Regarding the production of health care, more recent studies suggest that: A) economies of scale exist up to a hospital size of approximately 500 beds. B) hospitals of many different sizes can compete effectively with each other on the basis of cost. C) the LRAC curve exhibits significant diseconomies of scale beginning with a hospital […]
Much of the research on the minimum efficient scale suggests that for many firms the LRAC curve is: A) downward sloping over the relevant range of output. B) upward sloping over the relevant range of output. C) U-shaped. D) flat over a relatively large range of output levels. ANSWER D
Because each firm has a relatively large share of the market, the actions of one firm do not have much effect on the decision making of other firms in an oligopolistic market. Indicate whether the statement is true or false ANSWER FALSE
Firms in an oligopoly market will have a more difficult time maintaining price coordination when: A) demand for the firms’ products remains stable. B) the firms’ cost structures are similar. C) the firms’ products are highly differentiated. D) each firm controls the same share of the market. ANSWER C
Which of the following statements is true when the consumer is in utility-maximizing equilibrium? A) The number of units of each good purchased is equal. B) The prices of the goods in question must be equal. C) The total benefits the consumer receives from every good consumed must be the same for all goods. D) […]
Assume an individual is considering opening a new car dealership in a medium-sized metropolitan area (population = 200,000 ). Provide a list of economic variables you would recommend that the person consider in making his decision whether to open the business, and explain your rationale for including each variable. ANSWER At a minimum, it […]
The total amount of spending on nonresidential structures, equipment, software, residential structures, and business inventories in a given period of time is called: A) net exports. B) government consumption and investment. C) gross private domestic investment. D) personal consumption. ANSWER C
Assume firm X is one of the three largest firms in an oligopolistic industry. Firm X is currently considering a vertical merger with another firm that is the sole supplier of an input used by all of the firms that compete with firm X. If the merger goes through, firm X would be able to […]
Which of the following statements about the beer industry is correct? A) Over the last 30 years, technological change has resulted in substantial diseconomies of scale in the industry. B) In 2000, the minimum efficient scale in the industry was approximately 18 million barrels per year. C) As a result of an increase in the […]
The opportunity costs of the firm using its own funds are measured by the: A) market interest rate. B) inflation rate. C) price level. D) menu costs. ANSWER A
