Assume a monopolist regularly posts price increases three months in advance of when they will take effect. After a small number of new firms enter the market, the original firm continues the practice of announcing price increases in advance. Following the court’s logic in the Ethyl case, the firms in this market would not be […]
Based on empirical evidence, the “farm problem” that has confronted U.S. policymakers for many years is attributable, in large part, to the relatively inelastic demand for many agricultural products. Indicate whether the statement is true or false ANSWER TRUE
In February 2002, the euro/dollar exchange rate was 1.20, and in May 2002, the euro/dollar exchange rate was 1.10. What happened to the exchange rate during this period? A) Euro appreciated against the dollar. B) Euro depreciated against the dollar. C) Dollar appreciated against the euro. D) Both B and C. ANSWER A
When a firm is experiencing economies of scale, the minimum point of the firm’s short-run average total cost curve shifts down as it expands its scale of production. Indicate whether the statement is true or false ANSWER TRUE
When a country’s import spending exceeds export spending, the country is experiencing a: A) trade deficit. B) trade surplus. C) budget deficit. D) none of the above. ANSWER A
Because there is no formal agreement among the participating firms, firms that engage in tacit collusion are exempt from prosecution under the anti-trust laws. Indicate whether the statement is true or false ANSWER FALSE
When a country’s export spending exceeds import spending, the country is experiencing a: A) trade deficit. B) trade surplus. C) budget deficit. D) none of the above. ANSWER B
Although tacit collusion can enhance the price-setting power of the participating firms, it can also result in greater efficiency in production, which also benefits society. Thus, it is not immediately clear, a priori, when tacit collusion actually hurts or helps consumers. Indicate whether the statement is true or false ANSWER TRUE
Well-functioning financial markets promote A) inflation. B) deflation. C) unemployment. D) growth. ANSWER D
Decrease in stock market wealth will ________ the expenditure curve: A) decrease. B) increase. C) not change. D) none of the above. ANSWER A
