Question 1

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 2

The Clean Air Act and its amendments increase the production costs of the firms in a covered industry through increased:

Accepted Answer

A)  fixed costs while marginal cost is unchanged. 
B)  marginal cost while fixed costs remain the same. 
C)  fixed costs and increased marginal costs. 
D)  average cost while marginal cost is unchanged. 
A)  fixed costs while marginal cost is unchanged. 
B)  marginal cost while fixed costs remain the same. 
C)  fixed costs and increased marginal costs. 
D)  average cost while marginal cost is unchanged.

Question 3

An import quota 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 4

If the government regulates a monopoly's price below the socially efficient level, then:

Accepted Answer

A)  deadweight loss increases and there is a surplus output. 
B)  deadweight loss decreases and there is a shortage of output. 
C)  deadweight loss increases and there is a shortage of output. 
D)  deadweight loss decreases and there is a surplus of output. 
A)  deadweight loss increases and there is a surplus output. 
B)  deadweight loss decreases and there is a shortage of output. 
C)  deadweight loss increases and there is a shortage of output. 
D)  deadweight loss decreases and there is a surplus of output.

Question 5

What is the immediate result of applying the Clean Air Act to a previously nonregulated industry?

Accepted Answer

A)  Price decreases and production is reduced. 
B)  Price increases and production is reduced. 
C)  Price decreases and production is enlarged. 
D)  Price increases and production is enlarged. 
A)  Price decreases and production is reduced. 
B)  Price increases and production is reduced. 
C)  Price decreases and production is enlarged. 
D)  Price increases and production is enlarged.

Question 6

A lump-sum tariff imposed on foreign competitors will:

Accepted Answer

A)  always remove foreign competitors from the market. 
B)  increase the profits of domestic firms when demand is high. 
C)  have no impact on domestic firms' profits when demand for domestic goods is high. 
D)  decrease the profits of domestic firms when demand is high. 
A)  always remove foreign competitors from the market. 
B)  increase the profits of domestic firms when demand is high. 
C)  have no impact on domestic firms' profits when demand for domestic goods is high. 
D)  decrease the profits of domestic firms when demand is high.

Question 7

Consider the monopoly in the figure below 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 8

Consumer surplus in the unregulated monopoly market in the figure below is:

Accepted Answer

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

Question 9

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

Question 10

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 11

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 12

Rent seeking:

Accepted Answer

A)  results in less market share for the rent seekers. 
B)  involves lobbyists influencing government policies to benefit their interests. 
C)  results in more negative externalities. 
D)  None of the statements are correct. 
A)  results in less market share for the rent seekers. 
B)  involves lobbyists influencing government policies to benefit their interests. 
C)  results in more negative externalities. 
D)  None of the statements are correct.

Question 13

In the 1990s Japan reduced its exports of automobiles to the United States by 28 percent. If you were the manager of a Buick dealership, how would this affect your pricing strategy? Explain.

Accepted Answer

If the dealer has no market power, the r

Question 14

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 15

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 16

Which of the following is antitrust legislation?

Accepted Answer

A)  Sherman Act 
B)  Securities and Exchange Act 
C)  Lanham Act 
D)  Sherman Act and Lanham Act 
A)  Sherman Act 
B)  Securities and Exchange Act 
C)  Lanham Act 
D)  Sherman Act and Lanham Act

Question 17

The manager of a paper mill is preparing for her most important test yet. On Tuesday morning, she must testify before a Senate committee to "justify" the firm's high price. One senator is particularly angry with the firm because its price is twice the firm's marginal cost. On Tuesday afternoon, the manager is scheduled to appear before the House Subcommittee on the Environment to explain why the firm should not be slapped with a per-unit tax on the firm's output to compensate for the pollution it discharges into a major river. What do you think will be the manager's game plan?

Accepted Answer

Her best shot would probably be to point

Question 18

The Clean Air Act aids new entrants in a regulated industry when demand increases and provides an incentive for existing firms to invest in new antipollution technology by:

Accepted Answer

A)  restricting pollution permits from being traded. 
B)  allowing pollution permits to be traded within the industry. 
C)  allowing pollution permits to be traded across industries. 
D)  allowing pollution permits to be traded within the industry and allowing pollution permits to be traded across industries. 
A)  restricting pollution permits from being traded. 
B)  allowing pollution permits to be traded within the industry. 
C)  allowing pollution permits to be traded across industries. 
D)  allowing pollution permits to be traded within the industry and allowing pollution permits to be traded across industries.

Question 19

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 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 equal to MR.

Question 20

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

Which of the following is true about an excise tariff?

The Clean Air Act and its amendments increase the production costs of the firms in a covered industry through increased:

An import quota is:

If the government regulates a monopoly's price below the socially efficient level, then:

What is the immediate result of applying the Clean Air Act to a previously nonregulated industry?

A lump-sum tariff imposed on foreign competitors will:

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

Consumer surplus in the unregulated monopoly market in the figure below is:

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?

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:

Rent seeking:

In the 1990s Japan reduced its exports of automobiles to the United States by 28 percent. If you were the manager of a Buick dealership, how would this affect your pricing strategy? Explain.

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

Which of the following is antitrust legislation?

The Clean Air Act aids new entrants in a regulated industry when demand increases and provides an incentive for existing firms to invest in new antipollution technology by:

In the absence of price regulation, a monopolist:

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

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 is true about an excise tariff?

The Clean Air Act and its amendments increase the production costs of the firms in a covered industry through increased:

An import quota is:

If the government regulates a monopoly's price below the socially efficient level, then:

What is the immediate result of applying the Clean Air Act to a previously nonregulated industry?

A lump-sum tariff imposed on foreign competitors will:

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

Consumer surplus in the unregulated monopoly market in the figure below is:

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?

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:

Rent seeking:

In the 1990s Japan reduced its exports of automobiles to the United States by 28 percent. If you were the manager of a Buick dealership, how would this affect your pricing strategy? Explain.

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

Which of the following is antitrust legislation?

The Clean Air Act aids new entrants in a regulated industry when demand increases and provides an incentive for existing firms to invest in new antipollution technology by:

In the absence of price regulation, a monopolist:

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

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?