Question 1

When the government imposes an excise tax on foreign imports:

Accepted Answer

A) domestic consumers are harmed. 
B) domestic firms benefit. 
C) domestic firms are harmed. 
D) domestic consumers are harmed and domestic firms benefit. 
A) domestic consumers are harmed. 
B) domestic firms benefit. 
C) domestic firms are harmed. 
D) domestic consumers are harmed and domestic firms benefit.

Question 2

XYZ Labs - the sole producer of Diamatine - charges a price for its drug that is significantly above the firm's marginal cost.It takes XYZ Labs 10 years of research and development before products like Diamatine are finally sold in the market.Do you think government regulators would be wise to impose price ceilings on Diamatine in order to bring the price in line with marginal costs? Explain.

Accepted Answer

In situations where economies of scale a

Question 3

You are the CEO of a firm with an industry HHI equal to 1,000.Your firm presently controls 20 percent of the market.The board of trustees wants you to consider merging with a firm that controls 10 percent of the market.Should you be concerned about antitrust proceedings? Explain.

Accepted Answer

Before merging, the two firms have a tot

Question 4

Which of the following is true concerning negative externalities?

Accepted Answer

A) Firms tend to produce more than the efficient level of output. 
B) Society gains because firms do not pay the external costs of production. 
C) Perfect competition is better than monopoly from the viewpoint of society even in the presence of negative externalities. 
D) With negative externalities, a monopoly will always produce an output level less than is socially efficient. 
A) Firms tend to produce more than the efficient level of output. 
B) Society gains because firms do not pay the external costs of production. 
C) Perfect competition is better than monopoly from the viewpoint of society even in the presence of negative externalities. 
D) With negative externalities, a monopoly will always produce an output level less than is socially efficient.

Question 5

To prevent air pollution and breach of contract, which tools does the government use?

Accepted Answer

A) Penalties for both. 
B) Permits for both. 
C) Permits for pollution and penalties for breach. 
D) Penalties for pollution and permits for breach. 
A) Penalties for both. 
B) Permits for both. 
C) Permits for pollution and penalties for breach. 
D) Penalties for pollution and permits for breach.

Question 6

Consider the monopoly in the above graph with price regulated at $2 per unit.In this market, ___________ units will be exchanged.

Accepted Answer

A) 3 
B) 4 
C) 5 
D) 8 
A) 3 
B) 4 
C) 5 
D) 8

Question 7

Consider the monopoly in the above graph with price regulated at $2 per unit.The regulated price will result in a

Accepted Answer

A) surplus of 2 units. 
B) shortage of 2 units. 
C) surplus of 5 units. 
D) shortage of 5 units. 
A) surplus of 2 units. 
B) shortage of 2 units. 
C) surplus of 5 units. 
D) shortage of 5 units.

Question 8

Which of the following factors reduces need for government involvement in the market place?

Accepted Answer

A) The presence of externalities. 
B) The incentive to rent - seek. 
C) The need for public goods. 
D) Incomplete information. 
A) The presence of externalities. 
B) The incentive to rent - seek. 
C) The need for public goods. 
D) Incomplete information.

Question 9

A negative externality

Accepted Answer

A) is a payment received to parties not involved in the production or consumption of a good. 
B) is a cost borne to parties not involved in the production or consumption of a good. 
C) results from the absence of well - defined property rights. 
D) is a cost borne to parties not involved in the production or consumption of a good and results from the absence of well - defined property rights. 
A) is a payment received to parties not involved in the production or consumption of a good. 
B) is a cost borne to parties not involved in the production or consumption of a good. 
C) results from the absence of well - defined property rights. 
D) is a cost borne to parties not involved in the production or consumption of a good and results from the absence of well - defined property rights.

Question 10

The purpose of the Clean Air Act (1970) was to:

Accepted Answer

A) reduce market power. 
B) control negative externalities. 
C) improve competition across international markets. 
D) help make information easily obtainable for producers and consumers. 
A) reduce market power. 
B) control negative externalities. 
C) improve competition across international markets. 
D) help make information easily obtainable for producers and consumers.

Question 11

If a firm has been proven liable for a false ad, it has to:

Accepted Answer

A) terminate the false ad. 
B) recall any product with the false claim on it. 
C) compensate more than the damage they have caused. 
D) all of the statements associated with this question are correct. 
A) terminate the false ad. 
B) recall any product with the false claim on it. 
C) compensate more than the damage they have caused. 
D) all of the statements associated with this question are correct.

Question 12

If the government taxed output at $2 per unit, what would a competitive industry produce?

Accepted Answer

A) 10. 
B) 20. 
C) 15. 
D) 18. 
A) 10. 
B) 20. 
C) 15. 
D) 18.

Question 13

Which of the following explains why big business typically spends more on rent - seeking activities than consumers?

Accepted Answer

A) Lobbying is a public good to consumers. 
B) Lobbying is a public good to businesses. 
C) Labor unions in the involved firms. 
D) Lobbying is a public good to businesses and labor unions in the involved firms. 
A) Lobbying is a public good to consumers. 
B) Lobbying is a public good to businesses. 
C) Labor unions in the involved firms. 
D) Lobbying is a public good to businesses and labor unions in the involved firms.

Question 14

A lump - sum tariff is

Accepted Answer

A) a fixed fee that an importing firm must pay the domestic government in order to have the legal right to sell the product in the domestic market. 
B) the fee an importing firm must pay to the domestic government on each unit it brings into the domestic market. 
C) a restriction limiting the quantity of imported goods that can legally enter a domestic market. 
D) none of the statements associated with this question are correct. 
A) a fixed fee that an importing firm must pay the domestic government in order to have the legal right to sell the product in the domestic market. 
B) the fee an importing firm must pay to the domestic government on each unit it brings into the domestic market. 
C) a restriction limiting the quantity of imported goods that can legally enter a domestic market. 
D) none of the statements associated with this question are correct.

Question 15

In the U.S., government is the sole property owner of:

Accepted Answer

A) labor. 
B) air. 
C) land. 
D) knowledge. 
A) labor. 
B) air. 
C) land. 
D) knowledge.

Question 16

In the absence of price regulation, a monopolist:

Accepted Answer

A) charges a price below MR. 
B) charges a price above MC. 
C) charges a price equal to MR. 
D) charges a price above MC and charges a price equal to MR. 
A) charges a price below MR. 
B) charges a price above MC. 
C) charges a price equal to MR. 
D) charges a price above MC and charges a price equal to MR.

Question 17

Suppose a monopoly faces an inverse demand curve of P = 6 - Q and has constant marginal cost of 2.If the government is considering legislation that would regulate price to the competitive level, what is the maximum amount the monopoly would spend on (legal) lobbying activities designed to thwart the regulation?

Accepted Answer

A) $2. 
B) $4. 
C) $6. 
D) none of the statements associated with this question are correct. 
A) $2. 
B) $4. 
C) $6. 
D) none of the statements associated with this question are correct.

Question 18

In order to eliminate the inefficiency brought about by a monopoly, the government wants to impose a price ceiling on the monopoly.What is the optimal price to be imposed?

Accepted Answer

A) the competitive price. 
B) the competitive price - unless it is below ATC. 
C) the competitive price - unless it is below MR. 
D) the competitive price - unless it is above ATC. 
A) the competitive price. 
B) the competitive price - unless it is below ATC. 
C) the competitive price - unless it is below MR. 
D) the competitive price - unless it is above ATC.

Question 19

Which of the following is not a result of certification of skills?

Accepted Answer

A) A stated minimum standard of service is provided. 
B) A price higher than that which would have been charged if there were no certification. 
C) A bigger quantity exchanged than that which would have resulted if there were no certification. 
D) A profession is formed. 
A) A stated minimum standard of service is provided. 
B) A price higher than that which would have been charged if there were no certification. 
C) A bigger quantity exchanged than that which would have resulted if there were no certification. 
D) A profession is formed.

Question 20

The external marginal cost of producing coal is MCexternal = 6Q while the internal marginal cost is MCinternal = 4Q.The inverse demand for coal is given by P = 120 - 2Q.What is the socially efficient level of output?

Accepted Answer

A) 10. 
B) 20. 
C) 15. 
D) 8. 
A) 10. 
B) 20. 
C) 15. 
D) 8.

When the government imposes an excise tax on foreign imports:

You are the CEO of a firm with an industry HHI equal to 1,000.Your firm presently controls 20 percent of the market.The board of trustees wants you to consider merging with a firm that controls 10 percent of the market.Should you be concerned about antitrust proceedings? Explain.

Which of the following is true concerning negative externalities?

To prevent air pollution and breach of contract, which tools does the government use?

Consider the monopoly in the above graph with price regulated at $2 per unit.In this market, ___________ units will be exchanged.

Consider the monopoly in the above graph with price regulated at $2 per unit.The regulated price will result in a

Which of the following factors reduces need for government involvement in the market place?

A negative externality

The purpose of the Clean Air Act (1970) was to:

If a firm has been proven liable for a false ad, it has to:

If the government taxed output at $2 per unit, what would a competitive industry produce?

Which of the following explains why big business typically spends more on rent - seeking activities than consumers?

A lump - sum tariff is

In the U.S., government is the sole property owner of:

In the absence of price regulation, a monopolist:

In order to eliminate the inefficiency brought about by a monopoly, the government wants to impose a price ceiling on the monopoly.What is the optimal price to be imposed?

Which of the following is not a result of certification of skills?

The external marginal cost of producing coal is MC_external = 6Q while the internal marginal cost is MC_internal = 4Q.The inverse demand for coal is given by P = 120 - 2Q.What is the socially efficient level of output?

The Fundamentals of Managerial Economics

Market Forces: Demand and Supply

Quantitative Demand Analysis

The Theory of Individual Behavior

The Production Process and Costs

The Organization of the Firm

The Nature of Industry

Managing in Competitive, Monopolistic, and Monopolistically Competitive Markets

Basic Oligopoly Models

Game Theory: Inside Oligopoly

Pricing Strategies for Firms With Market Power

The Economics of Information

Advanced Topics in Business Strategy

Filters

Exam 14: A Managers Guide to Government in the Marketplace

When the government imposes an excise tax on foreign imports:

You are the CEO of a firm with an industry HHI equal to 1,000.Your firm presently controls 20 percent of the market.The board of trustees wants you to consider merging with a firm that controls 10 percent of the market.Should you be concerned about antitrust proceedings? Explain.

Which of the following is true concerning negative externalities?

To prevent air pollution and breach of contract, which tools does the government use?

Consider the monopoly in the above graph with price regulated at $2 per unit.In this market, ___________ units will be exchanged.

Consider the monopoly in the above graph with price regulated at $2 per unit.The regulated price will result in a

Which of the following factors reduces need for government involvement in the market place?

A negative externality

The purpose of the Clean Air Act (1970) was to:

If a firm has been proven liable for a false ad, it has to:

If the government taxed output at $2 per unit, what would a competitive industry produce?

Which of the following explains why big business typically spends more on rent - seeking activities than consumers?

A lump - sum tariff is

In the U.S., government is the sole property owner of:

In the absence of price regulation, a monopolist:

In order to eliminate the inefficiency brought about by a monopoly, the government wants to impose a price ceiling on the monopoly.What is the optimal price to be imposed?

Which of the following is not a result of certification of skills?

The external marginal cost of producing coal is MCexternal = 6Q while the internal marginal cost is MCinternal = 4Q.The inverse demand for coal is given by P = 120 - 2Q.What is the socially efficient level of output?

The Fundamentals of Managerial Economics

Market Forces: Demand and Supply

Quantitative Demand Analysis

The Theory of Individual Behavior

The Production Process and Costs

The Organization of the Firm

The Nature of Industry

Managing in Competitive, Monopolistic, and Monopolistically Competitive Markets

Basic Oligopoly Models

Game Theory: Inside Oligopoly

Pricing Strategies for Firms With Market Power

The Economics of Information

Advanced Topics in Business Strategy

Filters

The external marginal cost of producing coal is MC_external = 6Q while the internal marginal cost is MC_internal = 4Q.The inverse demand for coal is given by P = 120 - 2Q.What is the socially efficient level of output?