Which of the following statements regarding OPEC is false? A) Because it sells a homogeneous product, since its formation in 1960 OPEC has been the clear leader when it comes to determining the price of crude oil. B) OPEC’s membership includes countries from the Middle East, Africa, and South America. C) Over time, OPEC’s ability […]
In which of the following situations would consideration of the minimum efficient scale of operation suggest that the market should be served by a single firm 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 […]
Which of the following is not a basic assumption underlying the theory of consumer behavior? A) Consumers prefer more to less. B) Consumer preferences depend on the amounts of goods they consume as well as the amounts being consumed by other consumers. C) Goods are continuously divisible, that is, consumers can always purchase one more […]
Monetary policy consists of changes in taxes, which in turn affects the amount of money households can spend on consumption. Indicate whether the statement is true or false ANSWER FALSE
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. […]
