The primary objective of a cartel is to: A) maximize the amount of profit received by each member of the organization. B) maximize the joint profits of the members of the organization. C) ensure each member of the organization some minimum amount of profit. D) maximize the average profits of the members of the organization. […]
Long-run average cost is defined as: A) the minimum average cost of producing any level of output when all inputs are variable. B) the minimum average cost of producing any level of output when the amount of capital is varied and all other inputs are held constant. C) the average of the short-run costs associated […]
Predatory pricing is used primarily to: A) discourage new firms from entering a market. B) reduce (limit) the profits of all of the firms in the industry. C) drive other firms out of a market. D) establish a minimum price all of the firms in the market will charge. ANSWER C
Potential GDP is: A) minimum amount of output that can be produced given the labor force, capital stock, and technology. B) maximum amount of output that can be produced given the labor force, capital stock, and technology. C) varies over the business cycle. D) none of the above. ANSWER B
Because it is the only firm operating in a particular market, a monopolist is guaranteed to earn an economic profit. Indicate whether the statement is true or false ANSWER FALSE
Which of the following statements concerning the long-run average cost (LRAC) curve is correct? A) The LRAC curve represents the least-cost input combination of inputs for producing each level of output. B) The LRAC curve is derived from a series of short-run marginal cost curves. C) The short-run cost curve at the minimum point of […]
The success of a predatory pricing strategy in an oligopolistic market depends on all of the following except: A) the number of firms operating in the industry prior to enactment of the policy. B) how far the predatory price is below cost. C) the period of time for which the predatory price is in effect. […]
All else constant, as the barriers to entry into a particular market increase, so will the ability of firms in that market to earn above-average profits. Indicate whether the statement is true or false ANSWER TRUE
Potential GDP focuses on the: A) long-run supply side of the economy. B) long-run demand side of the economy. C) short-run supply side of the economy. D) short-run demand side of the economy. ANSWER A
The negatively-sloped part of the long-run average total cost curve is due to which of the following? A) Diseconomies of scale. B) Diminishing returns. C) The difficulties encountered in coordinating the many activities of a large firm. D) The increase in productivity that results from specialization. ANSWER D
