Which of the following business combinations likely exhibit economies of scope? A) Banking services for individuals and banking services for other business B) Retail clothing stores and electronic (internet) clothing sales C) Hospitals that perform heart surgery and hospitals that perform cosmetic surgery D) all of the above ANSWER D
A move from one point on a contract curve to another point on the contract curve will make A) both individuals better off. B) both individuals worse off. C) one individual better off and the other individual worse off. D) the goods more expensive. ANSWER C
A price support may be pictured by A) shifting the demand curve to the right by the amount of the government purchase. B) shifting the demand curve to the left by the amount of the government purchase. C) shifting the supply curve to the right by the amount of the government purchase. D) shifting the […]
Which of the following is NOT a potential objective of tying strategies used by firms? A) Reduce production costs and avoid problems associated with diseconomies of scale B) Protect brand image and ensure product quality C) Meter consumption across different buyers in order to collect a two-part tariff D) Extend a firm’s market power from […]
Daring Dora holds 90% of her assets in high-technology stocks, earning 12%, and 10% in long-term government bonds, earning 6%. The expected return on her portfolio A) is 6%. B) is 9%. C) is 11.4% D) is 12%. E) cannot be determined without knowing what the dollar value of her assets is. ANSWER C […]
Electric power utility companies use various fuel sources (e.g., coal, natural gas, nuclear) to generate electricity for their customers. What happens to the demand for natural gas used to generate electricity as we move from a short-run planning horizon to a long-run planning horizon? Why? A) Demand becomes more inelastic over time because the other […]
Bubba Burgers has discovered there are economies of scope available to the restaurant. Which is most likely to be a response to this discovery? A) Bubba adds more varied inputs to burger production. B) Bubba expands burger production, focusing on that one good. C) Bubba contracts burger production. D) Bubba adds grilled chicken sandwiches to […]
When a man invests in controlling weeds and trash that tend to accumulate in his yard, both he and his neighbors benefit from his action. Is an externality associated with his private decision? If so, explain its effect, and determine whether the efficient level of weed control occurs when the individual invests in weed control. […]
A plastics factory emits water pollutants into a nearby river. The marginal private cost of producing plastics is constant, the marginal external cost of the pollutants increases with the quantity of plasticis, and the demand for plastics is downward sloping. What happens to the socially optimal level of output and market price if the marginal […]
Once a point on a contract curve has been chosen, A) it is possible to make both individuals better off. B) it is possible to make one individual better off only at the expense of the other. C) there is no change that would make both individuals worse off. D) it is impossible for both […]
