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
Referring to the previous question, what will happen to the equilibrium price and quantity of cars? A) They will stay the same as domestic producers replace the cars once imported. B) The shortage will cause the equilibrium price to increase and equilibrium quantity will decrease. C) The surplus will cause equilibrium price to decrease and […]
The bond markets are important because they are A) easily the most widely followed financial markets in the United States. B) the markets where foreign exchange rates are determined. C) the markets where interest rates are determined. D) the markets where all borrowers get their funds. ANSWER C
When a consumer moves from a lower to a higher indifference curve, the marginal rate of substitution automatically increases. Indicate whether the statement is true or false ANSWER FALSE
Imports are: A) positively related to income in the rest of the world and currency appreciation. B) positively related to income in the rest of the world and currency depreciation. C) positively related to domestic income and currency appreciation. D) positively related to domestic income and currency depreciation. ANSWER C
The available data strongly suggest that, as the “needs” argument would suggest, the demand for health care is virtually perfectly inelastic. Indicate whether the statement is true or false ANSWER FALSE
What is the significance of the mutual interdependence among the firms in an oligopolistic market? What will be an ideal response? ANSWER The assertion that the firms in an oligopolistic market are mutually interdependent means that the decisions of one firm have an effect on the decisions of the other firms in the market. […]
Assume an auto firm’s factories are capable of producing both large and small cars and are operating at full capacity. Assume the price of large cars increases due to a shift in consumers’ preferences toward large cars and away from smaller cars. What would reasonably be expected to happen to the equilibrium price and quantity […]
Net exports are: A) negatively related to domestic income, positively related to income in the rest of the world, and positively related to currency appreciation. B) negatively related to domestic income, positively related to income in the rest of the world, and positively related to currency depreciation. C) positively related to domestic income, positively related […]
