to be identical to an existing law.

d. ​The Sherman Act has been criticized to be too vague.

​Which of the following acts of Congress declared restraint of trade illegal and declared any attempt at monopolizing unlawful? a. ​The Clayton Act b. ​The Celler-Kefauver Anti-Merger Act c. ​The Clayton-Celler Act d. ​The Sherman Antitrust Act e. ​The Wheeler-Lea Act

d. ​The Sherman Antitrust Act

​A camera manufacturer sells its cameras only to retailers who agree to buy the brand of film it sells. This is an example of _____. a. ​an interlocking directorate b. ​exclusive dealing c. ​price discrimination d. ​a tying contract e. ​a trust

d. ​a tying contract

​If the U.S. dollar depreciates in the foreign exchange market, American exports will _____ and American imports will _____. a. ​decrease; increase b. ​be less expensive; be less expensive c. ​be more expensive; be more expensive d. ​be less expensive; be more expensive e. ​be more expensive; be less expensive

d. ​be less expensive; be more expensive

​A natural monopoly, such as a local telephone company, is characterized by _____. a. ​low fixed costs and diseconomies of scale b. ​constant costs of production c. ​a lack of government regulation d. ​economies of scale e. ​a lack of natural competitors

d. ​economies of scale

​If a regulator sets the price in a natural monopoly equal to the monopolist's marginal cost, the monopolist will _____. a. ​face a horizontal demand curve b. ​earn an economic profit c. ​shut down in the short run d. ​experience a loss e. ​earn zero economic profit

d. ​experience a loss

​In a(n) _____, throughout the range of market demand, marginal cost is less than average cost and pulls average cost downward. a. ​oligopoly market b. ​duopoly c. ​perfectly competitive market d. ​natural monopoly e. ​monopsony

d. ​natural monopoly

​The government of a state wants Gigantic Software Corp., a natural monopoly, to stay in business yet still produce where price equals marginal cost. In order to encourage Gigantic Software Corp. to stay in business, the government might choose to: a. ​impose a tax on the company for each dollar of sales. b. ​set a price ceiling 10 percent lower than its previous level. c. ​replace the company's top management. d. ​provide a subsidy to the company to cover the loss and ensure a normal profit. e. ​establish regulations that raise the company's cost of doing business.

d. ​provide a subsidy to the company to cover the loss and ensure a normal profit.

If Monica has a comparative advantage in baking and George has a comparative advantage in sewing, then:​ a. ​Monica must have an absolute advantage in sewing. b. ​George must have an absolute advantage in baking. c. ​Monica must have an absolute advantage in baking. d. ​we can conclude nothing about absolute advantage. e. ​George must have an absolute advantage in sewing.

d. ​we can conclude nothing about absolute advantage.

​The index that the U.S. government currently uses to determine whether a merger should be allowed is the _____. a. ​four-firm concentration ratio b. ​Schumpeter index c. ​consumer price index d. ​Dow Jones average index e. ​Herfindahl-Hirschman index

e. ​Herfindahl-Hirschman index

​A regulated natural monopoly that must set price equal to average cost will: a. ​earn a net economic profit. b. ​incur an economic loss. c. ​shut down in the short run. d. ​experience diseconomies of scale. e. ​earn a normal profit.

e. ​earn a normal profit

​Ersatz Kreme will sell its donut filling to Hunky Donuts only if Hunky Donuts agrees not to buy donut filling from other suppliers. This is an example of _____. a. ​price discrimination b. ​a tying contract c. ​a trust d. ​an interlocking directorate e. ​exclusive dealing

e. ​exclusive dealing

​Antitrust laws in the United States: a. ​involve suing a competitive firm for changing its prices. b. ​apply only to natural monopolies. c. ​clearly define acceptable behavior. d. ​provide protection to those in regulated industries. e. ​have been enforced in an inconsistent manner.

e. ​have been enforced in an inconsistent manner.

​Anticompetitive business practices are illegal per se: a. ​only if they are prohibited by the Clayton Act. b. ​whether or not Congress has passed legislation prohibiting them. c. ​only if they result in a monopoly. d. ​only if there is no economic rationale for them. e. ​without regard to their economic rationale or consequences.

e. ​without regard to their economic rationale or consequences.

​Production by a monopolist would result in the socially optimal allocation of resources if: a. ​marginal revenue is equal to marginal cost. b. ​price is set equal to average total cost. c. ​marginal revenue is equal to average total cost. d. ​price is set equal to marginal cost. e. ​marginal revenue is greater than price.

vd. ​price is set equal to marginal cost.

​Under the U.S. antitrust law, a consent decree allows a firm to: a. ​challenge the government's accusation in court b. ​admit to an antitrust violation without a lawsuit c. ​cease the alleged wrongdoing after admitting guilt d. ​cease the alleged wrongdoing without admitting guilt e. ​admit to an antitrust violation without penalty

​cease the alleged wrongdoing without admitting guilt


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