The use of surveys of experts to estimate long-run production costs may be undermined by the fact that: A) it is a time-consuming process. B) it is dependent on the judgments of individuals closely connected with the industry. C) reporting biases can occur. D) all of the above. ANSWER D
Date: September 10th, 2020
All else constant, if the central bank wants to slow the pace at which the economy is expanding, it should increase interest rates. Indicate whether the statement is true or false ANSWER TRUE
Date: September 10th, 2020
It has been observed that whenever one imported beer distributor raises its price, other imported beer distributors quickly raise their price as well. Such behavior is characteristic of: A) the barometric-firm model of price leadership. B) explicit collusion. C) price leadership. D) the kinked-demand curve model of oligopoly. ANSWER C
Date: September 10th, 2020
In which of the following situations would the minimum efficient scale of operation provide little or no guidance regarding how many firms should serve the market to minimize production costs? A) When the LRAC curve slopes downward over the relevant range of output. B) When the LRAC curve hits its minimum point at a relatively […]
Date: September 10th, 2020
The slope of the budget constraint: A) changes as the marginal rate of substitution changes. B) is the ratio of the prices of the two goods. C) is the ratio of the budget to total utility. D) equals one, since the consumer can purchase any combination along the budget constraint. ANSWER B
Date: September 10th, 2020
An index based on a mail survey of 5,000 households by the Conference Board that measures households’ perceptions of general business conditions, available jobs in the households’ local area, and expected personal family income in the coming six months is called the: A) Consumer Sentiment Index. B) Consumer Confidence Index. C) Consumer Satisfaction Index. D) […]
Date: September 10th, 2020
Explain the basic distinction between microeconomic analysis and macroeconomic analysis. Describe the types of issues that each branch of analysis focuses on. What will be an ideal response? ANSWER Microeconomic analysis focuses on the behavior of individuals, e.g., consumers and firms. It is concerned with such issues as how a firm can produce output […]
Date: September 10th, 2020
An indifference curve is negatively-sloped because: A) utility is a subjective concept. B) as the consumer obtains additional units of one good, the consumer is willing to sacrifice increasing amounts of the other good. C) in order to remain at the same level of utility, if an individual gets more of one good, he must […]
Date: September 10th, 2020
Consider two goods, X and Y, where X is measured on the horizontal axis and Y is measured on the vertical axis. All else constant, a decrease in the price of X will cause the consumer’s budget constraint to: A) rotate in along the X axis B) rotate out along the X axis. C) shift […]
Date: September 10th, 2020
Firms have tried a number of different strategies to reduce the negative effects of competition on their ability to earn economic profits. Which of the following strategies is most desirable from the viewpoint of economic efficiency and consumer well being? A) Collusion. B) Price leadership. C) Formation of cartels. D) Investment in research and development. […]
Date: September 10th, 2020
