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.
By the 21st century few people purchased printed encyclopedias. Which of the
following competitive forces best explains this?
A) competition from substitutes
B) the bargaining power of buyers
C) the bargaining power of suppliers
D) the threat from potential entrants
Figure 12-7 Figure
12-7 illustrates the cost curves of a perfectly competitive firm.
If the market price is P1,
A) the firm will experience a loss and raise its price to P2. The firm will then break
even.
B) the firm will break even by producing a quantity of Q2.
C) the firm will experience a loss since price is less than ATC.
D) the firm may make a profit if it can increase the demand for its product.
A consequence of the quota that has been imposed on the importation of sugar into the
United States is
A) consumers are protected from eating unsafe products made from cheap imported
sugar.
B) competition in the U.S. sugar market is reduced.
C) the cost of producing cereal, chocolate and candy products in the United States is
reduced.
D) the market for sugar in the United States has become monopolistically competitive
rather than oligopolistic.
Social Security
A) has not been successful in reducing poverty among elderly Americans.
B) is a system whereby current retirees are paid from taxes collected from current
workers.
C) has a greater number of workers per retiree today as compared to when it started.
D) currently pays retirees benefits equal to what they paid into the system.
The income effect of a price change results in a
A) shift of the demand curve when income changes.
B) movement along the demand curve due to a change in relative prices.
C) shift of the demand curve due to a change in purchasing power brought about by the
price change.
D) movement along the demand curve due to a change in purchasing power brought
about by the price change.
When the government runs a deficit, which of the following is true?
A) T > TR – G
B) G > T + TR
C) G > TR – T
D) T < G + TR
The curve showing the short-run relationship between the ________ and the ________
is called the Phillips curve.
A) nominal interest rate; real interest rate
B) unemployment rate; inflation rate
C) price level; real GDP
D) exchange rate; real interest rate
The advice to “keep searching, there are plenty of jobs around here for which you are
qualified,” would be most appropriate for which of the following types of
unemployment?
A) frictional unemployment
B) structural unemployment
C) cyclical unemployment
D) seasonal unemployment
Figure 3-6
The figure above represents the market for canvas tote bags. Compare the conditions in
the market when the price is $50 and when the price is $35. Which of the following
describes how the market Differs at these prices?
A) At each price there is a surplus; the surplus is greater at $35 than at $50.
B) The Difference between quantity supplied and quantity demanded is greater at $50
than at $35.
C) At each price there is a surplus; firms will lower the equilibrium price in order to
eliminate the surplus.
D) At each price the supply of tote bags exceeds that demand for tote bags.
If Southwest Airlines borrows $20 million from a bank to finance the renovation of
their corporate offices, this is an example of
A) a bond market transaction.
B) indirect finance.
C) a stock market transaction.
D) direct finance.