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Economics MCQs and Short Questions Exam

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Question;Question 1An industry is comprised of 8 firms, each with an equal market share. What is the 4-firmconcentration ratio of this industry?0.3.0.4.0.5.0.8.Question 2The concentration and Herfindahl indices computed by the U.S. Bureau of Census mustbe interpreted with caution becausethey overstate the actual level of concentration in markets served by foreign firms.they understate the degree of concentration in local markets, such the gasolinemarket.none of the statements associated with this question are correct.all of the statements associated with this question are correct.Question 3A local telephone company charges $.10/min. based on a $.06/min. marginal cost ofoperation. What is the Lerner Index?0.2.0.25.0.40.0.50.Question 4Which of the following integration types aims at reducing transaction costs?Vertical integration.Horizontal integration.Cointegration.Conglomerate integration.Question 5Which of the following industry structures would you expect to have the highest Lernerindex score?Perfect competition.Monopoly.Monopolistic competition.Oligopoly.Question 6The Dansby-Willig Index measures the potential for a change in social welfare byexamining the affect of changes in industryproduction cost.output.revenue.profit.Question 7The tobacco industry has a Lerner index of 0.48. Based on this information, compute theoptimal markup factor.0.482.081.92there is not sufficient information to determine the optimal markup factor.Question 8Suppose that the demand in a particular industry is given by Qd = 100 - 2P. When themarket price in the industry is $10 per unit, total quantity demanded in the industry is_________. Furthermore, assume that each of the four largest firms in the industry sell 10units. Based on this information, the 4-firm concentration ratio isdemand is 80 units and the 4-firm concentration ratio is 0.50.demand is 45 units and the 4-firm concentration ratio is 0.75.demand is 80 units and the 4-firm concentration ratio is 0.75.demand is 45 units and the 4-firm concentration ratio is 0.5.Question 9Suppose the market for good X has a four-firm concentration ratio of 0.40. Havingworked for the four largest firms in the industry, you know the sales for these four firmsare given by $100,000, $125,000, $150,000 and $175,000. Based on this information weknow that sales for the remaining firms in the industry are$825.000.$550,000.$250,000.$137,500.Question 10The industry elasticity of demand for good Y is -2, while the elasticity of demand for anindividual manufacturer's of good Y is -8. Then Rothschild index is4, indicating there is significant monopoly power in this industry.1/4, indicating there is little monopoly power in this industry.4, indicating there is little monopoly power in this industry.none of the statements associated with this question are correct.Question 11Producer and consumer surpluses are measures ofindustry performance.market structure.firm conduct.none of the statements associated with this question are correct.Question 12Which of the following is NOT considered a measure of firm conduct?Lerner index of pricing behavior.Research and development measures.Advertising measures.Dansby-Willig index.Question 13Differentiated goods are a feature of a:Answerperfectly competitive market.monopolistically competitive market.monopolistic market.all of the above are corect.Question 14In the long-run, monopolistically competitive firms charge pricesequal to marginal cost.below marginal cost.equal to the minimum of average total cost.above the minimum of average total cost.Question 15In a monopoly where the marginal revenue and price are, respectively, given by $3 and$4, the price elasticity of demand is-1.-4-3/4-4/3.Question 16The external marginal cost of producing coal is MCexternal = 6Q while the internal marginalcost is MCinternal = 4Q. The inverse demand for coal is given by P = 120 - 4Q. How muchoutput would a competitive industry produce?10.20.15.8.Question 17The external marginal cost of producing coal is MCexternal = 6Q while the internal marginalcost is MCinternal = 4Q. The inverse demand for coal is given by P = 120 - 4Q. How muchoutput would a monopoly produce?10.20.15.It cannot be determined because of incomplete information.Question 18The Clean Air Act aids new entrants in a regulated industry when demand increases andprovides an incentive for existing firms to invest in new anti - pollution technology by:restricting pollution permits from being traded.allowing pollution permits to be traded within the industry only.allowing pollution permits to be traded across industries only.allowing pollution permits to be traded within the industry and allowing pollutionpermits to be traded across industries.Question 19Non - rivalry, as it relates to public goods, means thatconsumer rivalry does not exist in this market.producer rivalry does not exist in this market.consumer - producer rivalry does not exist in this market.government - producer rivalry does not exist in this market.Question 20A lump-sum tariff isa fixed fee that an importing firm must pay the domestic government in order to havethe legal right to sell the product in the domestic market.the fee an importing firm must pay to the domestic government on each unit it bringsinto the domestic market.a restriction limiting the quantity of imported goods that can legally enter a domesticmarket.none of the statements associated with this question are correct.Question 21XL Corp has estimated its demand and cost functions to be as follows: P = 60 0.2Q4Q + 1.2Q2a. Calculate the profit-maximizing price and outputC = 200 +b.c.Calculate the size of the profit.If fixed costs rise by $200 how would this affect the firm's situation?Question 22Why are anti-trust authorities less likely to challenge vertical mergers than horizontalmergers?Question 23Beta Industries manufactures floppy disks that consumers perceive as identical to thoseproduced by numerous other manufacturers. Recently, Beta hired an econometrician toestimate its cost function for producing boxes of one dozen floppy disks. The estimatedcost function is C(Q)=40+2Q2.a. What are the firm's fixed costs?b. What is the firm's marginal cost?Now suppose other firms in the market sell the product at a price of $16.c. How much should this firm charge for the product?d. What is the optimal level of output to maximize profits?e. How much profit will be earned?f. In the long run, should this firm continue to operate? Why?

 

Paper#56110 | Written in 18-Jul-2015

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