Question 1

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 2

The main purpose of antitrust policy is to:

Accepted Answer

A)  reduce market power. 
B)  control negative externalities. 
C)  help make information easily obtainable for producers and consumers. 
D)  All of the statements associated with this question are correct. 
A)  reduce market power. 
B)  control negative externalities. 
C)  help make information easily obtainable for producers and consumers. 
D)  All of the statements associated with this question are correct.

Question 3

The domestic demand and supply for sugar are Qd = 700 − 2P and QSD = 100 + 4P.The foreign supply is QSF = 150 + 3P.What is the total supply of sugar in the domestic market?

Accepted Answer

A)  Q = 250 + 7P 
B)  Q = 800 + 2P 
C)  Q = 850 + P 
D)  Q = 150 + 3P 
A)  Q = 250 + 7P 
B)  Q = 800 + 2P 
C)  Q = 850 + P 
D)  Q = 150 + 3P

Question 4

Nonexclusionary,as it relates to public goods,means that:

Accepted Answer

A)  no producer can be excluded from providing the good. 
B)  no one can be excluded from consuming the good, once it is provided. 
C)  the government can only exclude consumers from consuming the good. 
D)  producer-consumer rivalry exists. 
A)  no producer can be excluded from providing the good. 
B)  no one can be excluded from consuming the good, once it is provided. 
C)  the government can only exclude consumers from consuming the good. 
D)  producer-consumer rivalry exists.

Question 5

How much would consumers in the figure below spend to persuade politicians to regulate the monopoly's price to marginal (or average)cost?

Accepted Answer

A)  $24 
B)  $16 
C)  $8 
D)  $0 
A)  $24 
B)  $16 
C)  $8 
D)  $0

Question 6

Which of the following is true about an excise tariff?

Accepted Answer

A)  Domestic firms' marginal cost curves are shifted up by the amount of the excise tariff. 
B)  Foreign firms' average cost curves are shifted down by the amount of the excise tariff. 
C)  Domestic firms' average cost curves are shifted up by the amount of the excise tariff. 
D)  Foreign firms' marginal cost curves are shifted up by the amount of the excise tariff. 
A)  Domestic firms' marginal cost curves are shifted up by the amount of the excise tariff. 
B)  Foreign firms' average cost curves are shifted down by the amount of the excise tariff. 
C)  Domestic firms' average cost curves are shifted up by the amount of the excise tariff. 
D)  Foreign firms' marginal cost curves are shifted up by the amount of the excise tariff.

Question 7

If the government imposes a price ceiling below the monopolist's average cost curve,then in the long run the regulation makes:

Accepted Answer

A)  consumers better off. 
B)  consumers worse off. 
C)  the monopolist better off. 
D)  None of the preceding statements is correct. 
A)  consumers better off. 
B)  consumers worse off. 
C)  the monopolist better off. 
D)  None of the preceding statements is correct.

Question 8

According to the Clean Air Act,a new firm in the covered industry is required to:

Accepted Answer

A)  obtain a permit to pollute. 
B)  at least match the most effective system existing in the industry. 
C)  obtain a permit to pollute and at least match the most effective system existing in the industry. 
D)  None of the statements are correct. 
A)  obtain a permit to pollute. 
B)  at least match the most effective system existing in the industry. 
C)  obtain a permit to pollute and at least match the most effective system existing in the industry. 
D)  None of the statements are correct.

Question 9

The domestic demand and supply for sugar are Qd = 40,000 − 200P and QSD = 10,000 + 300P.The foreign supply is QSF = 20,000 + 100P.What is the domestic market price of sugar?

Accepted Answer

A)  12.3 
B)  15.0 
C)  16.7 
D)  18.3 
A)  12.3 
B)  15.0 
C)  16.7 
D)  18.3

Question 10

Consider the monopoly in the figure below with price regulated at $2 per unit.Monopoly profits at the regulated price (assuming the presence of fixed costs)are:

Accepted Answer

A)  $12. 
B)  $16. 
C)  $5. 
D)  There is insufficient information to determine the monopoly profits. 
A)  $12. 
B)  $16. 
C)  $5. 
D)  There is insufficient information to determine the monopoly profits.

Question 11

Suppose the external marginal cost of pollution is MCexternal = 5Q and the internal marginal cost is MCinternal = 10Q.Further,assume the inverse demand for the product,Q,is given by P = 90 - Q.
a.What is the socially efficient level of output?
b.How much output would a competitive industry produce?
c.How much output would a monopoly produce?
d.Discuss three ways government can induce firms to produce the socially efficient level of output.

Accepted Answer

a.The socially efficient level of output

Question 12

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 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 are correct.

Question 13

Consider the monopoly in the figure below with price regulated at $2 per unit.The deadweight loss under the regulated price is:

Accepted Answer

A)  $4.50. 
B)  $5. 
C)  $8. 
D)  There is insufficient information to compute the deadweight loss at the regulated price. 
A)  $4.50. 
B)  $5. 
C)  $8. 
D)  There is insufficient information to compute the deadweight loss at the regulated price.

Question 14

The external marginal cost of producing coal is MCexternal = 8Q while the internal marginal cost is MC internal = 6Q.The inverse demand for coal is given by P = 180 − 4Q.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 15

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

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 16

Consider the monopoly in the figure below with price regulated at $20 per unit.The deadweight loss under the regulated price is:

Accepted Answer

A)  $150. 
B)  $1,350. 
C)  $2,300. 
D)  There is insufficient information to compute the deadweight loss at the regulated price. 
A)  $150. 
B)  $1,350. 
C)  $2,300. 
D)  There is insufficient information to compute the deadweight loss at the regulated price.

Question 17

Three years ago the CEO of a large firm instituted a plan that encourages division managers to share information obtained about the demographic characteristics of those who purchase the firm's final product.Since the plan was implemented,however,the CEO has noticed that less information is available than ever.Why do you think the CEO's plan backfired?

Accepted Answer

There is a free rider problem caused by

Question 18

Consider the monopoly in the figure below with price regulated at $20 per unit.Monopoly profits at the regulated price are:

Accepted Answer

A)  $100. 
B)  $200. 
C)  $1,350. 
D)  There is insufficient information to determine the monopoly profits. 
A)  $100. 
B)  $200. 
C)  $1,350. 
D)  There is insufficient information to determine the monopoly profits.

Question 19

Rent seeking:

Accepted Answer

A)  involves resources paid to politicians to enhance one group at the expense of another. 
B)  results in less monopoly power. 
C)  results in externalities. 
D)  None of the statements are correct. 
A)  involves resources paid to politicians to enhance one group at the expense of another. 
B)  results in less monopoly power. 
C)  results in externalities. 
D)  None of the statements are correct.

Question 20

We learned in this chapter that there are laws against price discrimination.Yet,many firms openly engage in such practices.For instance,most hotel chains offer discounts to senior citizens that translate into prices that are about 10 percent lower than prices charged to other hotel guests.Why are such firms allowed to engage in such practices?

Accepted Answer

While the Clayton Act (1914)and the Robi

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

The main purpose of antitrust policy is to:

The domestic demand and supply for sugar are Q^d = 700 − 2P and Q^SD = 100 + 4P.The foreign supply is Q^SF = 150 + 3P.What is the total supply of sugar in the domestic market?

Nonexclusionary,as it relates to public goods,means that:

How much would consumers in the figure below spend to persuade politicians to regulate the monopoly's price to marginal (or average)cost?

Which of the following is true about an excise tariff?

If the government imposes a price ceiling below the monopolist's average cost curve,then in the long run the regulation makes:

According to the Clean Air Act,a new firm in the covered industry is required to:

The domestic demand and supply for sugar are Q^d = 40,000 − 200P and Q^SD = 10,000 + 300P.The foreign supply is Q^SF = 20,000 + 100P.What is the domestic market price of sugar?

Consider the monopoly in the figure below with price regulated at $2 per unit.Monopoly profits at the regulated price (assuming the presence of fixed costs)are:

A lump-sum tariff is:

Consider the monopoly in the figure below with price regulated at $2 per unit.The deadweight loss under the regulated price is:

The external marginal cost of producing coal is MC_external = 8Q while the internal marginal cost is MC _internal = 6Q.The inverse demand for coal is given by P = 180 − 4Q.If the government taxed output at $2 per unit,what would a competitive industry produce?

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

Consider the monopoly in the figure below with price regulated at $20 per unit.The deadweight loss under the regulated price is:

Consider the monopoly in the figure below with price regulated at $20 per unit.Monopoly profits at the regulated price are:

Rent seeking:

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

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

The main purpose of antitrust policy is to:

The domestic demand and supply for sugar are Qd = 700 − 2P and QSD = 100 + 4P.The foreign supply is QSF = 150 + 3P.What is the total supply of sugar in the domestic market?

Nonexclusionary,as it relates to public goods,means that:

How much would consumers in the figure below spend to persuade politicians to regulate the monopoly's price to marginal (or average)cost?

Which of the following is true about an excise tariff?

If the government imposes a price ceiling below the monopolist's average cost curve,then in the long run the regulation makes:

According to the Clean Air Act,a new firm in the covered industry is required to:

The domestic demand and supply for sugar are Qd = 40,000 − 200P and QSD = 10,000 + 300P.The foreign supply is QSF = 20,000 + 100P.What is the domestic market price of sugar?

Consider the monopoly in the figure below with price regulated at $2 per unit.Monopoly profits at the regulated price (assuming the presence of fixed costs)are:

A lump-sum tariff is:

Consider the monopoly in the figure below with price regulated at $2 per unit.The deadweight loss under the regulated price is:

The external marginal cost of producing coal is MCexternal = 8Q while the internal marginal cost is MC internal = 6Q.The inverse demand for coal is given by P = 180 − 4Q.If the government taxed output at $2 per unit,what would a competitive industry produce?

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

Consider the monopoly in the figure below with price regulated at $20 per unit.The deadweight loss under the regulated price is:

Consider the monopoly in the figure below with price regulated at $20 per unit.Monopoly profits at the regulated price are:

Rent seeking:

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 domestic demand and supply for sugar are Q^d = 700 − 2P and Q^SD = 100 + 4P.The foreign supply is Q^SF = 150 + 3P.What is the total supply of sugar in the domestic market?

The domestic demand and supply for sugar are Q^d = 40,000 − 200P and Q^SD = 10,000 + 300P.The foreign supply is Q^SF = 20,000 + 100P.What is the domestic market price of sugar?

The external marginal cost of producing coal is MC_external = 8Q while the internal marginal cost is MC _internal = 6Q.The inverse demand for coal is given by P = 180 − 4Q.If the government taxed output at $2 per unit,what would a competitive industry produce?