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The key characteristics of a monopolistically competitive market structure include
A) few sellers.
B) sellers selling similar but differentiated products.
C) high barriers to entry.
D) sellers acting to maximize revenue.
Table 4-4
Table 4-4 shows the demand and supply schedules for the labor market in the city of
Pixley.
Refer to Table 4-4. Suppose that the quantity of labor supplied decreases by 80,000 at
each wage level. What are the new free market equilibrium hourly wage and the new
equilibrium quantity of labor?
A) W = $8.50; Q = 550,000
B) W = $12.50; Q = 550,000
C) W = $8.50; Q = 630,000
D) W = $11.50; Q = 610,000
Which of the following is a disadvantage of trademarking a firm's product?
A) A trademark differentiates a firm's product.
B) A trademark conveys information about the product to the public.
C) A trademark may become so widely used to denote a particular type of product that
the trademark may no longer be a legally protected brand name.
D) A trademark does not affect demand for the firm's product.
Oligopoly differs from perfect competition and monopolistic competition in that
A) barriers to entry are lower in oligopoly industries than they are in perfectly
competitive and monopolistically competitive industries.
B) demand and marginal revenue curves are more useful for analyzing oligopoly than
they are for analyzing perfect competition and monopolistic competition.
C) because oligopoly firms often react when other firms in their industry change their
prices, it is difficult to know what the oligopolist's demand curve looks like.
D) the concentration ratios of oligopoly industries are lower than they are for perfectly
competitive and monopolistically competitive industries.
If a corporation goes bankrupt, bondholders have ________ on the firm's assets.
A) no claim
B) third claim, after the IRS and stockholders,
C) second claim, after stockholders,
D) first claim
What takes place in the indirect finance market?
A) Part ownership of corporations is sold in the form of stocks.
B) Corporate and government bonds are sold to savers.
C) Deposits of savers are accepted and loans made to borrowers.
D) Government purchases of buildings and equipment are sold to the highest bidder.
When a perfectly competitive firm finds that its market price is below its minimum
average variable cost, it will sell
A) the output where marginal revenue equals marginal cost.
B) any positive output the entrepreneur decides upon because all of it can be sold.
C) nothing at all; the firm shuts down.
D) the output where average total cost equals price.
The following equations represent the demand and supply for bottles of nail polish.
QD = 25 - P
QS = -15 + 3P
What is the equilibrium price (P) and quantity (Q - in thousands) of bottles of nail
polish?
A) P = $5; Q = 20 thousand
B) P = $15; Q = 30 thousand
C) P = $20; Q = 5 thousand
D) P = $10; Q = 15 thousand
Overuse of a common resource may be avoided by all of the following methods except
A) charging for the use of a common resource.
B) issuing tradable permits for the use of a common resource.
C) government taking over ownership of all private common resources.
D) setting quotas or legal limits on the quantity of the common resource consumed.
The government proposes a tax on imported champagne. Buyers will bear the entire
burden of the tax if the
A) supply curve for imported champagne is vertical.
B) demand curve for imported champagne is vertical.
C) demand curve for imported champagne is horizontal.
D) demand curve is downward sloping and the supply curve is upward sloping.
Academic book publishers hire editors, designers, and production and marketing
managers who help prepare books for publication. Because these employees work on
several books simultaneously, the number of people the company hires will not go up
and down with the quantity of books the company publishes during any particular year.
The salaries and benefits of people in these job categories will be included in
A) fixed cost and marginal cost but not variable cost.
B) fixed cost but not variable cost and total cost.
C) marginal cost and total cost but not fixed cost.
D) fixed cost and total cost but not variable cost.
Along an upward-sloping labor supply curve, as the wage rate increases, the
opportunity cost of leisure ________, causing individuals to supply a ________
quantity of labor.
A) increases; greater
B) increases; lower
C) decreases; greater
D) remains constant; constant
The ABC Company manufactures routers that are used to provide high-speed Internet
service. ABC sells an average of 1,000 routers each month, but to exhaust economies of
scale in its industry ABC would have to sell 3,000 routers each month. Therefore,
A) ABC is experiencing diseconomies of scale.
B) ABC is experiencing diminishing returns.
C) to reach minimum efficient scale ABC would have to sell at least 3,000 routers each
month.
D) ABC will soon go out of business.
Figure 11-6
Figure 11-6 contains information about the short run cost structure of a firm.
Refer to Figure 11-6. In the figure above which letter represents the average fixed cost
curve?
A) A
B) B
C) C
D) D
Which one of the following about a monopoly is false?
A) A monopoly could make profits in the long run.
B) A monopoly could break even in the long run.
C) A monopoly must have some kind of government privilege or government imposed
barrier to maintain its monopoly.
D) A monopoly status could be temporary.
Table 11-8
Elegant Settings manufactures stainless steel cutlery. Table 11-8 shows the company's
cost data.
Refer to Table 11-8. What is the minimum efficient scale of production?
A) 100 units
B) 200 units
C) 300 units
D) 400 units
Figure 9-2
Suppose the U.S. government imposes a $0.40 per pound tariff on rice imports. Figure
9-2 shows the impact of this tariff.
Refer to Figure 9-2. With the tariff in place, the United States produces
A) 9 million pounds of rice.
B) 15 million pounds of rice.
C) 31 million pounds of rice.
D) 42 million pounds of rice.
Figure 9-1
Figure 9-1 shows the U.S. demand and supply for leather footwear.
Refer to Figure 9-1. Suppose the government allows imports of leather footwear into
the United States. What will be the quantity demanded?
A) 5 units
B) 10units
C) 15 units
D) 20 units
After Suzie, owner of Suzie's Sweet Shop, hires her 8th worker the average product of
labor declines. Which of the following statements must be true?
A) The marginal product of the 8th worker is negative.
B) The marginal product of the 8th worker is less than the average product of labor
before the 8th worker was hired.
C) Suzie's profits would be greater if she did not hire the 8th worker.
D) The average product of labor is negative.
Figure 12-1
Refer to Figure 12-1. If the firm is producing 700 units, what is the amount of its profit
or loss?
A) loss of $280
B) loss equivalent to the area A
C) profit equivalent to the area A
D) There is insufficient information to answer the question.
Which of the following is an example of implicit collusion?
A) product differentiation
B) a retaliation strategy
C) a second-price auction
D) price leadership
Who controls a partnership?
A) stockholders
B) bondholders
C) the owners
D) all of these
Buffalo Wild Wings CEO Sally Smith decided to spend more than $200 million on
restaurant renovations in an attempt to attract more lunch customers and more families.
Like CEOs of other monopolistically competitive firms, Smith knew that without
innovating,
A) her firm had no chance of remaining in business.
B) her firm's profits would eventually be competed away by other firms.
C) her firm would eventually earn an accounting profit of zero.
D) her firm would become perfectly competitive.
Economists often analyze the interaction of individuals and firms in markets.
Economists also examine the actions of individuals and firms as they attempt to use
government to make themselves better off at the expense of others, a process that is
referred to as
A) rent seeking.
B) logrolling.
C) government failure.
D) the public choice initiative.
Households ________ factors of production and ________ goods and services.
A) supply; demand
B) supply; supply
C) demand; supply
D) demand; demand
Sparkle, one of many firms in the market for toothpaste, is in long-run equilibrium.
Sparkle has a small market share and has been in business for a long time.
a. Identify the market structure in which Sparkle operates. Explain your answer.
b. What is Sparkle's profit or loss? Explain your answer. If you cannot determine the
profit or loss, explain what information is missing.
c. Draw a diagram showing Sparkle's demand curve, marginal revenue curve, average
total cost curve, and marginal cost curve. Label your diagram.
A decrease in the demand for soft drinks due to changes in consumer tastes,
accompanied by an increase in the supply of soft drinks as a result of reductions in
input prices, will result in
A) a decrease in the equilibrium quantity of soft drinks and no change in the
equilibrium price.
B) a decrease in the equilibrium price of soft drinks and no change in the equilibrium
quantity.
C) a decrease in the equilibrium price of soft drinks; the equilibrium quantity may
increase or decrease.
D) an increase in the equilibrium quantity of soft drinks; the equilibrium price may
increase or decrease.
Which of the following would explain why economic profit might be less than
accounting profit?
A) A firm's net income is less than its accounting profit.
B) A firm has only explicit costs.
C) A firm's net income is greater than its accounting profit.
D) A firm has implicit costs as well as explicit costs.
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
Which of the following describes a difference between the marginal product of labor
and the marginal revenue product of labor?
A) The marginal product of labor declines as each additional worker is hired because of
the law of diminishing returns. The marginal revenue product of labor declines as each
additional worker is hired because of diseconomies of scale.
B) The marginal product of labor declines as each additional worker is hired because of
the law of diminishing returns. The marginal revenue product increases as each
additional worker is hired because of increases in the productivity of labor.
C) The marginal product of labor is inelastic. The marginal revenue product of labor is
elastic.
D) The marginal product of labor measures the change in output as additional workers
are hired. The marginal revenue product measures the change in revenue as additional
workers are hired.
Which of the following statements is false?
A) Marginal cost will equal average total cost when marginal cost is at its lowest point.
B) When marginal cost is less than average total cost, average total cost will fall.
C) When marginal cost is greater than average total cost, average total cost will rise.
D) Marginal cost will equal average total cost when average total cost is at its lowest
point.
How are the fundamental economic decisions determined in North Korea?
A) Individuals, firms, and the government interact in a market to make these economic
decisions.
B) These decisions are made by the country's elders who have had much experience in
answering these questions.
C) The government decides because North Korea is a centrally planned economy.
D) The United Nations decides because North Korea is a developing economy.
