An index, based on a telephone survey of 500 households conducted by the University of Michigan, that measures households’ attitudes regarding expected business conditions, personal financial conditions, an consumer confidence about purchasing furniture and major household appliances is called the: A) Consumer Sentiment Index. B) Consumer Confidence Index. C) Consumer Satisfaction Index. D) Consumer Consumption […]
The technique that estimates long-run costs and the minimum efficient scale by determining the scale of operation at which most firms in an industry are concentrated is called the: A) engineering estimation technique. B) statistical cost estimation technique. C) survivor approach. D) back-of-the-envelope approach. ANSWER C
One way for the federal government to increase the amount of spending in the domestic economy would be to decrease personal and business taxes. Indicate whether the statement is true or false ANSWER TRUE
Which of the following is the best example of tacit collusion? A) The formation of a cartel. B) Price leadership. C) Predatory pricing. D) Noncooperative pricing behavior. ANSWER B
Assuming that C = $6,200, I = $1,300, G = $1,100, Exports = $630, Imports = $750, and Depreciation = $600 (all in billions of dollars), GDP equals $7,880. Indicate whether the statement is true or false ANSWER FALSE
Assume the LRAC curve for a particular industry hits its minimum point at a relatively low level of output and then increases, and the demand for industry output is quite large. In this case, consideration of the minimum efficient scale of operation suggest that the market should be served by: A) a large number of […]
Which of the following pairs of goods would be expected to have a positive cross-price elasticity of demand? A) coffee and tea. B) gasoline and large SUVs. C) tennis racquets and tennis balls. D) hot dogs and hot dog buns. ANSWER A
Comparing the situation of a nominal interest rate of 10 percent and an inflation rate of 9 percent with a nominal interest rate of 6 percent and inflation rate of 2 percent, consumers would borrow more in which situation? A) Nominal interest rate of 10 percent since real interest rate is 1 percent. B) Nominal […]
Assume the four major grocery stores in a large metropolitan area decide to meet secretly to fix prices for meat. It would be easiest to maintain this arrangement when: A) the number of additional competitors is very small. B) the cost conditions for the four firms differ substantially. C) individual firms are able to offer […]
Which of the following is not an example of a practice that facilitates “tacit collusion”? A) Uniform prices charged by the firms in a particular industry. B) Advance notice of price changes by one or more of the firms in an industry. C) The use of most-favored-customer clauses. D) The formation of a cartel. […]
