Question 1

Which of the following statements is NOT true in the presence of externalities?

Accepted Answer

A)  Social marginal cost equals the sum of internal and external marginal costs. 
B)  A competitive industry generally produces more than a monopoly. 
C)  A competitive industry always produces more than the socially efficient level of output. 
D)  A monopoly always produces more than the socially efficient level of output. 
A)  Social marginal cost equals the sum of internal and external marginal costs. 
B)  A competitive industry generally produces more than a monopoly. 
C)  A competitive industry always produces more than the socially efficient level of output. 
D)  A monopoly always produces more than the socially efficient level of output.

Question 2

The domestic demand and supply for sugar are Qd = 60,000 − 400P and QSD = 20,000 + 500P.The foreign supply is QSF = 20,000 + 100P.What is the domestic quantity supplied at the domestic market price?

Accepted Answer

A)  22,000 
B)  10,000 
C)  52,000 
D)  30,000 
A)  22,000 
B)  10,000 
C)  52,000 
D)  30,000

Question 3

Which of the following is true for a monopoly?

Accepted Answer

A)  A monopoly always makes a positive profit. 
B)  A price ceiling on a monopoly is always desirable. 
C)  Price does not equal marginal cost. 
D)  A price ceiling on a monopoly is always desirable and price does not equal marginal cost. 
A)  A monopoly always makes a positive profit. 
B)  A price ceiling on a monopoly is always desirable. 
C)  Price does not equal marginal cost. 
D)  A price ceiling on a monopoly is always desirable and price does not equal marginal cost.

Question 4

The marginal cost of producing a good to society is the:

Accepted Answer

A)  horizontal sum of the supply curve and the marginal cost of polluting. 
B)  vertical sum of the demand curve and the marginal cost of polluting. 
C)  horizontal sum of the demand curve and the marginal cost of polluting. 
D)  vertical sum of the supply curve and the marginal cost of polluting. 
A)  horizontal sum of the supply curve and the marginal cost of polluting. 
B)  vertical sum of the demand curve and the marginal cost of polluting. 
C)  horizontal sum of the demand curve and the marginal cost of polluting. 
D)  vertical sum of the supply curve and the marginal cost of polluting.

Question 5

How much would the monopoly in the figure below spend to prevent its price being regulated to marginal (or average)cost?

Accepted Answer

A)  $16 
B)  $8 
C)  $4 
D)  $0 
A)  $16 
B)  $8 
C)  $4 
D)  $0

Question 6

Suppose a monopolist has positive fixed costs and constant marginal costs.If the government regulates a monopoly's price to marginal cost,in the long run:

Accepted Answer

A)  the monopolist will earn a profit if ATC > MC. 
B)  the monopolist will exit the industry. 
C)  the monopolist will earn a profit if ATC > P. 
D)  the monopolist will earn zero profits. 
A)  the monopolist will earn a profit if ATC > MC. 
B)  the monopolist will exit the industry. 
C)  the monopolist will earn a profit if ATC > P. 
D)  the monopolist will earn zero profits.

Question 7

You are the manager of a monopoly that faces an inverse demand curve $P = 100 - 10 Q$ ,and has constant average and marginal costs of $20 per unit.The government is considering legislation that would regulate your firm's price at $20 per unit.What is the maximum amount your firm should be willing to spend to lobby against the regulation?

Accepted Answer

If the regulation passes,price will be r

Question 8

Suppose a firm has 10 employees,all of whom desire a more pleasant work environment.Accordingly,they are considering removing litter from the grounds of the plant.Each employee has an inverse demand for "clean grounds" of P = 100 - 2Q,where Q is the number of empty beer cans removed from the premises.The marginal cost of removing beer cans is $1 per can.
a.What is the socially efficient quantity of cans to remove?
b.How much would each person have to pay per can to remove the socially efficient quantity?

Accepted Answer

a.Vertically sum the inverse demand over

Question 9

In the United States,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 10

If a price ceiling on a monopolist results in NO shortage:

Accepted Answer

A)  the full economic price is lower than the one set by the ceiling. 
B)  rent seeking must be effective. 
C)  the firm is on the verge of leaving the market. 
D)  the firm must be making zero economic profits. 
A)  the full economic price is lower than the one set by the ceiling. 
B)  rent seeking must be effective. 
C)  the firm is on the verge of leaving the market. 
D)  the firm must be making zero economic profits.

Question 11

The gadget industry is comprised of 10 firms,each with a 10 percent market share.What is the Herfindahl-Hirschman index for the industry?
 Based on the U.S.Department of Justice Merger Guidelines described in the text,do you think the Justice Department would be likely to block a merger between two of the firms?

Accepted Answer

HHI = 10,000[10(.10)²] = 1,000.

Question 12

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.

Which of the following statements is NOT true in the presence of externalities?

The domestic demand and supply for sugar are Q^d = 60,000 − 400P and Q^SD = 20,000 + 500P.The foreign supply is Q^SF = 20,000 + 100P.What is the domestic quantity supplied at the domestic market price?

Which of the following is true for a monopoly?

The marginal cost of producing a good to society is the:

How much would the monopoly in the figure below spend to prevent its price being regulated to marginal (or average)cost?

Suppose a monopolist has positive fixed costs and constant marginal costs.If the government regulates a monopoly's price to marginal cost,in the long run:

In the United States,government is the sole property owner of:

If a price ceiling on a monopolist results in NO shortage:

When the government imposes an excise tax on foreign imports:

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

Which of the following statements is NOT true in the presence of externalities?

The domestic demand and supply for sugar are Qd = 60,000 − 400P and QSD = 20,000 + 500P.The foreign supply is QSF = 20,000 + 100P.What is the domestic quantity supplied at the domestic market price?

Which of the following is true for a monopoly?

The marginal cost of producing a good to society is the:

How much would the monopoly in the figure below spend to prevent its price being regulated to marginal (or average)cost?

Suppose a monopolist has positive fixed costs and constant marginal costs.If the government regulates a monopoly's price to marginal cost,in the long run:

In the United States,government is the sole property owner of:

If a price ceiling on a monopolist results in NO shortage:

When the government imposes an excise tax on foreign imports:

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 = 60,000 − 400P and Q^SD = 20,000 + 500P.The foreign supply is Q^SF = 20,000 + 100P.What is the domestic quantity supplied at the domestic market price?