Assume the Congress approves increased drilling for oil in the U.S. to address the current energy shortage. People who are in favor of this policy argue that, ceteris paribus, this would cause: A) an increase in the equilibrium price and quantity of oil. B) a decrease in the equilibrium price and quantity of oil. C) […]
The text considers three methods that can be used to obtain empirical estimates of long-run costs in different industries. Of those three, surveys of expert opinion are considered to be most reliable because they are less subject to bias than the other two methods. Indicate whether the statement is true or false ANSWER FALSE
Assume the auto market is initially in equilibrium with imports from Japan taking up a significant share of the market. Now assume a quota on imports of Japanese cars is established. What will occur at the initial equilibrium price to signal market participants regarding the change that has taken place? A) A surplus is created […]
The text’s discussion of the airline industry, the soft drink industry, and the doughnut industry reveals a common theme when it comes to the types of competitive practices firms in each industry engage in. What is it and what advantage does it offer firms? ANSWER Firms in each of the industries listed above tend […]
Studies strongly suggest that advertising strategies are generally much more effective than pricing strategies as a means to increase market share. Indicate whether the statement is true or false ANSWER FALSE
Domestic currency depreciation will: A) help domestic firms that export and hurt domestic firms that import. B) help domestic firms that import. C) hurt domestic firms that export and help domestic firms that import. D) hurt domestic firms that export. ANSWER A
Decrease in the real interest rate will ________ the expenditure curve: A) decrease. B) increase. C) not change. D) none of the above. ANSWER B
“Learning by doing” results in decreased average costs of production and is illustrated by a downward shift of the firm’s long-run average cost curve. Indicate whether the statement is true or false ANSWER TRUE
Of the various models of noncooperative oligopoly behavior discussed in the text, which one has the greatest shortcoming when it comes to explaining observed behavior in an oligopoly market What will be an ideal response? ANSWER The kinked demand curve model is built around an assumed market price that currently exists for the market’s […]
Increase in consumer confidence will ________ the expenditure curve: A) decrease. B) increase. C) down. D) none of the above. ANSWER B
