Question 1

Which of the following are characteristics of public goods?

Accepted Answer

A)  Nonrivalry 
B)  Nonchivalrous 
C)  Nonexclusionary 
D)  Nonrivalry and nonexclusionary 
A)  Nonrivalry 
B)  Nonchivalrous 
C)  Nonexclusionary 
D)  Nonrivalry and nonexclusionary

Question 2

When the government imposes an effective price ceiling on a monopolist, what will be sure to happen in the short run?

Accepted Answer

A)  The dollar price will increase. 
B)  The dollar price will fall. 
C)  There will be a shortage of the product. 
D)  There will be a surplus of the product. 
A)  The dollar price will increase. 
B)  The dollar price will fall. 
C)  There will be a shortage of the product. 
D)  There will be a surplus of the product.

Question 3

Which of the following pieces of legislation is NOT aimed at curbing the negative effects of asymmetric information?

Accepted Answer

A)  Robison-Patman Act 
B)  Securities and Exchange Act 
C)  Lanham Act 
D)  Truth in Lending Simplification Act 
A)  Robison-Patman Act 
B)  Securities and Exchange Act 
C)  Lanham Act 
D)  Truth in Lending Simplification Act

Question 4

A price ceiling imposed on a monopoly may:

Accepted Answer

A)  lead to a shortage. 
B)  lead to no shortage. 
C)  drive the monopolist out of business. 
D)  All of the statements associated with this question are correct. 
A)  lead to a shortage. 
B)  lead to no shortage. 
C)  drive the monopolist out of business. 
D)  All of the statements associated with this question are correct.

Question 5

The import tariffs that President Bush placed on imported steel likely had what effect?

Accepted Answer

A)  Domestic steel producers were helped, but domestic steel consumers were hurt. 
B)  Both domestic steel consumers and foreign steel producers were helped. 
C)  Both domestic steel producers and domestic steel consumers were helped. 
D)  Foreign steel producers were helped, but domestic steel consumers were hurt. 
A)  Domestic steel producers were helped, but domestic steel consumers were hurt. 
B)  Both domestic steel consumers and foreign steel producers were helped. 
C)  Both domestic steel producers and domestic steel consumers were helped. 
D)  Foreign steel producers were helped, but domestic steel consumers were hurt.

Question 6

In producing the efficient amount of a public good, government should take into account:

Accepted Answer

A)  only the demand from high-demand consumers. 
B)  only the demand from low-demand consumers. 
C)  the vertical sum of all individual inverse demand curves. 
D)  the horizontal sum of all individual inverse demand curves. 
A)  only the demand from high-demand consumers. 
B)  only the demand from low-demand consumers. 
C)  the vertical sum of all individual inverse demand curves. 
D)  the horizontal sum of all individual inverse demand curves.

Question 7

Consider the monopoly in the figure below with price regulated at $2 per unit. Deadweight loss resulting from the unregulated monopoly price is _________ than the deadweight loss resulting from the regulated price.

Accepted Answer

A)  greater 
B)  less 
C)  no different 
D)  There is insufficient information to determine the difference in the deadweight loss between the regulated and unregulated prices. 
A)  greater 
B)  less 
C)  no different 
D)  There is insufficient information to determine the difference in the deadweight loss between the regulated and unregulated prices.

Question 8

Insider trading is prohibited by the:

Accepted Answer

A)  Security Exchange Act. 
B)  Lanham Act. 
C)  Clayton Act. 
D)  Robinson-Patman Act. 
A)  Security Exchange Act. 
B)  Lanham Act. 
C)  Clayton Act. 
D)  Robinson-Patman Act.

Question 9

Which of the following is NOT a valuable role of government in a free market society?

Accepted Answer

A)  To reduce negative externalities. 
B)  To enhance rent-seeking activities. 
C)  To reduce market power. 
D)  To provide public goods. 
A)  To reduce negative externalities. 
B)  To enhance rent-seeking activities. 
C)  To reduce market power. 
D)  To provide public goods.

Question 10

Consider the monopoly in the figure below with price regulated at $2 per unit. Consumer surplus at the regulated price is:

Accepted Answer

A)  $9. 
B)  $8. 
C)  $4.50. 
D)  There is insufficient information to determine consumer surplus. 
A)  $9. 
B)  $8. 
C)  $4.50. 
D)  There is insufficient information to determine consumer surplus.

Question 11

The manager of Roy's Video noticed a newspaper advertisement by a rival store that erroneously claimed, "We are the only firm in town that does not sell pornographic videos." He initially dismissed the deceptive advertisement but decided to reconsider his course of action when the rival refused to stop running the advertisement. In the interim, numerous churches and other organizations boycotted Roy's Video, resulting in an estimated loss of $25,000. Do you think it would be advisable for Roy to seek legal counsel? Explain.

Accepted Answer

The Lanham Act, in concert with the Clay

Question 12

The presence of government in the market leads to:

Accepted Answer

A)  benefits at no cost to society. 
B)  rent seeking. 
C)  externalities. 
D)  adverse selection. 
A)  benefits at no cost to society. 
B)  rent seeking. 
C)  externalities. 
D)  adverse selection.

Question 13

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 14

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 15

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. How many units of sugar will domestic producers supply after the quota is imposed?

Accepted Answer

A)  35,000 
B)  30,000 
C)  58,000 
D)  23,000 
A)  35,000 
B)  30,000 
C)  58,000 
D)  23,000

Question 16

Under the merger guidelines written by the DOJ and FTC, a merger may not be challenged if:

Accepted Answer

A)  there is significant foreign competition. 
B)  the firms involved have monetary problems. 
C)  there is an emergence of new technology. 
D)  All of the statements associated with this question are correct. 
A)  there is significant foreign competition. 
B)  the firms involved have monetary problems. 
C)  there is an emergence of new technology. 
D)  All of the statements associated with this question are correct.

Question 17

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. What is the socially efficient level of output?

Accepted Answer

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

Question 18

Which of the following is true about a lump-sum tariff?

Accepted Answer

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

Question 19

Consider the monopoly in the figure below with price regulated at $20 per unit. The regulated price will result in a:

Accepted Answer

A)  surplus of 3 units. 
B)  shortage of 3 units. 
C)  surplus of 18 units. 
D)  shortage of 18 units. 
A)  surplus of 3 units. 
B)  shortage of 3 units. 
C)  surplus of 18 units. 
D)  shortage of 18 units.

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

Accepted Answer

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

Which of the following are characteristics of public goods?

When the government imposes an effective price ceiling on a monopolist, what will be sure to happen in the short run?

Which of the following pieces of legislation is NOT aimed at curbing the negative effects of asymmetric information?

A price ceiling imposed on a monopoly may:

The import tariffs that President Bush placed on imported steel likely had what effect?

In producing the efficient amount of a public good, government should take into account:

Consider the monopoly in the figure below with price regulated at $2 per unit. Deadweight loss resulting from the unregulated monopoly price is _________ than the deadweight loss resulting from the regulated price.

Insider trading is prohibited by the:

Which of the following is NOT a valuable role of government in a free market society?

Consider the monopoly in the figure below with price regulated at $2 per unit. Consumer surplus at the regulated price is:

The presence of government in the market leads to:

The main purpose of antitrust policy is to:

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. How many units of sugar will domestic producers supply after the quota is imposed?

Under the merger guidelines written by the DOJ and FTC, a merger may not be challenged if:

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. What is the socially efficient level of output?

Which of the following is true about a lump-sum tariff?

Consider the monopoly in the figure below with price regulated at $20 per unit. The regulated price will result in a:

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

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 are characteristics of public goods?

When the government imposes an effective price ceiling on a monopolist, what will be sure to happen in the short run?

Which of the following pieces of legislation is NOT aimed at curbing the negative effects of asymmetric information?

A price ceiling imposed on a monopoly may:

The import tariffs that President Bush placed on imported steel likely had what effect?

In producing the efficient amount of a public good, government should take into account:

Consider the monopoly in the figure below with price regulated at $2 per unit. Deadweight loss resulting from the unregulated monopoly price is _________ than the deadweight loss resulting from the regulated price.

Insider trading is prohibited by the:

Which of the following is NOT a valuable role of government in a free market society?

Consider the monopoly in the figure below with price regulated at $2 per unit. Consumer surplus at the regulated price is:

The presence of government in the market leads to:

The main purpose of antitrust policy is to:

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. How many units of sugar will domestic producers supply after the quota is imposed?

Under the merger guidelines written by the DOJ and FTC, a merger may not be challenged if:

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. What is the socially efficient level of output?

Which of the following is true about a lump-sum tariff?

Consider the monopoly in the figure below with price regulated at $20 per unit. The regulated price will result in a:

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

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. How many units of sugar will domestic producers supply after the quota is imposed?

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. What is the socially efficient level of output?

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