Canada produces MP3 players and lumber, and the horizontal axis for Canada’s production possibilities frontier represents the amount of lumber produced. Canada’s borders are not initially open to trade, and the country consumes along its production possibilities frontier where the MRT and MRS equal the price ratio for the two products ($200 per 1,000 board-feet […]
The textbook for your class was not produced in a perfectly competitive industry because A) there are so few firms in the industry that market shares are not small, and firms’ decisions have an impact on market price. B) upper-division microeconomics texts are not all alike. C) it is not costless to enter or exit […]
Which of the following are examples of cooperative games? A) The bargaining between a buyer and seller over the price of a car B) Independent action by two firms in a market regarding advertising strategies C) Independent pricing strategies by two firms in a market D) Independent pricing strategies by many firms in a market […]
Suppose your neighbor likes to repair motorcycles in his front yard during evenings and on weekends, and he earns $400 per week from this work. However, the sight of piles of greasy motorcycle parts and the additional noise and traffic caused by his customers reduces your value of living in this neighborhood by $300 per […]
The U.S. government currently imposes a $0.54 per gallon tariff on all ethanol imported into the country. If this tariff were removed, then: A) the domestic ethanol price falls. B) the domestic quantity of ethanol supplied declines. C) domestic consumer surplus increases. D) domestic producer surplus decreases. E) all of the above ANSWER E […]
In the situation involving a bilateral monopoly, a A) single firm acts as both the monopsonist and the monopoly. B) single seller sells to a single buyer. C) monopsonist sells to a monopsonist. D) monopolist sells to a monopolist. ANSWER B
In the spring of 1994, Northwest Airlines took the independent action of reducing fares on its flights. Other competing airlines quickly matched the fare cuts. These actions might be interpreted as: A) a noncooperative game. B) a cooperative game. C) a constant sum game. D) a competitive game. ANSWER A
See the information in Scenario 4.4. Does the demand curve for Rock and Roll Trivia slope downward? A) Yes it does. B) No it does not. C) More information is needed to answer this question. ANSWER A
Writing total output as Q, change in output as ïQ, total labor employment as L, and change in labor employment as ïL, the marginal product of labor can be written algebraically as A) ïQ L. B) Q / L. C) ÎL / ÎQ. D) ÎQ / ÎL. 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 […]
