An incentive-compatible revelation mechanism is
a. self-enforcing
b. always multi-period
c. too complicated to influence decisions
d. prevalent in vertically integrated businesses
e. not adopted by franchise businesses
The demand curve facing the firm in ____ is the same as the industry demand curve.
a. pure competition
b. monopolistic competition
c. oligopoly
d. pure monopoly
e. none of the above
In pure competition:
a. the optimal price-output solution occurs at the point where marginal revenue is equal
to price
b. a firm’s demand curve is represented by a horizontal line
c. a firm is a price-taker since the products of every producer are perfect substitutes for
the products of every other producer
d. a and b only
e. a, b, and c
The optimal currency area involves a trade-off of reducing transaction costs but the
inability to use changes in exchange rates to help ailing regions. If the US, Canada, and
Mexico had one single currency (the Peso-Dollar) we would tend to see all of the
following EXCEPT:
a. Even more intraregional trade of goods across the three countries.
b. Lower transaction costs of trading within North America.
c. A greater difficulty in helping Mexico as you can no longer deflate the Mexican peso.
d. Less migration of workers across the three countries.
e. An elimination of correlated macroeconomic shocks across the countries.
In production and cost analysis, the short run is the period of time in which one (or
more) of the resources employed in the production process is fixed or incapable of
being varied.
a. true
b. false
Which of the following should not be counted in a cost-benefit analysis?
a. direct benefits and costs
b. real secondary benefits
c. technological secondary costs
d. pecuniary benefits
e. intangibles
An industry can be characterized by the following production function: Q =
2.5L.60C.40(a) What is the algebraic expression for the marginal productivity of labor?
(b) What is the algebraic expression for the average productivity of labor?
(c) How would you characterize the returns-to-scale in the industry?
The primary purpose of the Cobb-Douglas power function is to:
a. allow one to make estimates of cost-output relationships
b. allow one to make predictions about a resulting increase in output for a given
increase in the inputs
c. aid one in gaining accurate empirical values for economic variables
d. calculate a short-run linear total cost function
e. a and b
One shortcoming of the use of ____ in demand analysis is that the participants are
generally aware that their actions are being observed and hence they may seek to act in
a manner somewhat different than normal.
a. market experiments
b. consumer clinics
c. statistical (econometric) methods
d. a and b
e. none of the above
An inverse intensity customer sorting rule is one in which
a. customers with high willingness to pay secure the discounted goods
b. customers are rationed randomly between the discounted and full price goods
c. no customers purchase below their willingness to pay
d. customers with the lowest willingness to pay secure the discounted goods
e. brand loyalty allows the incumbent to retain its regular customers
In the linear breakeven model, the breakeven sales volume (in dollars) is equal to fixed
costs divided by:
a. unit selling price less unit variable cost
b. contribution margin per unit
c. one minus the variable cost ratio
d. a and b only
e. a, b, and c