Which of the following is an example of a way in which a firm in oligopoly can escape
the prisoner’s dilemma?
A) producing more of its product
B) advertising that it will match its rival’s price
C) reneging on a previous tacit agreement with rival firms to charge identical high
prices
D) ignoring the pricing decisions of the other firms
Figure 29-1
The appreciation of the dollar is represented as a movement from
A) B to A.
B) D to C.
C) C to B.
D) C to A.
An isoquant shows
A) the combinations of two goods that yield the same total satisfaction.
B) the combinations of two inputs that yield the same total product.
C) the combinations of two inputs that cost the same total quantity of money.
D) the combinations of two goods that cost the same amount of money.
Some economists who use the public choice model to explain the ways government
intervenes in the economy believe that regulatory capture results when an agency or
commission is given authority over a particular industry or product. Which of the
following is the best example of regulatory capture?
A) The Food and Drug Administration (FDA) has increased the time and expense
pharmaceutical firms incur to receive approval to market a new drug.
B) A federal government agency hires more employees than it requires to regulate an
industry because it does not seek to minimize costs or maximize the agency’s profits.
C) The head of an agency is required to testify before Congress because Congress
controls the size of the agency’s budget. Congress “captures” the agency because of its
budget authority.
D) Firms that were regulated by the Interstate Commerce Commission (ICC) attempted
for many years to influence the ICC’s actions.
________ describes the relationship between consumption spending and disposable
income.
A) Household wealth
B) The liquidity trap
C) The consumption function
D) The paradox of thrift
A dominant strategy
A) is one that is the best for a firm, no matter what strategies other firms use.
B) is one that a firm is forced into following by government policy.
C) involves colluding with rivals to maximize joint profits.
D) involves deciding what to do after all rivals have chosen their own strategies.
The Google search engine has a market share of ________ in the United States and
________ in Europe.
A) 90 percent; 25 percent
B) 50 percent; 50 percent
C) 70 percent; 90 percent
D) 45 percent; 15 percent
When Sophie, a French citizen, purchases a Dell computer in Paris that was produced in
Texas, the purchase is
A) both a U.S. and an French import.
B) a U.S. import and an French export.
C) a U.S. export and an French import.
D) neither an export nor an import for either country.
Which of the following is not a true statement about the impact of World War II on the
U.S. economy?
A) U.S. GDP increased dramatically from 1941 to 1945.
B) The war time years were a period of prosperity for U.S. consumers.
C) More than 40% of the labor force was in the military or producing war goods.
D) Increased production of tanks, ships, planes, and munitions accounted for most of
the increase in GDP.
An example of a factor of production is
A) a bottle of wine produced by a vineyard.
B) a vintner hired by a vineyard.
C) a loan granted to a vineyard.
D) the wine exported by a vineyard.
If a person takes $100 from his/her piggy bank at home and puts it in his/her savings
account, then M1 will ________ and M2 will ________.
A) increase; increase
B) not change; increase
C) decrease; increase
D) decrease; not change
E) increase; decrease
If a straight line passes through the point x = 14 and y = 3 and also through the point x =
4 and y = 10, the slope of this line is
A) negative 11 divided by 6.
B) seven tenths.
C) negative seven tenths.
D) 6 divided by 11.