________ is maximized in a competitive market when marginal benefit equals marginal
cost.
A) Deadweight loss
B) Marginal profit
C) Economic surplus
D) Selling price
According to the saving and investment equation, if net foreign investment falls by $35
million,
A) national saving in excess of domestic investment will decrease by $35 million.
B) national savings will rise by $35 million.
C) domestic investment will fall by $35 million.
D) national saving in excess of domestic investment will rise by $35 million.
In which of the following countries does health insurance not pay for most preventive
care procedures?
A) Canada
B) Japan
C) the United Kingdom
D) the United States
For a firm that can effectively price discriminate, who will be charged a lower price?
A) customers who have an elastic demand for the product
B) customers who have an inelastic demand for the product
C) buyers that are members of the largest market segment
D) buyers that are members of the smallest market segment
Which of the following is a macroeconomics question?
A) What determines the growth rate of gross domestic product?
B) How is the production quantity of snowboards determined?
C) What factors determine the price of electronic cigarettes?
D) What determines the salaries of Wall Street executives?
Arthur buys a new cell phone for $150. He receives consumer surplus of $150 from the
purchase. How much does Arthur value his cell phone?
A) $0
B) $150
C) $225
D) $300
Table 14-2
Table 14-2 shows the
payoff matrix for Wal-Mart and Target from every combination of pricing strategies for
the popular PlayStation 3. At the start of the game each firm charges a low price and
each earns a profit of $7,000. Suppose Wal-Mart and Target both advertise that they will
match the lowest price offered by any competitor. What is the purpose of such a
strategy?
A) to signal to each other not to charge below the current low price
B) to signal to each other that they will not hesitate to initiate a price war
C) to signal to each other that they intend to charge the high price
D) to signal to each other to share the market equally
Economists have long debated whether there is a significant loss of well-being to
society in markets that are monopolistically competitive rather than perfectly
competitive. Which of the following offers the best reason why some economists
believe that monopolistically competitive markets benefit consumers despite any loss of
well-being?
A) Although consumers may pay a price greater than marginal cost for a product, the
product is produced at the minimum average total cost.
B) Although consumers may pay a price greater than marginal cost and the product is
not produced at minimum average total cost, they benefit from being able to buy a
differentiated product more closely suited to their tastes.
C) Consumers pay a price equal to the marginal cost of producing a product, even
though it is not produced at the minimum average total cost.
D) Consumers are better off choosing from a variety of differentiated products, even
though product differentiation causes barriers that restrict entry into monopolistically
competitive markets.
Figure 4-4
The figure above represents the market for iced tea. Assume that this is a competitive
market. At a price of $1
A) the marginal cost of iced tea is greater than the marginal benefit; therefore, output is
inefficiently low.
B) producers should raise the price to $3 in order to sell the quantity demanded of
30,000.
C) the marginal benefit of iced tea is greater than the marginal cost; therefore, output is
inefficiently low.
D) the marginal benefit of iced tea is greater than the marginal cost; therefore, output is
inefficiently high.
Table 2-5 Production choices for Nadia’s Neckware
Assume Nadia’s Neckware only produces ascots and bowties. A combination of 16
ascots and 6 bowties would appear
A) along Nadia’s production
possibilities frontier.
B) inside Nadia’s production possibilities frontier.
C) outside Nadia’s production possibilities frontier.
D) at the horizontal intercept of Nadia’s production possibilities frontier.