ECON Final

Refer to Exhibit 9.7, which shows the cost and revenue curves for a monopolist. Total revenue earned by the monopolist by producing the profit-maximizing output is _____ a. $95,200. b. $84,000. c. $79,000. d. $52,000. e. $42,000.

A

Tariffs and quotas _____ a. reduce consumer surplus and increase producer surplus in the importing country. b. increase consumer surplus and reduce producer surplus in the importing country. c. reduce both consumer surplus and producer surplus in the exporting country. d. are imposed when there are differences in the opportunity cost of production across countries. e. are imposed when production is subject to economies of scale.

A

Which of the following is not an example of an open-access resource? a. deer in a forest b. fish in the ocean c. food in a restaurant d. wildflowers e. trees in a forest

C

Unlike implicit costs, explicit costs _____ a. reflect opportunity costs. b. include the value of the owner's time. c. are not included in a firm's accounting statements. d. are actual cash payments. e. do not change as a firm's output changes.

D

When does consumption occur? a. Consumption has a money price and a time price. b. Consumption has a money price but not a time price. c. Consumption has time price but not a money price. d. Consumption has neither a time price nor a money price. e. Consumption occurs instantly and therefore has no price.

A

Refer to Exhibit 9.12, which shows the cost and revenue curves faced by a profit-maximizing monopolist. The rectangle pbdp' reflects _____ a. a transfer from consumer surplus to monopoly loss. b. a transfer from consumer surplus to monopoly profit. c. zero normal profits. d. a loss for the monopolist. e. a welfare loss.

B

Refer to Table 6.5, which shows the total utility and marginal utility derived from the consumption of plums. The first column of the table represents the number of plums a consumer consumes in a day, and the second column of the table presents the total utility derived from that consumption. The marginal utility of eating the third plum is _____ a. 4 units. b. 6 units. c. 8 units. d. 2 units. e. 24 units.

B

Refer to Table 9.4, which shows the demand schedule for a monopolist. Marginal revenue associated with the sale of the fourth unit of output is _____ a. $10. b. $30. c. $60. d. $240. e. $210.

B

The actual deadweight loss from monopoly in the United States is likely to be greater than the calculated estimates because some _____ a. monopolies experience strong economies of scale. b. monopolists spend resources to secure and maintain their monopoly. c. monopolists often keep price lower than their profit-maximizing level in order to increase barriers to entry. d. monopolists' markets are contestable. e. monopolists' prices and profits are regulated by the government.

B

The golden rule of profit maximization says that _____ a. profit-maximizing firms produce where marginal revenue equals total cost. b. profit-maximizing firms produce where marginal revenue equals marginal cost. c. profit-maximizing firms produce where total revenue equals marginal cost. d. profit-maximizing firms produce where marginal revenue is less than marginal cost. e. profit-maximizing firms produce where marginal cost is greater than marginal revenue.

B

What is an oligopoly? a. an industry dominated by a few independent firms b. an industry dominated by just a few firms c. an industry dominated by many interdependent firms d. an industry dominated by many independent firms e. an industry dominated by only one firm

B

When diminishing marginal returns set in, marginal product is _____ a. positive and increasing. b. positive and decreasing. c. negative and increasing. d. negative and decreasing. e. zero.

B

Refer to Exhibit 8.13, which shows a perfectly competitive market. Social welfare is maximized at _____ a. $6. b. point m. c. point e. d. area A. e. area B

C

Refer to Exhibit 8.6, which shows the demand and the cost curves of a perfectly competitive firm. At the profit- maximizing output level, the firm experiences _____ a. a loss of $3,200. b. a profit of $1,600. c. a profit of $1,200. d. zero profit or loss. e. a loss of $800.

C

Refer to Exhibit 9.4, which shows the total cost and total revenue curves for a monopolist. The profit-maximizing output for the monopolist is _____ a. 1 unit. b. 2 units. c. 3 units. d. 4 units. e. 5 units.

C

Refer to Table 6.7, which shows Ethan's demand for sushi at various prices. When the price is $3, the consumer surplus is $_____ a. 5. b. 6. c. 10. d. 25. e. 30.

C

Refer to Table 8.2. The perfectly competitive firewood market is composed of 1,000 identical consumers and 1,000 identical firms. The table shows the cost for one representative firm and the demand schedule for one representative consumer. _____ cords of firewood will be bought and sold in the market at equilibrium. a. 5,000 b. 4,000 c. 3,000 d. 2,000 e. 1,000

C

To enhance social welfare, the government should encourage the production of _____ a. private goods. b. goods that produce moral hazard. c. goods that produce positive externalities. d. goods that have close substitutes. e. goods that produce negative externalities.

C

When the consumption of a good generates positive externalities, _____ a. the private demand curve for the good shifts rightward. b. the private demand curve for the good shifts leftward. c. the private demand curve for the good lies below the marginal social benefit curve. d. the private demand curve for the good lies above the marginal social benefit curve. e. the equilibrium quantity of the good determined by the free private market is too high.

C

Which of the following characterizes a perfectly competitive market? a. a few firms fiercely competing by slashing prices b. product differentiation through aggressive advertising c. perfect information d. limited resource mobility e. barriers to entry, such as licenses

C

Which of the following is true for a monopolist? a. Marginal revenue is maximized where demand is unit elastic. b. Total revenue is maximized where demand is inelastic. c. Marginal revenue is negative where demand is inelastic. d. Total revenue is negative where demand is elastic. e. Marginal revenue is lowest where demand is unit elastic.

C

Which of these is a key difference between a perfectly competitive firm and a monopolist that does not practice price discrimination? a. The marginal cost curve is U-shaped for a perfectly competitive firm but not for a monopolist. b. Price is equal to average revenue for a perfectly competitive firm in equilibrium but not for a monopolist. c. Price is equal to marginal revenue for a perfectly competitive firm in equilibrium but not for a monopolist. d. The average revenue curve is the demand curve for a perfectly competitive firm but not for a monopolist. e. A monopolist aims to maximize profits, while a perfectly competitive firm tries to maximize total revenue.

C

Which of the following is a difference between perfect competition and an oligopoly? a. Firms in an oligopoly earn economic profit in the long run, whereas firms in a perfectly competitive market earn zero economic profit in the long run. b. Firms in an oligopoly charge a lower price than firms in a perfectly competitive market. c. Firms in an oligopoly face horizontal demand curves, whereas firms in a perfectly competitive market face downward-sloping demand curves. d. An oligopoly is characterized by low barriers to entry, whereas a perfectly competitive market is characterized by high barriers to entry. e. There are many firms in an oligopoly, whereas there are only a few firms in a perfectly competitive market.

A

Which of the following is true of the relationship between average and marginal costs? a. If marginal cost is greater than average cost, then average cost is increasing. b. If marginal cost is greater than average cost, then average cost is decreasing. c. If marginal cost is greater than average cost, then marginal cost is decreasing. d. If marginal cost is lower than average cost, then marginal cost is decreasing. e. If marginal cost is lower than average cost, then fixed cost is decreasing.

A

Which of the following prevents potential competitors from entering a monopolized market? a. legal restrictions b. diseconomies of scale c. product differentiation d. stable market demand e. an abundant supply of resources

A

A negative externality is likely to arise if _____ a. the government sets up more schools. b. a company introduces a research and development unit. c. factories install devices to reduce the amount of chemicals released. d. the government introduces a measles vaccine. e. car owners refuse to pay for devices that reduce the emission of carbon monoxide.

E

Consumer surplus is _____ a. the amount by which quantity supplied exceeds quantity demanded at the current market price. b. the amount by which quantity demanded exceeds quantity supplied at the current market price. c. the change in total utility derived from a one-unit change in the consumption of a good. d. the horizontal sum of the individual demand curves for all consumers in a market. e. the difference between the maximum price consumers are willing to pay and the amount they actually pay.

E

Exhibit 10.1 shows the demand, marginal revenue, and cost curves for a monopolistic competitor. The price that the monopolistic competitor will charge at the profit-maximizing level of output is _____ a. $2. b. $4. c. $8. d. $9. e. $10.

E

Identify a statement that is true of a cartel. a. In a cartel, all firms produce the same amount of output and earn the same profit. b. In a cartel, all firms produce the same amount of output but earn different amounts of profit because their costs differ. c. In a cartel, firms produce different amounts of output but earn the same profit. d. In a cartel, firms with higher average costs produce more so that all firms earn the same profit. e. In a cartel, firms with lower average costs often earn higher profits.

E

In the short run, a monopolistically competitive firm continues to increase production _____ if it can at least cover its variable cost. a. as long as MR > AVC b. until MR = ATC c. as long as MC > MR d. until MR = AR e. until MR = MC

E

Refer to Table 6.3, which shows the total utility and marginal utility derived from the consumption of scones. The first column of the table represents the number of scones a consumer consumes in a day. The second column of the table presents the total utility derived from that consumption, and the third column shows the marginal utility of each additional scone. The total utility derived from the consumption of one scone is _____ units. a. 2 b. 4 c. 6 d. 8 e. 10

E

Refer to Table 8.4, which shows the output supplied by a firm and its total revenue. When does marginal revenue start decreasing? a. at a quantity of 10 b. at a quantity of 20 c. at a quantity of 30 d. at a quantity of 40 e. It stays constant at MR=P.

E

The production function is defined as _____ a. firm's total output. b. the increase in output that occurs when all resources are increased by the same proportion. c. the increase in output that occurs when an additional unit of a resource is added, holding all other resources constant. d. the amount of additional resources needed to increase output by one unit when all resources are increased by the same amount. e. The relationship between the amount of resources employed and total product.

E

Utility is determined by _____. a. consumer income b. the prices of goods and services c. the consumer surplus of all buyers in a market d. consumer expenditure e. consumer tastes and preferences

E

Which of the following reflects diseconomies of scale? a. marginal product decreasing as output increases b. short-run marginal cost increasing as output increases c. long-run marginal cost increasing as output increases d. short-run average cost increasing as output increases e. long-run total cost increasing by more than double as output doubles

E

To achieve the socially optimal level of pollution, the biggest polluters should be targeted for the greatest reduction in pollution. a. True b. False

False

The long-run average cost curve is tangent to the minimum point of every short-run average total cost curve. a. True b. False

False

A consumer's willingness to pay additional money for time-saving goods depends primarily on _____ a. the opportunity cost of his or her time. b. the wealth and property he or she possesses. c. his or her social status. d. the number of people in his or her household. e. the distance between his or her home and workplace.

A

A firm is said to be productively efficient if _____ a. it produces its output at the lowest possible cost. b. it sells its product at the lowest possible price. c. it earns a positive economic profit. d. it produces what consumers demand. e. it earns a normal profit in the short run.

A

Along the demand curve for a good, _____ a. the dollar value of marginal utility changes. b. total utility changes because of changes in income levels. c. real income changes because of changes in the price of the good. d. marginal valuation changes because of changes in income levels. e. consumer surplus changes because of changes in income levels.

A

As output rises, marginal product eventually diminishes and _____ a. marginal cost increases. b. average cost falls. c. total cost falls. d. fixed cost is increasing. e. average product is negative.

A

Autarky is _____ a. the situation of national self-sufficiency, in which there is no economic interaction with foreign producers or consumers. b. the situation in which there is no legal limit on the amount of a commodity that can be imported. c. the situation in which countries export products they can produce more cheaply in return for products that are unavailable domestically or are cheaper elsewhere. d. the situation in which world price is determined by the world supply and demand for a product. e. the situation in which each country specializes in making goods with the lowest opportunity cost.

A

Colluding firms, compared with competing firms, usually _____ a. produce less. b. charge less. c. welcome new firms. d. earn less economic profit. e. make it possible for consumers to pay lower prices.

A

Elvis values the first gravy sandwich at $5, the second at $4.50, and the third at $4. If he buys three sandwiches for $3 each, his consumer surplus has a value of _____ a. $4.50. b. $1.50. c. $13.50. d. $9.50. e. $12.00.

A

Game theory focuses on _____ a. strategic behavior among interdependent firms. b. professional athletic events. c. competition between the players in board games. d. competition between those in the political arena and those in the market place. e. the interaction between firms in a competitive industry and those in a non-competitive industry.

A

If a monopolist that does not practice price discrimination is operating at an output level where price equals average total cost, we can conclude that _____ a. its economic profit is $0. b. it is not maximizing profit. c. it should go out of business in the long run. d. it is not earning a normal profit. e. it should shut down in the short run.

A

Products such as strategic metals and military hardware are often insulated from foreign competition by trade restrictions because their output _____ a. is vital for national defense. b. is more vulnerable to fiscal deficits. c. protects domestic jobs and wage levels. d. is based on absolute advantage. e. is based on opportunity costs.

A

Refer to Exhibit 6.8, which shows the market equilibrium for opera tickets. The demand curve for opera tickets is labeled D and the supply curve is labeled S. At market equilibrium, the area _____ represents the consumer surplus of all buyers in the market. a. a b. b c. c d. a + b + c e. a + b

A

Refer to Exhibit 7.3, which shows the U-shaped cost curves for a producer. A is the marginal cost curve (MC), B is the average variable cost curve (AVC), and C is the average total cost curve (ATC). When output is 10, then _____ a. total cost equals $80. b. fixed cost equals $10. c. variable cost equals $70. d. marginal cost equals $10. e. fixed cost equals $7.

A

Refer to Exhibit 8.1, which shows a firm's demand in wheat markets. This firm is said to be a(an) _____ a. price taker. b. price maker. c. monopolist. d. oligopolist. e. rival.

A

Refer to Exhibit 8.11, which shows a perfectly competitive firm in an increasing-cost industry. Suppose the market is in long-run equilibrium and demand is at da. At point of a, the firm _____ a. does not earn an economic profit. b. earns an economic profit. c. does not earn a normal profit. d. earns a normal profit. e. has a lower average total cost.

A

Refer to Exhibit 8.9, which shows a perfectly competitive firm's short-run output decisions. Point 4 is called the: a. break-even point. b. shutdown point. c. indifference point. d. economic profit point. e. normal profit point.

A

Refer to Table 6.1, which shows the marginal utility of each additional unit of pretzel for a consumer. The first column of the table shows the number of pretzels consumed in a day, and the second column of the table shows the marginal utility of each additional unit of pretzel. Total utility is _____ and marginal utility is _____ with the consumption of each extra pretzel. a. increasing; decreasing b. increasing; increasing c. decreasing; increasing d. decreasing; decreasing e. increasing; staying the same

A

The basis of the benefits of specialization is _____ a. comparative advantage.b. absolute advantage. c. the size of the country. d. identical production costs between two countries. e. the stock of natural resources.

A

Refer to Exhibit 10.7. If the average cost of production shown decreases with an increase in output, then this cost curve illustrates _____ a. perfect competition. b. monopolies. c. oligopolies. d. monopolistic competition. e. a monopsony market.

C

According to the Coase theorem, _____ a. government regulation is necessary to eliminate negative externalities. b. externality problems can be solved efficiently by the assignment of property rights if transaction costs are low. c. it is necessary to assign property rights when bargaining costs are high. d. the assignment of property rights lead to equitable but inefficient solutions to externality problems. e. externality problems can be solved efficiently by the assignment of property rights if transaction costs are high.

B

According to the utility theory, in "consumer equilibrium," households have _____ a. consumed as much of every commodity as they wanted. b. spent their incomes in such a way that their overall satisfaction is maximized. c. spent their incomes in such a way that their marginal utility is maximized. d. spent their incomes in such a way that their marginal utility is zero for every product consumed. e. spent their incomes in such a way that their total utility is zero.

B

Exhibit 10.5 shows the demand, marginal revenue, and cost curves for a monopolistically competitive firm. The profit- maximizing (or loss-minimizing) price for the firm is _____ a. higher than $3.25. b. $3.25. c. $3.00. d. $2.50. e. between $2.50 and $3.00.

B

Individual firms in a perfectly competitive market can _____ a. sell more only by lowering their prices. b. sell all they produce at the market price. c. earn more profit if they charge a price above the market price. d. earn more profit if they charge a price below the market price. e. exit the market only if the existing firms allow it.

B

One difference between perfect competition and monopolistic competition is that _____ a. firms in perfect competition cannot earn a long-run economic profit, whereas firms in monopolistic competition can earn a long-run economic profit. b. firms in perfect competition take full advantage of economies of scale in long-run equilibrium, whereas firms in monopolistic competition do not take advantage of economies of scale in long-run equilibrium. c. firms in perfect competition can easily exit the market, whereas firms in monopolistic competition find it difficult to exit the market. d. firms in perfect competition face a downward-sloping demand curve, whereas firms in monopolistic competition face a horizontal demand curve. e. there are many firms in a perfectly competitive market, whereas there are a few firms in a monopolistically competitive market.

B

Refer to Exhibit 17.2, which shows market equilibrium in the presence of an externality in an economy. The socially efficient level of output is _____ a. 0 units. b. 100 units. c. between 0 and 100 units. d. 160 units. e. between 100 and 160 units.

B

Refer to Exhibit 7.4, which shows short-run average cost curves. The curves represent different _____ a. technology. b. plant sizes. c. products. d. nations. e. skill levels.

B

A monopolist's demand curve is _____ a. its marginal cost curve. b. its marginal revenue curve. c. identical to its market demand curve. d. the same as the demand curve faced by a firm in perfect competition. e. the same as its average cost curve.

C

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. $42. b. greater than $42. c. less than $42. d. less than the marginal revenue in that market segment. e. equal to the marginal revenue in that market segment.

C

Because of the ease of entry of new firms into monopolistically competitive markets in the long run, existing firms in these markets _____ a. produce at the lowest average total cost. b. charge a price equal to marginal cost. c. earn no economic profit in the long run. d. take advantage of economies of scope. e. earn no economic profit in the short run.

C

Claude's Copper Clappers sells clappers for $65 each in a perfectly competitive market. At its present level of output, Claude's marginal cost is $65, average variable cost is $45, and average total cost is $67. To maximize his profit or minimize his loss, Claude should _____ a. increase output. b. reduce output but not to zero. c. continue producing the present level of output. d. shut down. e. raise the price.

C

Economic profit is defined as _____ a. total revenue minus the cost of the goods produced. b. the price of the goods sold minus the quantity of goods sold. c. total revenue minus what must be paid to resources to attract them from their best alternative use. d. total revenue divided by what must be paid to resources to attract them from their best alternative use. e. total revenue plus what must be paid to resources to attract them from their best alternative use.

C

Harvey develops gaming apps from home instead of working as an engineer and earning $50,000 a year. He has invested $20,000 to upgrade to the hardware that he needs and estimates his expenses at $17,000 a year. Downloads generated $130,000 in revenue during the first year. What is his economic profit? a. $37,000 b. $50,000 c. $43,000 d. $93,000 e. $130,000

C

If a firm shuts down in the short run and produces no output, its total cost will be _____ a. equal to zero. b. equal to the variable cost. c. equal to the fixed cost. d. equal to only explicit costs. e. equal to the sum of implicit and explicit costs.

C

If you ordered the all-you-can-eat special, you continue to eat as long as _____ a. your actual marginal utility from another bite is positive. b. your actual marginal utility from another bite is negative. c. your expected marginal utility from another bite is positive. d. your expected marginal utility from another bite is negative. e. your expected marginal utility from another bite is zero.

C

Irrespective of whether a firm produces or shuts down in the short run, fixed cost is equal to its _____ a. average variable cost. b. total cost. c. sunk cost. d. total revenue. e. marginal cost.

C

Opportunity cost usually _____ a. cannot be measured. b. applies to labor but not to capital. c. is involved in calculating economic profit. d. is greater than the cash payment made to a resource. e. is less than the cash payment made to a resource.

C

Originally, GATT members had agreed to three items. One of those was to _____ a. protect U.S. industries and decrease world trade. b. manage legal and accounting requirements for U.S. tariffs and quotas. c. reduce tariffs through multinational negotiations. d. increase trade restrictions, after OPEC significantly raised oil prices. e. develop a free trade zone across 50 states.

C

A profit-maximizing monopolist supplies the quantity at which _____ a. average revenue exceeds average cost by the greatest amount.b. marginal revenue exceeds marginal cost by the smallest amount. c. marginal revenue exceeds marginal cost by the greatest amount. d. total revenue exceeds total cost by the greatest amount. e. total revenue exceeds total cost by the smallest amount.

D

Economists view pollution as an economic problem that arises because _____ a. private enterprises always minimize the amount of pollution produced. b. profitable firms rarely pollute. c. the level of pollution declines as the economy grows. d. firms that pollute do not pay the full social cost of producing their output. e. pollution costs are always borne by the government.

D

If an industry is a constant-cost industry, _____ a. the prices of its inputs increase even when output remains constant. b. it uses the same amount of inputs even at higher levels of output. c. the prices of its inputs rise at a constant rate as it uses more inputs. d. the prices of its inputs remain the same as the number of firms increases. e. firms in the industry experience economies of scale throughout their scales of operation.

D

Monopolistically competitive industries consist of _____ a. one firm selling several products. b. one firm selling one product. c. many firms, all selling identical products. d. many firms, each selling a slightly different product. e. many firms, each selling a completely different product.

D

Refer to Exhibit 10.10, which shows the payoff matrix of marketing strategies. If Coke adopts a big budget but Pepsi does not, the heavy promoter earns _____ a. $1 billion. b. $2 billion. c. $3 billion. d. $4 billion. e. $0.

D

Refer to Exhibit 10.8. The dominant strategy equilibrium is illustrated in _____ a. Scenario 1. b. Scenario 2. c. Scenario 3. d. Scenario 4. e. Scenario 1 and Scenario 4.

D

Refer to Exhibit 17.9, which shows the demand, supply, and marginal social benefit curves. The marginal private benefit of education equals the marginal cost at _____ a. point a. b. point b. c. point c. d. E. e. E'.

D

Refer to Exhibit 6.3, which shows Ken's demand curve for neckties. When the price of neckties is $5, Ken purchases four neckties. When the price of neckties falls to $4, he purchases five neckties. A decline in the price of neckties causes his expenditure to _____ a. increase from $20 to $25, increasing his consumer surplus. b. increase from $20 to $25, decreasing his consumer surplus. c. remain constant at $20, leaving his consumer surplus unchanged. d. remain constant at $20, increasing his consumer surplus. e. decrease from $20 to $15, increasing his consumer surplus.

D

Refer to Exhibit 9.16, which shows the cost and revenue curves faced by a monopolist. In perfect competition, consumer surplus would be represented by _____ a. a. b. c. c. e. d. area aec. e. zero.

D

Refer to Exhibit 9.2, which shows the cost and revenue curves for a non-discriminating monopolist. The total cost incurred by the monopolist at the profit-maximizing output is _____ a. $3,300. b. $3,400. c. $2,808. d. $2,340. e. $1,638.

D

Refer to Table 19.2, which shows per-day production data of rice and T-shirts for two countries, Cambria and Bodoni. Based on the table, it can be said that the opportunity cost of 1 T-shirt in Cambria is _____ a. 4 tons of rice. b. 0.5 tons of rice. c. 0.75 tons of rice. d. 0.025 tons of rice. e. 2 tons of rice.

D

Refer to Table 7.5, which shows labor, total product, and marginal product produced by a firm. At which point do diminishing marginal returns set in? a. before the first unit of labor b. between the first and second units of labor c. between the second and third units of labor d. between the third and fourth units of labor e. between the fourth and fifth units of labor

D

The difference between the effects of an import quota and a tariff is that _____ a. only the tariff results in a higher domestic price b. only the quota decreases the amount of goods imported c. the decrease in producer surplus is smaller with the quota. d. under a quota, part of the decrease in consumer surplus is redistributed to foreign producers; under a tariff, it is redistributed to the domestic government. e. under a tariff, part of the decrease in consumer surplus is redistributed to foreign producers; under a quota, it is redistributed to the domestic government.

D

The production possibilities curve of a country will be a straight line if _____ a. the production of each commodity is subject to economies of scale. b. the country completely specializes in the production of the good with the highest opportunity cost. c. the country has an absolute advantage in the production of each commodity. d. the resources in the country are equally adaptable to the production of each commodity. e. the country completely specializes in the production of the good with the lowest opportunity cost.

D

The short run is a period of time _____ a. equal to or less than six months. b. during which all resources may be varied. c. during which all resources are fixed. d. during which at least one resource is fixed. e. during which at least one resource may be varied.

D

A monopolist's supply curve is the portion of its marginal cost curve that lies below its average variable cost curve. a. True b. False

False

A profit-maximizing monopoly will always produce at the minimum point of its average total cost (ATC) curve. a. True b. False

False

Consumers benefit from market exchange when the maximum price they are willing to pay for a unit of a good is less than what they usually pay. a. True b. False

False

For any given price, the more elastic the demand for a good, the greater the consumer surplus. a. True b. False

False

In short-run equilibrium, a perfectly competitive firm can never earn an economic profit. a. True b. False

False

International trade between countries typically produces a winner and a loser. Generally, it is the more economically advanced country that gains at the expense of the less developed nation. a. True b. False

False

Price wars occur more often in monopolistic competition than in other market structures. a. True b. False

False

International trade increases the variety of goods and services available in a country. a. True b. False

True

Marginal cost indicates by how much total cost increases if one more unit is produced or by how much total cost drops if production declines by one unit. a. True b. False

True

Refer to Table 10.2, which depicts the payoff matrix facing Eagle Tobacco and Dan'l Boone Tobacco with respect to their decisions to advertise or not. Eagle Tobacco has a dominant strategy. a. True b. False

True

Suppose the marginal utility of a unit of Good X = MUx, the marginal utility of a unit of Good Y = MUy, Px = the price of a unit of Good x, and Py = the price of a unit of Good Y. If MUx/Px > MUy/Py, the consumer can increase utility by buying more of Good X. a. True b. False

True

When a system of pollution rights is in effect, polluters have no economic incentive to reduce the amount of pollution they generate. a. True b. False

True