teestMirco Chapter 11 Quiz, Micro Chapter 12 Quiz, Micro Chapter 13 Quiz, Micro Chapter 14 Quiz, Micro Chapter 19 Quiz

The figure given below shows the demand and supply curves of steel. Sp is the private supply curve, and Ss is the social supply curve that includes both private costs and external costs. In Figure 13.2, external costs are equal to _____.

da

Supplementary Security Incomes are provided by the U.S. government to those who:

earn less than $4,500 per year.

In which of the following situations, is a barrier to entry into a monopoly least likely to exist?

the tariffs on foreign goods are eliminated by the government

If social regulation increases a firm's fixed and variable costs:

then both marginal cost and average total cost will increase, and the firm will produce less.

When there is a divergence between social costs and private costs in a market, _____.

there will be too much or too little production and consumption in the market

Wal-Mart created a competitive advantage with its inventory system to reduce the ratio of cost of goods sold to sales, expecting:

to enjoy economic profits for a few years before its rivals caught up.

The horizontal and vertical axes of the Lorenz curve respectively measure:

total population and total income as cumulative percentages.

Graphically, consumer surplus is the area:

under the market demand curve and above the equilibrium price.

One necessary step in demonstrating monopolistic behavior is to define the market. In this process, defendants would:

want the market defined as broadly as possible.

Which of the following is not an example of nonprice competition?

Nissan lowers the interest rate charged for new automobile financing.

Which of the following is an example of a cartel?

Organization of the Petroleum Exporting Countries

The figure below shows revenue and cost curves of a natural monopoly firm. Refer to Figure 14.1. The natural monopolist will charge a price equal to:

P2

The figure below shows revenue and cost curves of a natural monopoly firm. Refer to Figure 14.1. Identify the fair-rate-of-return price.

P3

The following figure shows the revenue and cost curves of a monopolist. Consider the monopolist described in Figure 11.3. If the firm engages in profit-maximizing behavior, what price will it charge?

P5

_____ are the primary population group with poverty-level incomes in the USA.

People who do not have high school education

Which of the following is true of product differentiation?

Product differentiation exists when consumers perceive the products to be different.

Empirical observations validate that the Gini co-efficient for the U.S. economy was between 0.35 and 0.37 until the 1990s, after which it has increased and reached 0.469 in 2009. Which of the following can be inferred from this?

The distribution of national income in the U.S. has become slightly more unequal since the 1990s.

Which of the following is not a necessary condition for price discrimination?

The firm must be able to produce homogeneous products.

Which of the following is an example of the opportunity cost involved with social regulation?

The lives that are lost because new drugs are not introduced quickly

In which of the following markets adverse selection may not occur?

The market for new sports utility vehicles

If a monopolist is producing at the profit-maximizing level of output, what price will it charge?

The price given by the average-revenue curve at that level of output.

The market structure called monopolistic competition is named using both monopoly and perfect competition. Why?

There are many firms with easy entry and exit but each firm sells a unique product.

Why does the census data overstate inequality?

They do not consider the in-kind transfers received by the people from the government.

The poverty threshold is often determined in terms of the expenditure on meals that meet a predetermined nutritional standard.

True

A monopolistically competitive firm may earn above normal profits or may incur losses in the short run.

True.

A patent issued by the government, gives a firm monopoly power on certain products or discoveries.

True.

Actions against alleged violators of the antitrust statutes may be initiated by the Justice Department, by the Federal Trade Commission, and by private plaintiffs.

True.

Both monopolistically and perfectly competitive firms earn only normal profits in the long run.

True.

Economies of scale, control over a scarce input, and patents are all examples of barriers to entry.

True.

When consumers or producers do not bear the full cost of their economic decisions, they tend to produce or consume more than they otherwise would.

True.

Which of the following transfer programs in the U.S. is funded by a national tax but administered by state governments?

Unemployment insurance

A market is said to be concentrated when:

a firm or a few firms are able to dictate the competitive conditions in a market.

An oligopoly market consists of:

a group of firms that dominate the market.

One of the popular myths about monopoly is that:

a monopolist can charge any price for his/her good.

If 50 percent of the population receives 20 percent of the total income, it can be represented on the Lorenz curve by:

a point below the line of income equality.

When the benefits of an activity are received by those who are not directly involved in it, _____.

a positive externality exists

The first phase of antitrust policy in the U.S. began with the passage of the Sherman Antitrust Act in 1890. To judge a firm's action, the courts in this period used:

a rule of reason.

To avoid driving a natural monopolist into bankruptcy, regulatory commissions:

allow the monopolist to earn a fair rate of return.

Most natural monopolies are regulated at some level by a government because:

an unregulated natural monopolist would charge an inefficiently high price in the market.

The Gini co-efficient is the:

area between the Lorenz curve and the line of perfect equality divided by the total area under the line of income equality.

Under George W. Bush's administration, antitrust policy:

became more relaxed.

If social regulation causes the supply curve in a market to shift up because of higher marginal costs, then:

both consumer and producer surplus will decrease.

The table given below shows the price charged by a firm and the marginal cost incurred by it for different levels of the output. The firm described in Table 11.2:

cannot be a perfectly competitive firm.

When practicing price discrimination, a firm can increase its revenue by:

charging a higher price to the customers with a more inelastic demand.

In which market structure model(s) is product differentiation a significant feature?

Monopolistic competition

Which of the following does the Sherman Antitrust Act forbid?

Monopolization or attempts to monopolize

Which of the following market structures is characterized by a single firm and huge barriers to entry?

Monopoly

In the case of public goods, _____.

the principle of mutual excludability and principle of rivalry do not apply

The following table shows the units of output sold at different price levels by Gizmo's Inc. According to Table 11.1, what is the marginal revenue of the third unit?

$10

The following figure shows the revenue curves of a monopolist: Refer to Figure 11.6. Assume that marginal costs are constant at $2,500 and fixed costs are zero. Under a monopoly, consumer surplus would be:

$100,000.

The table given below shows the price, marginal revenue and marginal cost of a monopolist at different levels of the output. The firm does not incur a fixed cost of production. In Table 11.4, assume that total fixed cost is $20. What is the maximum profit the firm can earn at equilibrium?

$4

The table below shows the payoff (profit) matrix of Firm A and Firm B indicating the profit outcome that corresponds to each firm's pricing strategy (where $500 and $200 are the pricing strategies of two firms). Refer to Table 12.2. If firm B follows its dominant strategy but firm A does not, then firm B earns a profit of:

$45

A monopolistic industry will have a Herfindahl index value of:

1000.

The following table shows the costs and benefit of producing a commodity. According to Table 13.1, at the free market equilibrium:

4 units of output is produced.

The figure given below shows the Lorenz curves of two countries (Country A and Country B). Refer to Figure 19.2. The richest 20 percent of the population in Country A receive:

40 percent of the national income.

Overfishing along the coastline of Helsking village led the government to impose a fee on the boats used for fishing. The fishermen were charged $50 on each boat they sent out for fishing. The following table shows the total pounds of fish caught per hour and the number of boats used for fishing. Refer to Table 13.2. Suppose fish sells for $1 per pound. If each fisherman decides whether or not to fish based on the average catch, how many boats per hour will go out to fish?

6

The table below shows the distribution of income in the U.S. in the year 1978. According to Table 19.1, what percentage of income is received by the top 40% of the population?

68.6%

Which of the following is true of the demand curve faced by a monopolist?

A monopolist faces a relatively inelastic demand curve.

Which of the following is not a problem with a public good?

A public good is often underconsumed

The table given below shows the absolute tax amounts under five different tax policies for respective income levels. Refer to Table 19.2. Which of the tax policies is an example of a proportional tax?

Alpha

The figure below shows the market equilibrium (point B) at the intersection of demand and supply curves under perfect competition. Refer to Figure 11.5. Assume that the curve labeled S represents the monopolist's marginal-cost curve and the curve labeled D represents the monopolist's demand curve. Which of the following will represent the consumer surplus?

An area that is less than PPCBA

Which of the following is true of Antitrust policy?

Antitrust policy restricts abusive behavior by a firm dominating a market.

​Which of the following are most likely to be in poverty?

Diaabled

If everyone in an economy had equal income, the Lorenz curve would be a curve that intersects the line of income equality at the point at which 50 percent of the population earns 50 percent of the income.

False

Under the Clinton administration, attempts were made to relax the antitrust enforcement efforts of the Reagan administration.

False

The social cost is negative in case of a negative externality.

False.

Which of the following is an example of in-kind transfer?

Food stamps

The figure given below shows revenue and cost curves of a monopolistically competitive firm. Consider the monopolistically competitive firm described in the Figure 12.1. The profit-maximizing output level and price are _____ and _____ respectively.

H;D

Which of the following statements is true?

In the case of positive externalities, a private market will produce too little of a good compared to the socially efficient level of output.

The figure given below shows the cost and revenue curves of a monopolist. In Figure 11.9, what is the consumer surplus at the profit-maximizing levels of output and price?

JNM

Which of the following practices is restricted by the antitrust laws of the United States?

Merger of smaller firms into a large firm

The table below shows the payoff (profit) matrix of Firm A and Firm B indicating the profit outcome that corresponds to each firm's pricing strategy (where $500 and $200 are the pricing strategies of two firms). Refer to Table 12.2. If both firm A and firm B choose their dominant strategies then:

firm A makes a profit of $50 and firm B makes a profit of $40.

The figure given below shows the demand for permits and the maximum permissible level of pollution. In the figure, the downward sloping line is the demand curve of permits; the vertical line denotes the maximum permissible limit of pollution. Refer to Figure 13.4. Suppose the government wishes to reduce pollution to a quantity of Qb. If it sells marketable pollution permits for a pollution quantity of Qb, then:

firms will bid the price of the permits up to a price of Pb, and Qb amount of pollution will result.

Higher the economic freedom in a country, _____.

higher is the life expectancy of the people

Transfer programs are so named because they transfer:

income from the relatively high-income people to relatively low-income people.

In a certain monopolistically competitive market that is characterized by high prices and equally high-quality merchandise, if a firm's competitors begin to successfully introduce new products that cut into the firm's market share, the firm's best counter-strategy is to:

introduce few new products in order to meet competitors head on.

The consumption of a club good like cable television:

is excludable and nonrivalrous.

The most-favored customer is one who:

is guaranteed to receive the lowest price for a product.

Firms in monopolistically competitive markets spend significant sums on product differentiation because:

it enables them to earn positive profits in the short run.

A monopolistically competitive market is characterized by:

many firms selling similar but differentiated products.

Per capita income is calculated as:

national income divided by number of people.

When the existing firms in a monopolistically competitive industry earn above-normal profit:

new firms enter into the market, and entry continues until firms earn normal profit.

In contrast to perfect competition, in a monopolistically competitive industry:

new firms entering the market produce a close substitute, not an identical or standardized product.

One of the reasons that communism failed in the Soviet Union is that, under communism:

no one had property rights, so there was little incentive to use resources efficiently.

When Glaxo-Wellcome introduced AZT, an AIDS drug, it was able to enjoy high profits because:

of barriers to entry provided by patents

In a market system, incomes are distributed according to the:

ownership of resources.

Moral hazard is the term used to describe the situation in which:

people may change their behavior after they have signed a contract or agreed to a specified behavior.

A Herfindahl index value of 20, for a particular industry, indicates that the industry is most likely to be:

perfectly competitive.

The figure below shows the demand and supply curves in the market for elementary education. Price and Quantity have been taken on vertical and horizontal axes respectively. According to Figure 13.1, the outcome of an unregulated, unsubsidized market would be:

point c

The ability of a firm to charge different customers different prices is called _____.

price discrimination

The figures given below represent the revenue curves of a monopolist. According to Figure 11.2, at point C:

price elasticity of demand is equal to 1

Monetary freedom refers to:

price stability with an assessment of price control.

Because of their brand names, Kodak, IBM, Honda, Daimler-Chrysler, and other well-known firms are able to charge significantly higher prices for their products than their competitors without losing any business. Expenditures made by firms to create brand names:

provide reliability to consumers.

A firm, such as a public utility, which is the sole producer in a market in which the government determines prices and standards of service, is known as a(n):

regulated monopoly.

Following are the controversies over how poverty should be measured, except:

the concept of poverty line does not take into account the expenditure on food by each family.

When the government imposes a tax on the production of a commodity:

the cost of production increases, so the supply curve shifts to the left.

One major similarity between perfect competition and monopolistic competition is that:

the firms just break even in the long run.

The "Public Choice" school of economists argue that:

the government often does not take correct economic decisions as it is run by self-interested politicians.

The Clean Air Act of 1972 required some companies to install the "best available" pollution control technologies. This is an example of:

the government using the command approach to discourage a negative externality.

For an economy, the greater the value of the Gini co-efficient, _____.

the greater will be the income inequality