A common theme in the discussions of the airline, soft drink, doughnut, and express delivery industries is that oligopolistic firms tend to compete: A) strictly on the basis of price and nothing else. B) strictly on the basis of cost minimization. C) primarily on the basis of product differentiation and price. D) primarily by erecting […]
An increase in price will result in no change in total revenue if: A) the percentage change in price is large enough to cause quantity demanded to fall to zero. B) the coefficient of elasticity is equal to zero. C) the percentage change in quantity demanded is equal to the percentage change in price (in […]
According to the information presented in the text the parcel and express delivery industry could best be characterized as: A) a perfectly competitive market. B) a monopolistically competitive market. C) an oligopoly. D) a monopoly. ANSWER C
Gross Domestic Product (GDP) is defined as the market value of: A) all goods and services sold during the year by domestic and foreign producers. B) all final consumer goods produced during the year by domestic and foreign suppliers. C) all intermediate goods produced during the year by domestic and foreign suppliers. D) all final […]
If a country’s central bank wants to stimulate spending in the economy, it should: A) increase the amount of assets banks should keep on reserve at all times. B) decrease taxes. C) lower interest rates. D) increase government spending. ANSWER C
Assume the production of a particular good is characterized by significant economies of scale. In addition, three different versions of the good can be produced, and large segments of the population prefer different versions of the good. In this case, the preferred market structure for this good would be: A) perfect competition. B) monopoly. C) […]
In which of the following cases would the price elasticity of demand be expected to increase? A) The number of close substitutes for the good increases. B) The time period under consideration decreases. C) The cost of the good relative to total income decreases. D) The supply of the good increases. ANSWER A
Assume the four-firm concentration ratio in industry X is 75 percent and that the firms in the industry produce a differentiated product. Industry X most likely would be characterized as: A) perfectly competitive. B) a monopoly. C) monopolistically competitive. D) an oligopoly. ANSWER D
In the equation GDP = C + I + G + F, in which F equals net export spending (i.e., total spending on exports minus total spending on imports), imports are subtracted from the other types of expenditures because: A) imports reduce national welfare. B) other countries do not import goods from the U.S. C) […]
When demand is inelastic and price decreases: A) the effect of the decrease in price on total revenue dominates the effect of the increase in quantity demanded on total revenue; overall total revenue declines. B) the effect of the increase in quantity demanded on total revenue dominates the effect of the decrease in price on […]
