A government can impose an import quota or an equivalent tariff that achieves the same impact on trade. What is the key difference in the welfare outcomes of these two policy options? A) The domestic quantity supplied is larger under the tariff policy. B) The domestic price is higher under the tariff policy. C) The […]
When one party suffers negative external effects due to the actions of another party, a lawsuit may not lead to the efficient outcome if: A) property rights are not clearly assigned. B) the parties have incomplete information. C) the legal costs of the lawsuit are too high. D) All of the above ANSWER D […]
If any of the assumptions of perfect competition are violated, A) supply-and-demand analysis cannot be used to study the industry. B) graphs with flat demand curves cannot be used to study the firm. C) graphs with downward-sloping demand curves cannot be used to study the firm. D) there may still be enough competition in the […]
In general, the deadweight loss associated with an import tariff or quota becomes relatively larger when: A) supply and demand are inelastic. B) supply is elastic and demand is inelastic. C) demand is elastic and supply is inelastic. D) supply and demand are elastic. ANSWER D
An example of monopoly power in input markets is A) major league baseball owners in the market for player services. B) the United Auto Workers union in the market for auto worker services. C) OPEC in the market for crude oil. D) all of the above ANSWER B
Which of the following equations based on capital (K) and labor (L) inputs does not represent a plausible production function? A) F(K,L) = 3KL B) F(K,L) = 3K C) F(K,L) = K + L – 1 D) F(K,L) = 10(KL)0.5 ANSWER C
See the information in Scenario 4.4. From this demand curve, one can infer that: A) Rock and Roll Trivia is an inferior good. B) computers and diskettes are substitutes. C) computers and diskettes are complements. D) computers are a normal good. E) A, B and D are true. ANSWER A
Refer to Figure 9.9. Now suppose an import quota of 3000 trucks is imposed. If the government wanted to cut off all international trade without changing the quota, it could allow the quota amount of 3000 trucks in at no tariff and then charge a tariff on all imports above the quota amount. What tariff […]
You are playing a game in which a dollar bill is auctioned. The highest bidder receives the dollar in return for the amount bid. However, the second-highest bidder must pay the amount that he or she bids, and gets nothing in return. The optimal strategy is: A) to bid the smallest allowable increment below $1. […]
The slope of the total product curve is the A) average product. B) slope of a line from the origin to the point. C) marginal product. D) marginal rate of technical substitution. ANSWER C
