Question;Chapter;12 Quiz;1.;What distinguishes monopolistic competition;from perfect competition?;A.;The number of firms;B.;The ease of entry;and exit;C.;The difficulty new;firms have in entering monopolistic competition as compared with perfect;competition.;D.;In monopolistic competition each firm sells a slightly;different or unique product, that is not the case in perfect competition.;E.;In perfect;competition each firm sells a slightly different or unique product, that is;not the case in monopolistic competition.;2.;Which of the following statements is true?;A.;A monopoly faces;significant threats of entry into the market if economic profits exist.;B.;Monopolistically;competitive firms will never earn economic profits in the short run.;C.;In monopolistically competitive markets, economic;profits will eventually lead to the entry of new firms.;D.;There are high;barriers to entry in perfect competition.;E.;There are high;barriers to entry in monopolistic competition.;3.;In the spring of 2003, Coke introduced a new;drink called Vanilla Coke. In the summer of 2003, Pepsi responded by;marketing its own brand of Pepsi Vanilla. Such moves by firms are known as;A.;long-run equilibrium;in perfect competition.;B.;product differentiation.;C.;price;discrimination.;D.;profit;determination.;E.;extremely stupid to;most informed observers.;4.;Compared with a perfectly competitive;industry, a monopolistically competitive firm;A.;produces a larger;quantity but at a lower price.;B.;produces a larger;quantity at a higher price.;C.;produces the same;quantity, but at a higher price.;D.;produces exactly the;same quantity at exactly the same price.;E.;produces a smaller quantity at a higher price.;5.;Because consumers often possess incomplete;information in markets;A.;gaining information;about products itself may be costly.;B.;brand names provide;valuable information to consumers about the quality of products.;C.;firms often provide;information through marketing.;D.;guarantees can help;to increase consumer confidence in a product.;E.;All of the above;6.;Compared to goods, services;A.;are more tangible.;B.;can usually be;stored for future use.;C.;can be physically;possessed.;D.;are intangible.;E.;can be bought and;sold in markets.;7.;Consumers are willing to pay a higher price;for a brand-name product as opposed to a generic product because;A.;a brand name provides a signal about a product?s;quality and reliability.;B.;they are willing to;pay more for the privilege of watching the firm?s commercials.;C.;a brand-name product;itself is always of higher quality.;D.;consumers maximize;utility by purchasing the most expensive products.;E.;consumers are;irrational.;8.;What characteristic is unique to oligopolistic;firms?;A.;Barriers to entry in;the market;B.;Interdependence of firms;C.;Homogeneous products;D.;Economic profits can;exist in the long run.;E.;Economic profits can;exist in the short run.;9.;The kinked demand curve of an oligopoly firm;implies that;A.;rival firms will not;match a price cut but will follow a price increase.;B.;prices are fairly rigid.;C.;the firms will;collude in establishing price and output.;D.;rival firms will;match neither a price cut nor a price increase.;E.;a firm will not;consider rivals? reactions in setting price and output.;10.;A price-leadership oligopoly is one in which;A.;a dominant firm in the market sets the price and;other firms follow.;B.;small-market;participants have a strong influence over price.;C.;there is a large;kink in the demand curve.;D.;a prisoner?s dilemma;exists.;E.;all firms face;downward-sloping demand curves.;Quiz Chapter 13;1.;The text argues that;one reason that governments may intervene in the operation of a business;through regulation is to;A.;increase monopoly;profits.;B.;reduce the amount of;information consumers have about a product.;C.;promote competitive behavior.;D.;promote;non-competitive behavior.;E.;All of the above;2.;In the United States, antitrust policy is defined by;A.;the Sherman;Antitrust Act of 1890.;B.;the Clayton;Antitrust Act of 1914.;C.;the Federal Trade;Commission Act of 1914.;D.;All of the above;E.;None of the above;3.;According to the text, an unreasonable monopolistic activity;A.;is impossible to;define.;B.;is the;responsibility of the FTC.;C.;is the;responsibility of the Justice Department.;D.;is defined according to whether a rule of reason or a;per se rule is used.;E.;is defined in;absolute terms by the Antitrust Division.;4.;According to antitrust policy, market power is;A.;based on the ability;to control prices.;B.;based on the ability;to price discriminate.;C.;any concentration;ratio above 50 percent.;D.;the share of the market held by a firm.;E.;based on an attempt;to monopolize.;5.;In antitrust cases, the most commonly used measure of market;concentration is known as;A.;the Herfindahl index.;B.;the Concentration;index.;C.;the Von Neumann;index.;D.;the Taylor index.;E.;the Market index.;6.;The term level playing field implies;A.;the desire to limit;the number of firms that are allowed to operate within certain industries.;B.;the desire to;redistribute wealth from the extremely rich to those living in poverty.;C.;the desire to give;government employees something important to do.;D.;the desire to enhance the competitive environment.;E.;the ultimate goal of;creating a utopian society.;7.;Which of the following is an industry that has not been;deregulated in the United States since 1980?;A.;Trucking;B.;Air transportation;C.;Telecommunications;D.;Financial services;E.;Internet service providers;8.;Overall, the weight of evidence with regard to regulating the;economy;A.;shows that;regulation has been counterproductive in the past because government;regulators were not held publicly accountable for their actions as they are;today.;B.;shows that;regulatory agencies systematically pursue the public?s best interest.;C.;is in favor of more;economic regulation.;D.;is inconclusive as to whether there should be more or;less economic regulation.;E.;is in favor of less;economic regulation.;9.;While the United States was deregulating industries, the rest of;the world was;A.;privatizing industries.;B.;nationalizing;industries.;C.;awaiting the;outcome.;D.;regulating;industries.;E.;reregulating;industries.;10.;Which of the following;is involved with international regulation?;A.;The General Agreement on Tariffs and Trade;B.;The World Trade Organization;C.;The Multilateral;Agreement on Investment;D.;A and B.;E.;None of the above;Chapter 14 Quiz;1.;A market failure occurs when;A.;the market outcome;is viewed as unfair by a majority of consumers.;B.;a market fails to;provide the good at a zero price.;C.;quantity demanded;exceeds quantity supplied.;D.;the market outcome is not the socially efficient;outcome.;E.;markets produce the;socially efficient level of output.;2.;The social costs of production;A.;include all costs involved in production.;B.;equal the private;costs minus the value of the externality.;C.;are less than the;private costs of production when negative externalities exist.;D.;are included in the;private supply curve.;E.;All of the above;3.;A potential remedy for the problem of negative externalities is;A.;a subsidy to;producers so that they produce more.;B.;a subsidy to;consumers so that they consume more.;C.;a tax based on the external costs of production and;consumption.;D.;a tax that increases;production and consumption.;E.;an increase in;income taxes so that the government can hire more bureaucrats to solve the;problem.;4.;One advantage of marketable pollution permits is that;A.;they provide a;significant source of revenue for the government.;B.;they allow others in society to influence the level;of externalities by purchasing the permits themselves.;C.;firms have no;incentives to purchase the permits.;D.;the firms with the;least costly methods of pollution reduction will be the first to purchase;the permits.;E.;All of the above;5.;The problem of common ownership arises due to;A.;the fact that;benefits are shared in common.;B.;a lack of clearly defined property rights.;C.;the fact that costs;accrues solely to the individual, but the benefits go to the society as a;whole.;D.;the internalization;of external costs.;E.;the fact that most;people are cranky.;6.;Many species, such as the Hawksbill sea turtle, Asian rhino, and;whale sharks, have been hunted close to extinction. One reason why so many;species are close to extinction is;A.;a lack of common;ownership.;B.;a lack of private ownership.;C.;that the market;prices of the products derived from the animals are inefficiently low.;D.;that there is no;demand for the animals.;E.;high rates of;suicide among endangered species.;7.;The principle of mutual exclusivity states that;A.;economics and;politics are mutually exclusive.;B.;the owner of a good has the right to exclude others;from using that good.;C.;it is costly to;exclude individuals from consuming public goods.;D.;negative;externalities are exclusive to producers of goods and services.;E.;mutual funds should;be purchased instead of stocks.;8.;Compared to the demand for a privately provided good, the demand;for a public good is likely to be;A.;less than the demand for a similar private good;because individuals can consume the good without having to pay for it.;B.;identical to the;demand for a similar private good.;C.;greater than the;demand for a similar private good, because more than one consumer can;consume the good at the same time.;D.;easier to determine;because everyone pays the same price.;E.;None of the above;9.;Market failure occurs;A.;when governments;levy taxes on business firms.;B.;when governments;levy taxes on workers.;C.;when perfectly competitive markets do not achieve;economic efficiency.;D.;whenever governments;intervene in the decision-making processes of perfectly competitive markets.;E.;when markets produce;an income distribution that is not equitable.;10.;For public goods;A.;the principle of;mutual exclusivity holds strongly.;B.;one individual?s;consumption of a good prohibits others from consuming that good.;C.;the principle of mutual exclusivity does not apply.;D.;costs are imposed on;individuals not directly involved in the transaction.;E.;None of the above;Chapter 15 Quiz;1.;Which of the following is a resource?;A.;Stocks;B.;Money;C.;Entrepreneurial ability;D.;Pollution;E.;Bonds;2.;The demand for a resource is;A.;a derived demand.;B.;always unit elastic.;C.;likely to increase;with decreases in resource price.;D.;a direct;relationship between resource price and quantity demanded.;E.;an inverse;relationship between quantity available and quantity demanded.;3.;The resource market is the same as the product market except;that, in the resource market;A.;the demand curve;slopes up.;B.;buyers and sellers are reversed.;C.;there is no;substitution effect.;D.;the supply curve;slopes down.;E.;there is no income;effect.;4.;When a resource becomes more productive, that is, when each unit;of the resource can produce more output;A.;the firm will use more of the resource.;B.;the firm will use;less of the resource.;C.;the firm will not;change its use of the resource.;D.;the resource becomes;scarce.;E.;the resource becomes;expensive.;5.;According to the text, the market demand for a resource;A.;consists of the;demands of each firm willing to pay for a resource.;B.;consists of the;demands of each firm able to pay for a resource.;C.;consists of the demands of each firm willing and able;to pay for a resource.;D.;is the same as the;firm?s demand for a resource.;E.;depends on distinct;elements for every firm.;6.;According to the text, a business is much like an individual in;the sense that they both;A.;decide how much they are willing to pay for something;by deciding how much that something is worth to them.;B.;decide how much they;are willing to pay for something by deciding how much others are willing to;pay.;C.;decide how much they;are willing to pay for something by deciding how much that something costs.;D.;decide how much they;are willing to pay for something by deciding how much of that something is;available.;E.;use resources.;7.;The marginal-physical product is the;A.;total output divided;by the total cost.;B.;quantity of a;resource divided by total product.;C.;change in output;associated with a change in total cost.;D.;additional output;associated with an additional unit of a fixed resource.;E.;additional output associated with an additional unit;of a variable resource.;8.;The marginal-factor cost of labor;A.;is less than the;wage rate for all workers employed after the first for a monopsony.;B.;is the extra cost to the firm of employing one;additional worker.;C.;equals the wage rate;when the monopsonist is employing the profit maximizing quantity of labor.;D.;curve lies below the;market demand for labor curve for a monopsony.;E.;is the extra cost of;producing one additional unit of output.;9.;The supply of resources;A.;is represented by a;vertical supply curve.;B.;is likely to become;less elastic over time as resources are used up.;C.;identifies the quantities that will be available for;sale at different prices.;D.;is absolutely fixed;because there are only so many units available at any moment.;E.;is irrelevant in;determining resource price.;10.;The payment needed to keep a resource in its current use depends;mostly on;A.;the resource?s opportunity cost.;B.;the taxes paid by;the resource?s owner.;C.;the taxes paid by;the resource?s user.;D.;the resource?s;economic rent.;E.;the derived demands;for other resources.
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