In which of the following situations would reliance on expert opinion as a basis for a managerial decision be most preferred? A) When the product can be packaged with a variety of price and quality combinations. B) When the business in question serves as a supplier of inputs to other businesses, especially in multi-product situations […]
In the run up to the war in Iraq that began in 2003, one of the many concerns raised was that a war could result in a decrease in the supply of oil. At the same time, the U.S. economy was having a hard time recovering from the recession of 2001 and, as a result, […]
Explain why X-inefficiency is likely to be more prevalent in an industry in which firms have market power. What will be an ideal response? ANSWER The assumed goal of firms is to maximize profits, i.e., the difference between total revenues and total costs. X-inefficiency refers to the situation in which firms have fewer incentives […]
In the foreign exchange market, the quantity U.S. dollars supplied is a function of: A) the amount of imports and the level of capital outflows. B) the amount of exports and the level of capital outflows. C) the amount of exports and the level of capital inflows. D) none of the above. ANSWER A
Assume the costs of production in the U.S. auto industry are rising and, at the same time, the prices of Japanese-made autos are decreasing. What would reasonably be expected to happen to the equilibrium price and quantity of U.S.-made autos? A) Price will increase; quantity cannot be determined. B) Price will decrease; quantity cannot be […]
The practice of setting price by increasing the average costs of production by some percentage is referred to as: A) average cost pricing. B) percentage pricing. C) rate-of-return pricing. D) markup pricing. ANSWER D
Changes in stock prices A) do not affect people’s wealth and their willingness to spend. B) affect firms’ decisions to sell stock to finance investment spending. C) occur in regular patterns. D) are unimportant to decision makers. ANSWER B
A measure of the change in the stock of real and financial assets held by a country’s residents in a foreign country and by foreigners in the given country is called the: A) current account. B) financial account. C) national income product account. D) none of the above. ANSWER B
The slope of the linear consumption function represents induced consumption expenditures. Indicate whether the statement is true or false ANSWER TRUE
When the government decides to impose a tax on sellers of a good or service, sellers try to pass the tax on to consumers by raising the price of the good being sold. Assume the government decides to place a $1 tax on each unit of a good sold, e.g., tires. Using the simple model […]
