1) In this market, equilibrium price and
quantity, respectively, are
a.$10 and 30 units.
b.$10 and 50 units.
c.$10 and 70 units.
d.$4 and 50 units.
2) Buyers and sellers who have no influence on market price are referred to as
a.market pawns.
b.monopolists.
c.price takers.
d.price setters.
3) The LookGood BePopular (LGBP) Clothing Company embarked on a new
advertising campaign in which a group of young beautiful people are having fun eating
out at a restaurant wearing the company’s clothes. Critics of advertising argue that this
advertisement
a.causes demand for LGBP Clothing to be less elastic.
b.is more effective than other forms of advertisement because of its content.
c.will cause the market to be more competitive.
d.Both a and b are correct.
4) It is likely that efficiency wages will decrease employee effort.
a.True
b.False
5) Figure 14-2
Suppose a firm operating in a competitive market has the following cost curves:
If the market price is Pc, in the short run the firm will earn
a.positive economic profits.
b.negative economic profits but will try to remain open.
c.negative economic profits and will shut down.
d.zero economic profits.
6) In game theory, a Nash equilibrium is
a.an outcome in which each player is doing his best given the strategies chosen by the
other players.
b.an outcome in which no player wishes to change her chosen strategy given the
strategies chosen by the other players.
c.the outcome that occurs when all players have a dominant strategy.
d.All of the above are correct.
7) European countries tend to rely on which type of tax more so than the United States
does?
a.an income tax
b.a lump-sum tax
c.a value-added tax
d.a corrective tax
8) Suppose that the labor market for life guards is initially in equilibrium. Then
swimming pool owners adopt a new labor-saving technology that uses computers to
monitor the locations of swimmers in the pool. What happens to the equilibrium wage
and quantity of life guards?
a.Both the equilibrium wage and quantity increase.
b.Both the equilibrium wage and quantity decrease.
c.The equilibrium wage increases, and the equilibrium quantity decreases.
d.The equilibrium wage decreases, and the equilibrium quantity increases.
9) Which of the following statements is correct? Monopolies are socially inefficient
because they
(i)charge a price above marginal cost.
(ii)produce too little output.
(iii)earn profits at the expense of consumers.
(iv)maximize the market’s total surplus.
a.(iii) only
b.(iii) and (iv) only
c.(i) and (ii) only
d.(i), (ii), (iii), and (iv)
10) Acme Computer Co. sells computers to retail stores for $400. If Acme requires the
retailers to charge customers $500 for the computers, then it is engaging in
a.resale price maintenance.
b.predatory pricing.
c.tying.
d.monopolistic competition.
11) Screening occurs when
a.an informed party acts to reveal his private information.
b.an informed party acts to conceal his private information.
c.an uninformed party acts to induce the informed party to reveal private information.
d.an uninformed party acts on its limited information.