Econ 528
Figure 4-3 shows the market for tiger shrimp. The market is initially in equilibrium at a price of $15 and a quantity of 80. Now suppose producers decide to cut output to 40 in order to raise the price to $18. 10) Refer to Figure 4-3. What is the value of consumer surplus at a price of $18? A) $60 B) $120 C) $180 D) $240
$60
Table 12-2 lists the various pounds (lbs.) of apples that Margie Stattler can sell. Assume that Margie operates in a perfectly competitive market. What is Margie's total revenue if she sells 250 pounds of apples? Select one: a. $250 b. $750 c. $500 d. There is not enough information in the table to determine Margie's total revenue.
$750
Figure 4-3 shows the market for tiger shrimp. The market is initially in equilibrium at a price of $15 and a quantity of 80. Now suppose producers decide to cut output to 40 in order to raise the price to $18. Refer to Figure 4-3. What is the value of the deadweight loss at the equilibrium price of $15? Select one: a. $40 b. $0 c. $100 d. $60
$0
Refer to Figure 4-3. What is the value of the deadweight loss at a price of $18? A) $100 B) $180 C) $660 D) $1,040
$100
Figure 4-3 shows the market for tiger shrimp. The market is initially in equilibrium at a price of $15 and a quantity of 80. Now suppose producers decide to cut output to 40 in order to raise the price to $18. Refer to Figure 4-3. What is the value of producer surplus at the equilibrium price of $15? Select one: a. $80 b. $400 c. $240 d. $160
$160
Refer to Figure 4-3. What is the value of producer surplus at a price of $18? A) $240 B) $300 C) $340 D) $720
$240
Golda Rush quit her job as a manager for Home Depot to start her own hair dressing salon, Goldilocks. She gave up a salary of $40,000 per year, invested her savings of $30,000 (which was earning 5 percent interest) and borrowed $10,000 from a close friend, agreeing to pay 5 percent interest per year. In her first year, Golda spent $18,000 to rent a salon, hired a part-time assistant for $12,000 and incurred another $15,000 on equipment and hairdressing material. Based on this information, what is the amount of her explicit costs? Select one: a. $45,500 b. $47,000 c. $87,000 d. $45,000
$45,500
The long-run average cost curve shows A) the lowest average cost of producing every level of output in the long run. B) where the most profitable level of output occurs. C) the average cost of producing where diminishing returns are not present. D) the plant size or scale that the firm should build.
the lowest average cost of producing every level of output in the long run.
Figure 12-9 shows cost and demand curves facing a profit-maximizing, perfectly competitive firm. Refer to Figure 12-9. Identify the firm's short-run supply curve. Select one: a. the marginal cost curve b. the marginal cost curve from a and above c. the marginal cost curve from d and above d. the marginal cost curve from b and above
the marginal cost curve from b and above
A negative externality exists if A) there are price controls in a market. B) there are quantity controls in a market. C) the marginal social cost of producing a good or service exceeds the private cost. D) the marginal private cost of producing a good or service exceeds the social cost.
the marginal social cost of producing a good or service exceeds the private cost.
Figure 12-4 shows the cost and demand curves for a profit-maximizing firm in a perfectly competitive market. Refer to Figure 12-4. If the market price is $30, the firm's profit-maximizing output level is Select one: a. 130. b. 0. c. 180. d. 240.
c. 180.
Assume that both the demand curve and the supply curve for MP3 players shift to the right but the demand curve shifts more than the supply curve. As a result Select one: a. the equilibrium price of MP3 players will decrease; the equilibrium quantity may increase or decrease. b. the equilibrium price of MP3 players may increase or decrease; the equilibrium quantity will increase. c. both the equilibrium price and quantity of MP3 players will increase. d. the equilibrium price of MP3 players will increase; the equilibrium quantity may increase or decrease.
c. both the equilibrium price and quantity of MP3 players will increase.
Suppose that the duopolists competing in Cournot fashion agree to produce the collusive output. Given that firm two commits to this collusive output, it pays firm one to Select one: a. cheat by raising prices. b. cheat by producing a lower level of output. c. none of the above. d. cheat by producing a higher level of output.
cheat by producing a higher level of output.
A firm that can effectively price discriminate will charge a higher price to Select one: a. customers who have the more elastic demand for the product. b. buyers who are members of the smallest market segment. c. buyers who belong to the largest market segment. d. customers who have the more inelastic demand for the product.
customers who have the more inelastic demand for the product.
Economic costs of production differ from accounting costs in that Select one: a. accounting costs are always larger than economic cost. b. economic costs include expenditures for hired resources while accounting costs do not. c. accounting costs include expenditures for hired resources while economic costs do not. d. economic costs add the opportunity costs of a firm using its own resources while accounting costs do not.
economic costs add the opportunity costs of a firm using its own resources while accounting costs do not.
The price of a factor of production that is in fixed supply is called A) economic rent. B) economic profit. C) a compensating differential. D) opportunity cost.
economic rent.
If, when a firm double all its inputs, its average cost of production decreases, then production displays A) diminishing returns. B) economies of scale. C) diseconomies of scale. D) declining fixed costs.
economies of scale.
7) Producing 200 units of good Y and 100 units of good X in the same factory costs the firm $50,000. In contrast, producing 200 units of good Y in one factory and 100 units of good X in another factory costs the firm $75,000. So if the firm produces the two goods together, it achieves: a. quadratic returns to scale. b. diseconomies of scope. c. economies of scope. d. diseconomies of scale and diseconomies of scope.
economies of scope.
An oligopolistic industry is characterized by all of the following except Select one: a. firms pursuing aggressive business strategies, independent of rivals' strategies. b. existence of entry barriers. c. production of standardized products. d. the possibility of reaping long run economic profits.
firms pursuing aggressive business strategies, independent of rivals' strategies.
Managerial economics a. explains which products consumers will buy. b. describes how pay for managers is set. c. helps managers make decisions in the face of scarcity. d. ensures managers always make good decisions.
helps managers make decisions in the face of scarcity.
A reason why a perfectly competitive firm's demand for labor curve slopes downward is that A) each additional unit of labor hired is less efficient than previously hired units. B) in the short run, as more labor is hired, labor's marginal product falls because of the law of diminishing returns. C) the extra cost of hiring additional units of labor increases as a firm hires more units of labor. D) the firm's demand curve for the product that uses labor is downward sloping
in the short run, as more labor is hired, labor's marginal product falls because of the law of diminishing returns.
Which of the following is a source of market failure? A) unforeseen circumstances which leads to the bankruptcy of many firms B) a lack of government intervention in a market C) incomplete property rights or inability to enforce property rights D) an inequitable income distribution
incomplete property rights or inability to enforce property rights
If the Apple iPhone and the Samsung Galaxy are considered substitutes, then, other things equal, an increase in the price of the iPhone will Select one: a. increase the quantity demanded for the iPhone. b. decrease the demand for the iPhone. c. increase the demand for the Galaxy. d. increase the quantity demanded for the Galaxy.
increase the demand for the Galaxy.
Which of the following is not part of an oligopolist's business strategy? A) deciding on how to manage relations with suppliers B) choosing what new technologies to adopt C) selecting which new markets to enter D) independently setting a product's price without consideration of its rivals' pricing policies
independently setting a product's price without consideration of its rivals' pricing policies
A characteristic found only in oligopolies is A) break even level of profits. B) interdependence of firms. C) independence of firms. D) products that are slightly different
interdependence of firms
A company achieves competitive advantage whenever A)it has a product offering that is differentiated from the product offerings of rivals. B)its customers exhibit a high degree of loyalty to the company's brand. C)it has more core competences than its rivals. D)it has a better credit rating than rivals. E)it has an edge over rivals in attracting customers and coping with competitive forces.
it has an edge over rivals in attracting customers and coping with competitive forces.
A firm's demand curve for labor slopes downwards because Select one: a. workers supply less labor services as the wage rate falls. b. of the law of diminishing marginal returns. c. of rising marginal product. d. firms supply less labor as the wage rate rises.
of the law of diminishing marginal returns
An industry has a 4-firm concentration ratio of 85. We would call this industry a: Select one: a. oligopoly b. very competitive one c. monopoly d. purely competitive industry
oligopoly
If a producer is not able to expand its plant capacity immediately, it is Select one: a. bankrupt. b. losing money. c. operating in the short run. d. operating in the long run.
operating in the short run.
What is the incentive for a firm to join a cartel? A) to be able to earn profits in the long run but not in the short run B) to be able to earn larger profits than if it was not part of the cartel C) to completely insulate itself from competition D) to produce a larger amount of output than if it was not part of the cartel
to be able to earn larger profits than if it was not part of the cartel
The following table provides hypothetical sales data for 10 firms that comprise the television industry. Ignoring the fact that these companies are from different countries, calculate the four-firm concentration ratio. Then answer the following question. Brand Sales (millions of $s) Zenith 25 Magnavox 15 Sony 38 Mitsubishi 22 Philips 12 RCA 15 Panasonic 24 Samsung 28 Hitachi 10 Motorola 8 The concentration ratio for the four largest firm is: Select one: a. 88% b. 78% c. 68% d. 58%
58%
Figure 15-9 shows the demand and cost curves for a monopolist. 2) Refer to Figure 15-9. What is the economically efficient output level? A) 600 units B) 800 units C) 940 units D) 1160 units
940 units
Which of the following is an example of bundling? Select one: a. A $95 ticket to the Magic Kingdom gives you entrance to the park and free access to all the rides b. A shoe store doesn't sell shoes for just one foot; it sells shoes for the left foot and right foot packaged together c. An automobile manufacturer includes Michelin tires on its new cars d. HP includes a toner cartridge with the purchase of a new laser printer
A $95 ticket to the Magic Kingdom gives you entrance to the park and free access to all the rides
8) The marginal revenue product of labor for a firm a. will increase if the price of the firm's output increases. b. is the firm's demand curve for labor. c. will decrease if the firm hires more labor. d. All of the above are correct.
All of the above are correct.
Which of the following is an example of strategic behavior that we see in oligopoly? a. a. A firm builds excess capacity to discourage the entry of competitors. b. A firm adopts the pricing behavior of a dominant firm under the assumption that other firms will do likewise. c. Firms in an industry increase advertising expenditures to avoid losing market share. d. All of the above are examples of strategic behavior.
All of the above are examples of strategic behavior
All of the following statements are true of the minimum efficient scale except one. Which one? A) All possible economies of scale have been exhausted. B) The short-run average total cost curve's minimum point is equal to the long run average cost curve's minimum point. C) Any increase in the scale of operation will encounter diseconomies of scale. D) An increase in the output level will increase profit.
An increase in the output level will increase profit.
Which of the following is not a reason why firms experience economies of scale? Select one: a. As output increases, the managers can begin to have difficulty coordinating the operations of their firms. b. Technology can make it possible to increase production with a smaller increase in at least one input. c. Workers and managers can become more specialized, enabling them to be more productive. d. Larger firms may be able to purchase inputs at lower costs than smaller competitors
As output increases, the managers can begin to have difficulty coordinating the operations of their firms.
Which of the following is a reason why a firm would experience diseconomies of scale? Select one: a. As the size of the firm increases, it must operate in other countries where differences in language, customs and laws increase its average costs. b. As the size of the firm increases, it becomes more difficult to find markets where it doesn't already have operations. c. As the size of the firm increases it becomes more difficult to coordinate the operations of its manufacturing plants. d. To finance an increase in the size of its plant a firm must borrow more money or sell more shares of stock.
As the size of the firm increases it becomes more difficult to coordinate the operations of its manufacturing plants.
17) Successful differentiation allows a firm to A)gain buyer loyalty to its brand (because some buyers prefer the differentiating features and are thus brand loyal). B)set the industry ceiling on price. C)attract many more buyers by charging a lower price than rivals and thereby take sales and market share away from rivals. D)command a premium price for its product and/or increase unit sales (because additional buyers are won over by the differentiating features), and/or. E)Both A and D.
Both A and D.
Which of the following statements about the price elasticity of demand is correct? Select one: a. Demand is more elastic the smaller the percentage of the consumer's budget the item takes up. b. Demand is more elastic in the long run than it is in the short run. c. The elasticity of demand for a good in general is equal to the elasticity of demand for a specific brand of the good. d. The absolute value of the elasticity of demand ranges from zero to one.
Demand is more elastic in the long run than it is in the short run.
A firm that is threatened by the potential entry of competitors into a market builds excess production capacity. This is an example of Select one: a. Cournot competition b. Entry Barriers to prevent potential entrants c. collusion or cartel d. Bertrand competition
Entry Barriers to prevent potential entrants
Which of the following characteristics is common to monopolistic competition and perfect competition? A) Firms produce identical products. B) Entry barriers into the industry are low. C) Each firm faces a downward -sloping demand curve. D) Firms take market prices as given.
Entry barriers into the industry are low.
Refer to Figure 15-10. The deadweight loss due to a monopoly is represented by the area A) FHE. B) FGE. C) GEH. D) FQ1Q2E. Answer: A
FHE.
Answer whether the following statement is true or false: Economic rent for an input is higher if the input is abundant is supply Select one: True False The correct answer is 'False'
False
Answer whether the following statement is true or false: If the marginal revenue product of an input is less than the price of that input, the input is too expensive and the firm should stop using that input and try to find some alternate inputs. Select one: True False
False
If firms are in Cournot equilibrium: a) Each firm could increase profits by unilaterally increasing output. b) Each firm could increase profits by unilaterally decreasing output. c) Firms could increase profits by jointly increasing output. d)Firms could increase profits by jointly reducing output
Firms could increase profits by jointly reducing output
The president of Toyota's Georgetown plant was quoted as saying, "Demand for high volumes saps your energy. Over a period of time, it eroded our focus [and] thinned out the expertise and knowledge we painstakingly built up over the years." Based on this quote, what must be true of the plant's average cost of production curve? A) It is upward-sloping. B) It is downward-sloping. C) It is a ray from the origin. D) It is U-shaped.
It is upward-sloping.
If the marginal product of labor is 2, the marginal product of capital is 4, the wage rate is $3, the rental price of capital is $6, and the price of output is $1.50, then the firm should Select one: a. Hold output constant, but hire more labor and less capital b. Increase output by hiring more labor, more capital, or both c. Decrease output by reducing the quantity of capital, reducing the number of units of labor, or both d. None of the above is correct
None of the above is correct
Refer to Figure 12-3. Suppose the prevailing price is P1 and the firm is currently producing its loss-minimizing quantity. Identify the area that represents the loss. A) P2 deP1 B) P3cbP1 C) P3caP0 D) 0P1 bQ1
P3cbP1
Refer to Figure 15-2. To maximize profit, the firm will produce Select one: a. Q2. b. Q1. c. Q4. d. Q3.
Q2
1. Refer to Figure 15-4. If the monopoly firm wants to maximize its profit, it should operate at a level of output equal to a. Q1. b. Q2. c. Q3. d. Q4.
Q3
13) (Table 10.4) The table shows consumer valuations (maximum willingness to pay per month) for two cable television networks. In which of the scenarios would a cable television company have an increase in producer surplus from using a bundling strategy as opposed to selling channel access separately? A)Scenario A B)Scenario B C)Scenario C D)Scenario D
Scenario C
If a firm charges customers $ 200 per unit of the first unit purchased, and $160 per unit for each additional unit purchased in excess of one unit. Then, what is the economic term of this strategy? Select one: a. Profit maximization pricing b. First-degree price discrimination c. Second-degree price discrimination d. Third -degree price discrimination
Second-degree price discrimination
Suppose two firms in a duopoly implicitly collude and charge a high price. How might each firm benefit from advertising that it will match the lowest price offered by its competitor? Select one: a. The offer to match prices is a way of deterring entry by other large firms, thereby keeping the market share of the existing firms intact b. The advertisement is meant to suggest to consumers that the offered price is actually the lowest price available c. The offer to match prices is a way of signaling to antitrust authorities that the firms are not engaged in illegal collusion d. The advertisement ensures that the other firm does not cheat. If a firm cheats on the agreement and charges the lower price, the rival firm will retaliate by doing the same.
The advertisement ensures that the other firm does not cheat. If a firm cheats on the agreement and charges the lower price, the rival firm will retaliate by doing the same.
Studies have shown links between calcium consumption and a reduction in osteoporosis. How does this affect the market for calcium? Select one: a. The calcium supply curve shifts to the right because of a change in tastes in favor of calcium. b. The calcium demand curve shifts to the right because of a change in tastes in favor of calcium. c. The calcium demand curve shifts to the left because this new information will increase the price of calcium. d. The calcium supply curve shifts to the left because this new information will increase the price of calcium.
The calcium demand curve shifts to the right because of a change in tastes in favor of calcium.
Buyers rush to purchase stocks in California vineyards following a forecast of a 30 percent decline in this year's grape harvest. What happens in the California wine market as a result of this announcement? Select one: a. The demand curve for California wine shifts to the right in anticipation of higher prices in the future. b. The supply curve for California wine shifts to the left in anticipation of lower quantities in the future. c. The supply curve for California wine shifts to the right in anticipation of higher prices in the future. d. The demand curve for California wine shifts to the left in anticipation of higher prices in the future.
The demand curve for California wine shifts to the right in anticipation of higher prices in the future.
Assume the market for organic produce sold at farmers' markets is perfectly competitive. All else equal, as more farmers choose to produce and sell organic produce at farmers' markets, what is likely to happen to the equilibrium price of the produce and profits of the organic farmers in the long run? A) The equilibrium price is likely to increase and profits are likely to remain unchanged. B) The equilibrium price is likely to remain unchanged and profits are likely to increase. C) The equilibrium price is likely to decrease and profits are likely to decrease. D) The equilibrium price is likely to increase and profits are likely to increase.
The equilibrium price is likely to decrease and profits are likely to decrease.
First (Perfect) degree price discrimination means that a firm charge: Select one: a. The maximum amount that buyers are willing to pay for each unit. b. Different prices to people of different racial or ethnic backgrounds. c. Different prices to different groups of buyers. d. One single price—the maximum possible—to all of its buyers.
The maximum amount that buyers are willing to pay for each unit.
How many pounds of apples should Margie sell to maximize her profit? Refer to Table 12-2. Table 12-2 lists the various pounds (lbs.) of apples that Margie Stattler can sell. Assume that Margie operates in a perfectly competitive market. a. This can be determined only when all of the values for market price, total revenue, average revenue and marginal revenue are given. b. 300 pounds c. 400 pounds d. This cannot be determined without knowing Margie's total or marginal production cost
This cannot be determined without knowing Margie's total or marginal production cost
Which of the following is an example of a long run adjustment? A) Your university offers Saturday morning classes next fall. B) Ford Motor Company lays off 2,000 assembly line workers. C) A soybean farmer turns on the irrigation system after a month long dry spell. D) Wal-Mart builds another Supercenter.
Wal-Mart builds another Supercenter.
Which of the following is the best example of a short run adjustment? A) A local bakery purchases another commercial oven as part of its capacity expansion. B) Your local Wal-Mart hires two more associates. C) Smith University completed negotiations to acquire a large piece of land to build its new library. D) Toyota builds a new assembly plant in Texas.
Your local Wal-Mart hires two more associates.
"Tom and Jack are two local petrol stations. Although they have different constant marginal costs, they both survive continued competition." Tom and Jack do not constitute: Select one: a. a Stackelberg oligopoly. b. a Cournot oligopoly. c. a Bertrand oligopoly. d. a monopolistically competitive industry.
a Bertrand oligopoly
Sue and Jane own two local petrol stations. They have identical constant marginal costs, but earn zero economic profits. Sue and Jane constitute a) a Sweezy oligopoly. b) a Cournot oligopoly. c) a Bertrand oligopoly. d) none of the above.
a Bertrand oligopoly.
An externality is A) a benefit realized by the purchaser of a good or service. B) a cost paid for by the producer of a good or service. C) a benefit or cost experienced by someone who is not a producer or consumer of a good or service. D) anything that is external or not relevant to the production of a good or service.
a benefit or cost experienced by someone who is not a producer or consumer of a good or service.
Relative to a perfectly competitive market, a monopoly results in Select one: a. a gain in producer surplus equal to the loss in consumer surplus. b. greater economic efficiency. c. a gain in producer surplus less than the loss in consumer surplus. d. a gain in producer surplus equal to the gain in consumer surplus.
a gain in producer surplus less than the loss in consumer surplus.
A cartel is A) a temporary storage facility for automobiles. B) a group of firms that enter into an informal agreement to fix prices to maximize joint profits. C) a group of firms that enter into a formal agreement to fix prices to maximize joint profits. D) an example of a group of firms that collectively regulate a competitive industry
a group of firms that enter into a formal agreement to fix prices to maximize joint profits.
Figure 4-3 shows the market for tiger shrimp. The market is initially in equilibrium at a price of $15 and a quantity of 80. Now suppose producers decide to cut output to 40 in order to raise the price to $18. Refer to Figure 4-3. What is the value of consumer surplus at the equilibrium price of $15? Select one: a. $240 b. $180 c. $60 d. $120
a. $240
Sally quit her job as an auto mechanic earning $50,000 per year to start her own business. To save money she operates her business out of a small building she owns which, until she started her own business, she had rented out for $10,000 per year. She also invested her $20,000 savings (which earned a market interest rate of 5% per year) in her business. You are given the following information about the first year of her operations. Total revenue: $120,000 Cost of labor: $40,000 Cost of materials: $15,000 Equipment rental: $5,000 Foregone Salary: $50,000 Foregone Interest: $1,000 Opportunity cost of Building: 10,000 Which one is the correct answer? Select one: a. In the first year, economic profit is -$1,000 and accounting profit is $60,000 b. In the first year, economic profit is $70,000 and accounting profit is $60,000 c. In the first year, economic profit is $120,000 and accounting profit is $61,000 d. In the first year, economic profit is $60,000 and accounting profit is $60,000
a. In the first year, economic profit is -$1,000 and accounting profit is $60,000
Which of the following would cause an increase in the equilibrium price and an increase in the equilibrium quantity of watermelons? Select one: a. an increase in supply and an increase in demand greater than the increase in supply b. an increase in demand and an increase in supply c. an increase in supply d. a decrease in demand and an increase in supply
a. an increase in supply and an increase in demand greater than the increase in supply
A member of a cartel like OPEC has an incentive to Select one: a. argue for larger production quotas for each member of the cartel. b. abide by its individual production quota. c. support equal production quotas for each member. d. agree to a low cartel production level and then produce more than its quota.
agree to a low cartel production level and then produce more than its quota.
Which of the following would cause both the equilibrium price and equilibrium quantity of cotton (assume that cotton is a normal good) to increase? A) an increase in consumer income B) a drought that sharply reduces cotton output C) a decrease in consumer income D) unusually good weather that results in a bumper crop of cotton
an increase in consumer income
Which of the following would cause a decrease in the equilibrium price and an increase in the equilibrium quantity of salmon? A) a decrease in demand and an increase in supply B) an increase in supply C) an increase in supply and an increase in demand greater than the increase in supply D) a decrease in demand and a decrease in supply
an increase in supply
Learning curves represent the relationship between Select one: a. average variable cost and the number of units produced per time period b. total cost and technology c. average variable cost and the rate of increase in technology d. average variable cost and the cumulative number of units produced
average variable cost and the cumulative number of units produced
In September 2012, the average price of gasoline in the United States was $3.91 per gallon and consumers bought 5 percent less gasoline than they had during September 2011, when the average price was $3.66 per gallon. Based on these numbers, what was the arc price elasticity of demand (midpoint formula) for gasoline from September 2011 to September 2012? Select one: a. -6.75 b. -0.76 c. -2.96 d. -0.33
b. -0.76
Figure 12-9 shows cost and demand curves facing a profit-maximizing, perfectly competitive firm. Identify the short-run shut down point for the firm. Select one: a. a b. b c. c d. d
b. b
A monopolistically competitive firm will Select one: a. charge the same price as its competitors do. b. have some control over its price because its product is differentiated. c. produce an output level that is productively and allocatively efficient. d. always produce at the minimum efficient scale of production.
b. have some control over its price because its product is differentiated.
8) Answer whether the following statement true or false: a. Over time, more experienced workers will demand higher wage and therefore, will lead to an increased in the cost of production for the producers. b. When you produce more, average cost of production increases.
both are false
The minimum efficient scale is Select one: a. level of operation where long-run average costs are lowest. b. the smallest output level where the firm finally reaches productive efficiency. c. the level of output where diminishing returns have not set in yet. d. the plant size that yields the most profit.
level of operation where long-run average costs are lowest
A perfectly competitive firm's supply curve is its A) marginal cost curve. B) marginal cost curve above its minimum average total cost. C) marginal cost curve above its minimum average variable cost. D) marginal cost curve above its minimum average fixed cost.
marginal cost curve above its minimum average variable cost.
A low-cost leader's basis for competitive advantage is: A)using an everyday low pricing strategy to gain the biggest market share. B)bigger profit margins than rival firms. C)high buyer switching costs because of the company's differentiated product offering. D)meaningfully lower overall costs than competitors. E)a reputation for charging the lowest prices in the industry.
meaningfully lower overall costs than competitors.
Mandatory motorcycle helmet laws are designed to reduce the severity of injuries resulting from motorcycle involvement in traffic accidents. In this sense, these mandatory helmet laws are reducing ________ of risky behavior. A) positive externalities B) negative externalities C) the private benefit D) the social benefit
negative externalities
Assume that a 4 percent decrease in income results in a 6 percent increase in the quantity demanded of a good. The income elasticity of demand for the good is Select one: a. negative, and the good is an inferior good. b. positive, and the good is a normal good. c. positive, and the good is an inferior good. d. negative, and the good is a normal good.
negative, and the good is an inferior good.
A monopolistically competitive firm faces a downward-sloping demand curve because A) it is able to control price and quantity demanded. B) there are few substitutes for its product. C) of product differentiation. D) its market decisions are affected by the decisions of its rivals
of product differentiation.
A positive externality results when A) economists are sure that a good or service provides benefits to consumers. B) someone pays for a good or service even though she is not directly affected by the production or consumption of it. C) when people who live in one country benefit from the production of a good or service that occurs in another country. D) people who are not directly involved in producing or paying for a good or service benefit from it.
people who are not directly involved in producing or paying for a good or service benefit from it.
Refer to the Article Summary. Higher home values which result from close proximity to public transportation are an example of a ________ due to the public transportation. A) positive externality. B) negative externality. C) private cost. D) social cost.
positive externality
Today, Walt Disney World charges different customers different prices for admission. This pricing strategy is called Select one: a. arbitrage. b. price discrimination. c. cost-price pricing. d. odd pricing.
price discrimination.
Economies of scope refers to the decrease in average total cost that can occur when a firm a. produces more than one product. b. has monopoly power in world markets. c. controls the raw materials used as inputs. d. narrows the scope of its regional markets.
produces more than one product.
Economies of scope exist between book publishing and magazine publishing if Select one: a. the cost of a publishing a book is not subject to diminishing marginal returns. b. the cost of publishing a magazine is lower for firms that publish many magazines than for firms that publish only one magazine. c. the cost of publishing a magazine is lower for book publishers than for other firms. d. the cost of publishing a book falls over time as the publisher acquires more experience.
the cost of publishing a magazine is lower for book publishers than for other firms
The term "derived demand" refers to A) the demand for financial products called derivatives. B) the demand for a factor of production that is derived from the demand for the good the factor produces. C) a firm's estimated demand curve derived from sales data. D) a demand curve that derives from the availability of resources.
the demand for a factor of production that is derived from the demand for the good the factor produces.
If the price of automobiles was to increase, then Select one: a. the quantity demanded of gasoline would decrease. b. the demand for gasoline would increase. c. the supply of gasoline would increase. d. the demand for gasoline would decrease.
the demand for gasoline would decrease.
Assume that both the demand curve and the supply curve for MP3 players shift to the right but the supply curve shifts more than the demand curve. As a result A) both the equilibrium price and quantity of MP3 players will decrease. B) the equilibrium price of MP3 players will decrease; the equilibrium quantity will increase. C) the equilibrium price of MP3 players may increase or decrease; the equilibrium quantity will decrease. D) the equilibrium price of MP3 players will increase; the equilibrium quantity will decrease.
the equilibrium price of MP3 players will decrease; the equilibrium quantity will increase.
At the minimum efficient scale A) all possible economies of scale have not been exhausted. B) the firm has achieved the lowest possible average cost of production. C) any increases in the scale of operation will encounter further economies of scale. D) marginal cost is at its minimum.
the firm has achieved the lowest possible average cost of production.
If the 4-firm concentration ratio for industry A is 80: a. the four largest first account for 20 percent of total output. b. the four largest firms account for 80 percent of total output. c. the industry is a monopoly. d. the industry is competitive.
the four largest firms account for 80 percent of total output.
A four-firm concentration ratio measures A) the fraction of an industry's sales accounted for by the four largest firms. B) the production of any four firms in an industry. C) how the four largest firms became so concentrated. D) the fraction of employment of the four largest firms in an industry
the fraction of an industry's sales accounted for by the four largest firms.
In 2004, hurricanes destroyed a large portion of Florida's orange and grapefruit crops. In the market for citrus fruit A) the supply curve shifted to the right resulting in an increase in the equilibrium price. B) the supply curve shifted to the left resulting in an increase in the equilibrium price. C) the demand curve shifted to the right resulting in an increase in the equilibrium price. D) the demand curve shifted to the left resulting in a decrease in the equilibrium price.
the supply curve shifted to the left resulting in an increase in the equilibrium price.
Assume the market for organically-grown produce is perfectly competitive. All else equal, as farmers find it less profitable to produce and sell organic produce in this market Select one: a. the demand curve will shift to the left and the equilibrium price will decrease. b. the supply curve will shift to the left and the equilibrium price will increase. c. the supply curve will shift to the right, the demand curve will shift to the left, and the equilibrium price will decrease. d. the supply curve will shift to the left, the demand curve will shift to the left, and the equilibrium price will increase.
the supply curve will shift to the left and the equilibrium price will increase.
Refer to Figure 15-10. What is the area that represents producer surplus under a monopoly? A) the triangle 0P2E B) the triangle 0P3H C) the trapezium 0P1FH D) the rectangle P1P3HF
the trapezium 0P1FH
Refer to Figure 15-10. What is the area that represents consumer surplus under a monopoly? A) the triangle P0P1F B) the triangle P0P2E C) the trapezium P1P2EF D) the rectangle P1P3HF
the triangle P0P1F
If the cross-price elasticity of demand for two goods is 1.25, then Select one: a. the two goods are luxuries. b. the two goods are substitutes. c. the demand for one of the goods conforms to the law of demand, but the demand for the other good violates the law of demand. d. one of the goods is normal and the other good is inferior.
the two goods are substitutes
Selling tickets in the orchestra region of the Metropolitan Opera for $55 and selling tickets in the upper balcony for $28 to listen to Luciano Pavoratti describes which type of price discrimination? Select one: a. first-degree price discrimination b. bundling c. third-degree price discrimination d. This is not necessarily price discrimination.
third-degree price discrimination
