Question 1
persistently realize economic profits in both the short and long run.
realize economic profits in the long run and normal profits in the short run.
tend to incur persistent losses in both the short and long run.
tend to realize economic profits in the short run and normal profits in the long run.
2 points
Question 2
continue its efforts to differentiate its product.
raise its price.
lower its price.
do nothing because it will inevitably experience a decline in profits.
2 points
Question 3
automobiles
tobacco products
restaurants
farm equipment
2 points
Question 4
indicates the total profitability among the top four firms in an industry.
is an indicator of the degree of monopolistic competition.
indicates the presence and intensity of an oligopoly market.
is used by the government as a basis for anti-trust cases.
2 points
Question 5
all firms in an industry are affected by the same macro economic conditions such as a recession inflation interest rates exchange rates etc.
the actions of firms are independent of each other.
the actions of one firm in an industry are easily recognized and perhaps copied by others.
monopolists recognize that they must face eventual competition in the long run.
2 points
Question 6
markets must be capable of being separated.
markets must be interdependent.
different demand price elasticities must exist in different markets.
demand price elasticities must be identical in all markets.
Both markets must be capable of being separated and different demand price elasticities must exist in different markets
2 points
Question 7
the existence of a small number of firms.
geographic proximity of firms.
homogeneity of the product.
easy entry into the industry.
2 points
Question 8
determine whether a firm should make or buy a component product.
determine the correct value of a product as it moves from one stage of production to another.
minimize a multinational firm’s tax liabilities.
All of these
2 points
Question 9
one firm drives the others out of the market.
the dominant firm decides how much each of its competitors can sell.
the dominant firm establishes the price at the quantity where its MR = MC and permits all other firms to sell all they want to sell at that price.
the dominant firm charges the lowest price in the industry.
2 points
Question 10
monopoly prices.
competitive prices.
prices under monopolistic competition.
marginal cost.
2 points
Question 11
all parties to a transaction possess less than full information.
one party in a transaction has more information than the other party.
some information possessed by the parties in a transaction may be false.
a zero-sum game exists.
2 points
Question 12
the gains of one player are less than the gains of the other player.
the gains of one player are greater than the gains of the other player.
the gains of one player directly reflect the losses of another player.
the gains and losses of players are all expressed in zeros.
2 points
Question 13
is a way of conveying information to other parties in a transaction where asymmetric information exists.
represents a dominant strategy in a multi-player game.
results in an optimum solution to a beach kiosk scenario.
None of these
2 points
Question 14
moral hazard.
moral suasion.
adverse selection.
fraud.
2 points
Question 15
outcome of a Prisoner’s Dilemma.
result of market signaling.
risk associated with a Dutch auction.
risk that one party to a contract may alter its post-contract behavior to the detriment of another party.
2 points
Question 16
A Brazilian investor buys German government bond.
An American buys a new Swedish car.
An Italian firm builds a plant in Nebraska.
A Canadian investor buys a French equity.
2 points
Question 17
the number of sellers in the market.
the ease of exit from the market.
the difference in the firm’s profits in the long run.
the degree of product differentiation.
2 points
Question 18
forward markets
futures markets
currency options
All of these
2 points
Question 19
highly skilled workers.
highly educated workers.
semi-skilled workers.
low skilled workers.
2 points
Question 20
high; low
low; high
economic; normal
above-normal; accounting
2 points
Question 21
a fine imposed on a company that pollutes a stream
the closing of a public library
a sales tax on jewelry
the increase on bridge tolls
2 points
Question 22
restricts production.
levies a tax for the difference between private costs and social costs.
prohibits production.
All three of these
Both restricts production and levies a tax for the difference between private costs and social costs
2 points
Question 23
greater than
less than
the same as
greater or less (depending on the market) than
2 points
Question 24
dumps waste in river upstream from a popular fishing spot.
produces coal that is not in demand in a recession.
underpays its employees.
overworks its employees.
2 points
Question 25
greater than
less than
the same as
greater or less (depending on the market) than