Question 1

Regulation

Accepted Answer

A)  always increases consumer surplus. 
B)  passes the cost-benefit test. 
C)  solves market failures of all size. 
D)  None of the above. 
A)  always increases consumer surplus. 
B)  passes the cost-benefit test. 
C)  solves market failures of all size. 
D)  None of the above.

Question 2

Suppose two neighbors share a park.One neighbor,Al,leaves trash in the park.This bothers the other neighbor,Bert.According to Coase's Theorem,the optimal level of trash in the park can be achieved if

Accepted Answer

A)  Al is fined by the government. 
B)  Al has the right to leave trash and Bert cannot do anything about it. 
C)  Al has the right to leave trash and Bert can pay him to limit his dumping. 
D)  Bert moves. 
A)  Al is fined by the government. 
B)  Al has the right to leave trash and Bert cannot do anything about it. 
C)  Al has the right to leave trash and Bert can pay him to limit his dumping. 
D)  Bert moves.

Question 3

To alleviate the commons problem,the government can

Accepted Answer

A)  apply a tax. 
B)  set a quota. 
C)  assign property rights. 
D)  All of the above. 
A)  apply a tax. 
B)  set a quota. 
C)  assign property rights. 
D)  All of the above.

Question 4

Laws that are used to prevent firms from colluding and setting high prices are called

Accepted Answer

A)  anti-trust laws. 
B)  price ceiling laws. 
C)  anti-cartel laws. 
D)  anti-competition policies. 
A)  anti-trust laws. 
B)  price ceiling laws. 
C)  anti-cartel laws. 
D)  anti-competition policies.

Question 5

In order to regulate a monopoly's price

Accepted Answer

A)  the government needs to hire former executives from the monopoly. 
B)  the government should rely on industry experts for information. 
C)  the government needs accurate information on the monopoly's demand and cost curves. 
D)  the government needs to know the monopoly's supply curve. 
A)  the government needs to hire former executives from the monopoly. 
B)  the government should rely on industry experts for information. 
C)  the government needs accurate information on the monopoly's demand and cost curves. 
D)  the government needs to know the monopoly's supply curve.

Question 6

The total demand for a public good is found by

Accepted Answer

A)  horizontally summing all individual demands. 
B)  vertically summing all individual demands. 
C)  finding the demand from the median voter. 
D)  dividing the marginal cost of the good by the number of voters. 
A)  horizontally summing all individual demands. 
B)  vertically summing all individual demands. 
C)  finding the demand from the median voter. 
D)  dividing the marginal cost of the good by the number of voters.

Question 7

Resale price maintenance

Accepted Answer

A)  requires a retailer to sell a good no lower than the specified price. 
B)  is illegal. 
C)  is the price of a maintenance contract on a good, such as an extended service contract on a car. 
D)  has a net negative impact on competition. 
A)  requires a retailer to sell a good no lower than the specified price. 
B)  is illegal. 
C)  is the price of a maintenance contract on a good, such as an extended service contract on a car. 
D)  has a net negative impact on competition.

Question 8

A free rider

Accepted Answer

A)  benefits from a positive externality without paying for it. 
B)  has a horizontal demand curve. 
C)  places no value on the good provided. 
D)  All of the above. 
A)  benefits from a positive externality without paying for it. 
B)  has a horizontal demand curve. 
C)  places no value on the good provided. 
D)  All of the above.

Question 9

If a production process creates positive externalities,a competitive market produces too few positive externalities because the producer

Accepted Answer

A)  does not pay all the costs of the externalities. 
B)  does not receive compensation for the externalities. 
C)  Both A and B. 
D)  None of the above. 
A)  does not pay all the costs of the externalities. 
B)  does not receive compensation for the externalities. 
C)  Both A and B. 
D)  None of the above.

Question 10

A patent is a property right,which gives the owner

Accepted Answer

A)  the right to sell and/or license the invention. 
B)  the ability to make the knowledge of how to make the invention rival. 
C)  a guaranteed profit. 
D)  All of the above. 
A)  the right to sell and/or license the invention. 
B)  the ability to make the knowledge of how to make the invention rival. 
C)  a guaranteed profit. 
D)  All of the above.

Question 11

Patents

Accepted Answer

A)  always increase total welfare. 
B)  create monopoly power. 
C)  reduce deadweight loss. 
D)  are a form of trade secret. 
A)  always increase total welfare. 
B)  create monopoly power. 
C)  reduce deadweight loss. 
D)  are a form of trade secret.

Question 12

If a production process generates pollution,then a competitive market will

Accepted Answer

A)  produce more of the good than is socially optimal. 
B)  produce less of the good than is socially optimal. 
C)  produce the socially optimal quantity of that good. 
D)  produce zero output. 
A)  produce more of the good than is socially optimal. 
B)  produce less of the good than is socially optimal. 
C)  produce the socially optimal quantity of that good. 
D)  produce zero output.

Question 13

If the government has enough knowledge about a market and the damage it causes through pollution,it can force the socially optimal output

Accepted Answer

A)  through an emission fee. 
B)  using a ban on pollution. 
C)  deregulating to eliminate the monopoly. 
D)  All of the above. 
A)  through an emission fee. 
B)  using a ban on pollution. 
C)  deregulating to eliminate the monopoly. 
D)  All of the above.

Question 14

Which of the following goods has the property of rivalry?

Accepted Answer

A)  national defense 
B)  a highway 
C)  air to breathe 
D)  a digital music file 
A)  national defense 
B)  a highway 
C)  air to breathe 
D)  a digital music file

Question 15

Optimal price regulation sets price equal to

Accepted Answer

A)  marginal cost. 
B)  average variable cost. 
C)  average cost. 
D)  minimum average cost. 
A)  marginal cost. 
B)  average variable cost. 
C)  average cost. 
D)  minimum average cost.

Question 16

If the government regulates the price a monopoly can charge,and the price ceiling is set below what the competitive market price would be,then

Accepted Answer

A)  a shortage will exist. 
B)  a surplus will exist. 
C)  producer surplus is maximized. 
D)  consumer surplus is maximized. 
A)  a shortage will exist. 
B)  a surplus will exist. 
C)  producer surplus is maximized. 
D)  consumer surplus is maximized.

Question 17

In the U.S.,charging monopoly-level prices

Accepted Answer

A)  is evidence of a conspiracy. 
B)  is illegal. 
C)  is not necessarily illegal. 
D)  constitutes a per se violation. 
A)  is evidence of a conspiracy. 
B)  is illegal. 
C)  is not necessarily illegal. 
D)  constitutes a per se violation.

Question 18

The Commons Problem arises because

Accepted Answer

A)  firms don't maximize profits. 
B)  social and private incentives are not aligned and property rights are missing. 
C)  social cost equals private cost and property rights are missing. 
D)  social benefit equals private benefit and property rights are missing. 
A)  firms don't maximize profits. 
B)  social and private incentives are not aligned and property rights are missing. 
C)  social cost equals private cost and property rights are missing. 
D)  social benefit equals private benefit and property rights are missing.

Question 19

Cartels persist despite laws against them because

Accepted Answer

A)  international cartels are legal. 
B)  it is impossible to convict firms. 
C)  of the Prisoners' Dilemma issue. 
D)  All of the above. 
A)  international cartels are legal. 
B)  it is impossible to convict firms. 
C)  of the Prisoners' Dilemma issue. 
D)  All of the above.

Question 20

If a change passes the cost-benefit test,then

Accepted Answer

A)  it is a Pareto improvement. 
B)  it may be a Pareto improvement. 
C)  it is not a Pareto improvement. 
D)  total surplus is maximized. 
A)  it is a Pareto improvement. 
B)  it may be a Pareto improvement. 
C)  it is not a Pareto improvement. 
D)  total surplus is maximized.

Regulation

Suppose two neighbors share a park.One neighbor,Al,leaves trash in the park.This bothers the other neighbor,Bert.According to Coase's Theorem,the optimal level of trash in the park can be achieved if

To alleviate the commons problem,the government can

Laws that are used to prevent firms from colluding and setting high prices are called

In order to regulate a monopoly's price

The total demand for a public good is found by

Resale price maintenance

A free rider

If a production process creates positive externalities,a competitive market produces too few positive externalities because the producer

A patent is a property right,which gives the owner

Patents

If a production process generates pollution,then a competitive market will

If the government has enough knowledge about a market and the damage it causes through pollution,it can force the socially optimal output

Which of the following goods has the property of rivalry?

Optimal price regulation sets price equal to

If the government regulates the price a monopoly can charge,and the price ceiling is set below what the competitive market price would be,then

In the U.S.,charging monopoly-level prices

The Commons Problem arises because

Cartels persist despite laws against them because

If a change passes the cost-benefit test,then

Introduction

Supply and Demand

Empirical Methods for Demand Analysis

Consumer Choice

Production

Costs

Firm Organization and Market Structure

Competitive Firms and Markets

Monopoly

Pricing With Market Power

Oligopoly and Monopolistic Competition

Game Theory and Business Strategy

Strategies Over Time

Managerial Decision-Making Under Uncertainty

Asymmetric Information

Global Business

Filters

Exam 16: Government and Business

Regulation

Suppose two neighbors share a park.One neighbor,Al,leaves trash in the park.This bothers the other neighbor,Bert.According to Coase's Theorem,the optimal level of trash in the park can be achieved if

To alleviate the commons problem,the government can

Laws that are used to prevent firms from colluding and setting high prices are called

In order to regulate a monopoly's price

The total demand for a public good is found by

Resale price maintenance

A free rider

If a production process creates positive externalities,a competitive market produces too few positive externalities because the producer

A patent is a property right,which gives the owner

Patents

If a production process generates pollution,then a competitive market will

If the government has enough knowledge about a market and the damage it causes through pollution,it can force the socially optimal output

Which of the following goods has the property of rivalry?

Optimal price regulation sets price equal to

If the government regulates the price a monopoly can charge,and the price ceiling is set below what the competitive market price would be,then

In the U.S.,charging monopoly-level prices

The Commons Problem arises because

Cartels persist despite laws against them because

If a change passes the cost-benefit test,then

Introduction

Supply and Demand

Empirical Methods for Demand Analysis

Consumer Choice

Production

Costs

Firm Organization and Market Structure

Competitive Firms and Markets

Monopoly

Pricing With Market Power

Oligopoly and Monopolistic Competition

Game Theory and Business Strategy

Strategies Over Time

Managerial Decision-Making Under Uncertainty

Asymmetric Information

Global Business

Filters