Chapter 42 – Walmart: Always Low Prices (and Low Wages) – Always
Chapter 42 Walmart: Always Low Prices (and Low Wages) – Always
Multiple Choice
1. Walmart accounts for ____ of US GDP.
A) less than 1%
B) 2%
C) 10%
D) 15%
2. In very small towns where there is only one grocery store, the market form is
A) monopoly.
B) oligopoly.
C) monopolistic competition.
D) perfect competition.
3. If you got a new job and were moved to Dale Indiana (population 1,500) you would expect to
find two grocery stores, the market form is
A) monopoly.
B) oligopoly.
C) monopolistic competition.
D) perfect competition.
4. If you got a new job and were moved to Terre Haute Indiana (population 60,000) you would
expect to find ten grocery stores (two Super Walmarts, three Krogers, and three IGA
affiliates and two independent grocery stores), the market form is
A) monopoly.
B) oligopoly.
C) monopolistic competition.
D) perfect competition.
Chapter 42 – Walmart: Always Low Prices (and Low Wages) – Always
5. If you got a new job and were moved to Indianapolis Indiana (population 800,000) you
would expect to find more than 100 grocery stores (several Super Walmarts and Super
Targets, several Krogers, Marshes and dozens of IGA affiliates and dozens more independent
grocery stores), the market form is
A) monopoly.
B) oligopoly.
C) monopolistic competition.
D) perfect competition.
6. In small towns where there are two grocery stores, the market form is
A) monopoly.
B) oligopoly.
C) monopolistic competition.
D) perfect competition.
7. In most larger cities where there are several grocery stores, the market form is
A) monopoly.
B) oligopoly.
C) monopolistic competition.
D) perfect competition.
8. In the locations where Walmart Supercenters are part of the grocery market, the market form
is
A) monopoly.
B) oligopoly.
C) monopolistic competition.
D) perfect competition.
9. Walmart entered the grocery business in the 1990s, by 2005 it was the _____ grocery chain
in the U.S.
A) largest
B) second largest
C) third largest
D) fourth largest
Chapter 42 – Walmart: Always Low Prices (and Low Wages) – Always
10. Walmart has an impact on workers, even in states where they have few stores, because
A) their pricing policies compel firms to outsource production to low-cost foreign locations.
B) their web-stores are dominant.
C) they rarely buy from firms in states in which they have stores.
D) they buy American only.
11. Theoretically, a firm can enter an industry with low prices, drive out their competition and
take advantage of their newly achieved monopoly power to raise prices, but the evidence is
that Walmart has
A) tried to do this and failed for economic reasons.
B) tried to do this and failed for legal reasons.
C) succeeded at doing this.
D) never tried to do this.
12. Walmart’s‘s prices are _________ national grocery averages
A) above.
B) 50% lower than.
C) 15-22% lower than.
D) 3-7% lower than.
13. The notion that there are no consumers who lose when a Walmart enters a city
A) is right, because consumers can always shop elsewhere.
B) is right because everyone prefers Walmart.
C) is wrong because some consumers shop elsewhere.
D) is wrong because some consumers prefer shopping at stores that ultimately close.
14. When Walmart enters a city, the net effect upon consumers is that they
A) lose about as much as they win.
B) win.
C) lose.
D) never knew what hit them.
Chapter 42 – Walmart: Always Low Prices (and Low Wages) – Always
15. Economists measure the degree to which consumers lose when Walmart comes to a city by
looking that their willingness to pay more at others stores. This measure is called
A) surveyed preferences.
B) understated preferences.
C) revealed preferences.
D) unrequited preferences.
16. Economists measure the degree to which consumers win when Walmart comes to a city by
looking at changes to
A) consumer spending.
B) consumer surplus.
C) elasticity of demand.
D) producer surplus.
17. The typical Walmart Supercenter sells between _____ worth of goods per year
A) $1 million and $2 million
B) $200 million and $250 million
C) $100 million and $150 million
D) $1 billion and $2 billion
18. The typical annual gain to consumers who switch to Walmart is between ______ per store.
A) $15 million and $33 million
B) $100 million and $150 million
C) $31 million and $40 million
D) $250 million and $300 million
19. Members of IGA are advised by that organization to
A) “out Walmart” Walmart by lowering prices.
B) hire less qualified people to keep costs down.
C) sell exactly the same goods Walmart does.
D) provide a level of service, community involvement, and types of goods Walmart does
not.
Chapter 42 – Walmart: Always Low Prices (and Low Wages) – Always
20. Independent grocery stores are best-advised to
A) “out Walmart” Walmart by lowering prices.
B) hire less qualified people to keep costs down.
C) sell exactly the same goods Walmart does.
D) provide a level of service, community involvement, and types of goods Walmart does
not.
21. Nationally, the place you are most likely to find a butcher creating special cuts for customers
is
A) a Walmart or other Superstore.
B) a Sams or CostCo warehouse club.
C) a national chain grocery store.
D) an independent or IGA affiliated grocery stor.e
22. Nationally, the place you are most likely to find a community leader is among the
owners/managers of
A) a Walmart or other Superstore.
B) a Sams or CostCo warehouse club.
C) a national chain grocery store.
D) an independent or IGA affiliated grocery store.
23. Nationally, the place you are most likely to find sponsors for youth athletic teams are among
the
A) Walmarts or other Superstores.
B) Sams or CostCo warehouse clubs.
C) national chain grocery stores.
D) independent or IGA affiliated grocery stores.
24. Workers at Walmart are paid ______ their unionized counterparts
A) much more than
B) more than
C) the same
D) less than
Chapter 42 – Walmart: Always Low Prices (and Low Wages) – Always
25. The pay differential between Walmart and unionized grocery stores is between
A) $1 and $2 per hour.
B) $5 and $10 per hour.
C) $4 and $5 per hour.
D) $10 and 15 per hour.
26. Walmart hires approximately _____ employees per Supercenter store
A) 100
B) 200
C) 300
D) 450
27. When a Walmart hires people for a new store, economists suggest that
A) more workers are actually laid off at other establishments.
B) at least some workers are laid off at other establishments.
C) the same number of workers are laid off at other establishments
D) even more workers are added at other establishments.
28. Walmart tends to ______ sales tax collections in the community
A) double
B) increase
C) have little effect on
D) decrease
29. When a new Walmart comes to a city, ________ percent of sales at the Walmart would not
have occurred in the city anyway.
A) one to two
B) five to ten
C) twenty to thirty
D) forty to fifty
Chapter 42 – Walmart: Always Low Prices (and Low Wages) – Always
30. When a new Walmart comes to a city, ________ percent of sales at the Walmart would have
occurred in the city anyway.
A) ninety to ninety-five
B) seventy to eighty
C) fifty to sixty
D) twenty to thirty
31. When a new Walmart locates in an area, other retail stores and restaurants often locate
nearby, exhibiting what economists call Walmart’s ________ factor
A) “pull”
B) “push”
C) exponential
D) catalogue sales
32. Which of the following is an example of Walmart’s “pull” factor?
A) a new Starbucks locates near the Walmart.
B) an IGA store tries to go head-to-head with Walmart.
C) a Super K-Mart tries to go head-to-head with Walmart.
D) a new Starbucks locates across town.
33. When a new Walmart locates in an area, other businesses in the area are
A) all helped.
B) all hurt.
C) all unaffected.
D) both helped and hurt.
34. When a new Walmart locates in an area, a business likely to be helped is a
A) nearby gas station.
B) distant gas station.
C) nearby grocery store .
D) distant hospital.
Chapter 42 – Walmart: Always Low Prices (and Low Wages) – Always
35. It is noted by some sociologists that a new Walmart store in town will
A) raise prices.
B) pay exorbitant wages.
C) provide extensive same-sex benefits.
D) negatively impact community leadership.
36. Walmart grocery sales are _______ times the sales of the next-largest grocery chain
(Kroger).
A) more than twenty
B) exactly ten
C) between three and four
D) one and one-half
37. Walmart’s share of total grocery sales has grown to be approximately
A) 60%.
B) 30%.
C) 10%.
D) 5%.
38. Walmart’s share of all grocery sales made by the ten largest grocery chains is approximately
A) 42%.
B) 11%.
C) 4%.
D) 2%.
39. Walmart’s “pull–factor” can be beneficial to a community by encouraging
A) labor union activists to move permanently into the area.
B) dissatisfied employees to apply for work at other local “Mom and Pop” retailers.
C) suppliers to offer their employees higher wages and more attractive fringe benefits.
D) other “big box” retailers to locate nearby.
Chapter 42 – Walmart: Always Low Prices (and Low Wages) – Always
40. One non-academic source has suggested that Walmart’s efficiencies actually tend to
A) increase total employment locally.
B) be offset by its inefficiencies, so that total employment is unchanged locally.
C) reduce total employment locally.
D) be matched by price increases to its customers, explaining the company’s spectacular.
profitability
41. 33 The literature on job displacements suggests that when a new Wal Mart opens with 450
workers,
A) between 75 percent and 133 percent of that number will be displaced elsewhere in the
community.
B) between 45 percent and 65 percent of that number will be displaced elsewhere in the
community.
C) between 25 percent and 35 percent of that number will be displaced elsewhere in the
community.
D) between 5 percent and 15 percent of that number will be displaced elsewhere in the
community.
42. A consumer who pays extra to shop at an IGA grocery store and avoid Walmart exhibits a
A) compulsive behavior.
B) “revealed preference”.
C) “pathologically irrational preference”.
D) systematically inefficient decision-making ability.