In the United States, major league baseball is exempt from antitrust laws. Before 1975, the baseball team owners agreed to hold an annual draft of amateur baseball players. Once the players were drafted and signed by a team, they were effectively tied to that team for life. This allowed baseball owners to operate like ________ […]
For automobile demand in the U.S., the income response tends to be larger in the: A) short run. B) long run. C) The income response is the same in the long run and the short run. D) We do not have enough information to answer this question. ANSWER A
When a good is price inelastic, consumer expenditures on the good A) increase when price increases. B) decrease when price increases. C) do not change when price increases. D) are not related to price elasticity of demand. ANSWER A
To demonstrate the anchoring phenomenon, Kahneman and Tversky would ask research subjects very difficult questions that should be answered with a number between zero and 100. Before asking for the respondent’s answer, they would also spin a large wheel that generated random number outcomes from zero to 100. If the respondents were subject to the […]
A competitive equilibrium is efficient in the production and exchange of two goods X and Y when A) MRSXY = MRTLK (where L = labor input and K = capital input). B) MRTXY = MRSLK (where L = labor input and K = capital input). C) MRSXY = MRTXY. D) MCX/MCY = PY/PX. ANSWER […]
Consider a situation in which the government has limited information about costs and benefits of pollution abatement associated with a given industry. However, it is known that the marginal social cost curve for emissions is much steeper than the marginal cost of abatement curve (in absolute terms). In this situation, which method of emissions control […]
Fine-dining restaurants commonly provide statements in their menus such as, “A 20% gratuity will be added to all checks for parties of six or more patrons”. Given that this statement tends to raise the level of tips or gratuities left by other groups of diners, the statement is a good example of: A) the endowment […]
Supply curves for secondary supply resources (e.g., scrap metal) become: A) Steeper in the short run B) More elastic in the long run C) Steeper in the long run D) More inelastic in the short run ANSWER C
Suppose the government does not provide an incentive payment to producers under a production quota policy, and the amount that may be produced and sold by firms is limited by law in order to raise the market price to the support price. Do producers still gain surplus value under this version of the production quota […]
When a good has a unitary price elasticity, consumer expenditures for the good A) change in the same direction as a price change. B) change in the opposite direction to a price change, but not necessarily by the same percentage as the price change. C) do not change when the price of the good decreases. […]
