ECON questions

A.

The number of firms

B.

The ease of entry and exit

C.

The difficulty new firms have in entering monopolistic competition as compared with perfect competition.

D.

In monopolistic competition each firm sells a slightly different or unique product; that is not the case in perfect competition.

E.

In perfect competition each firm sells a slightly different or unique product; that is not the case in monopolistic competition.

A.

A monopoly faces significant threats of entry into the market if economic profits exist.

B.

Monopolistically competitive firms will never earn economic profits in the short run.

C.

In monopolistically competitive markets, economic profits will eventually lead to the entry of new firms.

D.

There are high barriers to entry in perfect competition.

E.

There are high barriers to entry in monopolistic competition.

A.

long-run equilibrium in perfect competition.

B.

product differentiation.

C.

price discrimination.

D.

profit determination.

E.

extremely stupid to most informed observers.

A.

produces a larger quantity but at a lower price.

B.

produces a larger quantity at a higher price.

C.

produces the same quantity, but at a higher price.

D.

produces exactly the same quantity at exactly the same price.

E.

produces a smaller quantity at a higher price.

A.

gaining information about products itself may be costly.

B.

brand names provide valuable information to consumers about the quality of products.

C.

firms often provide information through marketing.

D.

guarantees can help to increase consumer confidence in a product.

E.

All of the above

A.

are more tangible.

B.

can usually be stored for future use.

C.

can be physically possessed.

D.

are intangible.

E.

can be bought and sold in markets.

A.

a brand name provides a signal about a product’s quality and reliability.

B.

they are willing to pay more for the privilege of watching the firm’s commercials.

C.

a brand-name product itself is always of higher quality.

D.

consumers maximize utility by purchasing the most expensive products.

E.

consumers are irrational.

A.

Barriers to entry in the market

B.

Interdependence of firms

C.

Homogeneous products

D.

Economic profits can exist in the long run.

E.

Economic profits can exist in the short run.

A.

rival firms will not match a price cut but will follow a price increase.

B.

prices are fairly rigid.

C.

the firms will collude in establishing price and output.

D.

rival firms will match neither a price cut nor a price increase.

E.

a firm will not consider rivals’ reactions in setting price and output.

A.

a dominant firm in the market sets the price and other firms follow.

B.

small-market participants have a strong influence over price.

C.

there is a large kink in the demand curve.

D.

a prisoner’s dilemma exists.

E.

all firms face downward-sloping demand curves.

A.

increase monopoly profits.

B.

reduce the amount of information consumers have about a product.

C.

promote competitive behavior.

D.

promote non-competitive behavior.

E.

All of the above

A.

the Sherman Antitrust Act of 1890.

B.

the Clayton Antitrust Act of 1914.

C.

the Federal Trade Commission Act of 1914.

D.

All of the above

E.

None of the above

A.

is impossible to define.

B.

is the responsibility of the FTC.

C.

is the responsibility of the Justice Department.

D.

is defined according to whether a rule of reason or a per se rule is used.

E.

is defined in absolute terms by the Antitrust Division.

A.

based on the ability to control prices.

B.

based on the ability to price discriminate.

C.

any concentration ratio above 50 percent.

D.

the share of the market held by a firm.

E.

based on an attempt to monopolize.

A.

the Herfindahl index.

B.

the Concentration index.

C.

the Von Neumann index.

D.

the Taylor index.

E.

the Market index.

A.

the desire to limit the number of firms that are allowed to operate within certain industries.

B.

the desire to redistribute wealth from the extremely rich to those living in poverty.

C.

the desire to give government employees something important to do.

D.

the desire to enhance the competitive environment.

E.

the ultimate goal of creating a utopian society.

A.

Trucking

B.

Air transportation

C.

Telecommunications

D.

Financial services

E.

Internet service providers

A.

shows that regulation has been counterproductive in the past because government regulators were not held publicly accountable for their actions as they are today.

B.

shows that regulatory agencies systematically pursue the public’s best interest.

C.

is in favor of more economic regulation.

D.

is inconclusive as to whether there should be more or less economic regulation.

E.

is in favor of less economic regulation.

A.

privatizing industries.

B.

nationalizing industries.

C.

awaiting the outcome.

D.

regulating industries.

E.

reregulating industries.

A.

The General Agreement on Tariffs and Trade

B.

The World Trade Organization

C.

The Multilateral Agreement on Investment

D.

A and B.

E.

None of the above

A.

the market outcome is viewed as unfair by a majority of consumers.

B.

a market fails to provide the good at a zero price.

C.

quantity demanded exceeds quantity supplied.

D.

the market outcome is not the socially efficient outcome.

E.

markets produce the socially efficient level of output.

A.

include all costs involved in production.

B.

equal the private costs minus the value of the externality.

C.

are less than the private costs of production when negative externalities exist.

D.

are included in the private supply curve.

E.

All of the above

A.

a subsidy to producers so that they produce more.

B.

a subsidy to consumers so that they consume more.

C.

a tax based on the external costs of production and consumption.

D.

a tax that increases production and consumption.

E.

an increase in income taxes so that the government can hire more bureaucrats to solve the problem.

A.

they provide a significant source of revenue for the government.

B.

they allow others in society to influence the level of externalities by purchasing the permits themselves.

C.

firms have no incentives to purchase the permits.

D.

the firms with the least costly methods of pollution reduction will be the first to purchase the permits.

E.

All of the above

A.

the fact that benefits are shared in common.

B.

a lack of clearly defined property rights.

C.

the fact that costs accrues solely to the individual, but the benefits go to the society as a whole.

D.

the internalization of external costs.

E.

the fact that most people are cranky.

A.

a lack of common ownership.

B.

a lack of private ownership.

C.

that the market prices of the products derived from the animals are inefficiently low.

D.

that there is no demand for the animals.

E.

high rates of suicide among endangered species.

A.

economics and politics are mutually exclusive.

B.

the owner of a good has the right to exclude others from using that good.

C.

it is costly to exclude individuals from consuming public goods.

D.

negative externalities are exclusive to producers of goods and services.

E.

mutual funds should be purchased instead of stocks.

A.

less than the demand for a similar private good, because individuals can consume the good without having to pay for it.

B.

identical to the demand for a similar private good.

C.

greater than the demand for a similar private good, because more than one consumer can consume the good at the same time.

D.

easier to determine, because everyone pays the same price.

E.

None of the above

A.

when governments levy taxes on business firms.

B.

when governments levy taxes on workers.

C.

when perfectly competitive markets do not achieve economic efficiency.

D.

whenever governments intervene in the decision-making processes of perfectly competitive markets.

E.

when markets produce an income distribution that is not equitable.

A.

the principle of mutual exclusivity holds strongly.

B.

one individual’s consumption of a good prohibits others from consuming that good.

C.

the principle of mutual exclusivity does not apply.

D.

costs are imposed on individuals not directly involved in the transaction.

E.

None of the above

A.

Stocks

B.

Money

C.

Entrepreneurial ability

D.

Pollution

E.

Bonds

A.

a derived demand.

B.

always unit elastic.

C.

likely to increase with decreases in resource price.

D.

a direct relationship between resource price and quantity demanded.

E.

an inverse relationship between quantity available and quantity demanded.

A.

the demand curve slopes up.

B.

buyers and sellers are reversed.

C.

there is no substitution effect.

D.

the supply curve slopes down.

E.

there is no income effect.

A.

the firm will use more of the resource.

B.

the firm will use less of the resource.

C.

the firm will not change its use of the resource.

D.

the resource becomes scarce.

E.

the resource becomes expensive.

A.

consists of the demands of each firm willing to pay for a resource.

B.

consists of the demands of each firm able to pay for a resource.

C.

consists of the demands of each firm willing and able to pay for a resource.

D.

is the same as the firm’s demand for a resource.

E.

depends on distinct elements for every firm.

A.

decide how much they are willing to pay for something by deciding how much that something is worth to them.

B.

decide how much they are willing to pay for something by deciding how much others are willing to pay.

C.

decide how much they are willing to pay for something by deciding how much that something costs.

D.

decide how much they are willing to pay for something by deciding how much of that something is available.

E.

use resources.

A.

total output divided by the total cost.

B.

quantity of a resource divided by total product.

C.

change in output associated with a change in total cost.

D.

additional output associated with an additional unit of a fixed resource.

E.

additional output associated with an additional unit of a variable resource.

A.

is less than the wage rate for all workers employed after the first for a monopsony.

B.

is the extra cost to the firm of employing one additional worker.

C.

equals the wage rate when the monopsonist is employing the profit maximizing quantity of labor.

D.

curve lies below the market demand for labor curve for a monopsony.

E.

is the extra cost of producing one additional unit of output.

A.

is represented by a vertical supply curve.

B.

is likely to become less elastic over time as resources are used up.

C.

identifies the quantities that will be available for sale at different prices.

D.

is absolutely fixed because there are only so many units available at any moment.

E.

is irrelevant in determining resource price.

A.

the resource’s opportunity cost.

B.

the taxes paid by the resource’s owner.

C.

the taxes paid by the resource’s user.

D.

the resource’s economic rent.

E.

the derived demands for other resources.